Pasculli, L; Maclennan, S; (2022) “The Producers” of Tax Abuse: The Corrupting Effects of Tax Laws and Tax Reliefs in the U.K. Film Industry. Law and Contemporary Problems , 85 (4) pp. 101-136.

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Abstract

Mel Brooks’s famous film, The Producers, tells the tale of a dishonest theatrical producer, Max Bialystock, who contracts the services of accountant Leopold Bloom. While auditing Bialystock’s latest accounts, Bloom discovers that “[u]nder the right circumstances, a producer could make more money with a flop than he could with a hit.” Bloom’s discovery was, in essence, that legal and financial structures for producing plays and musicals provided an opportunity for a “dishonest man” to “make a fortune” by defrauding investors in the production. Bloom, an impressionable young accountant of previously unimpeachable character, soon finds himself drawn into a fraud. As often happens, reality exceeds fiction. For decades, tax reliefs1 offered by United Kingdom law on qualifying film production expenses—so-called, “film tax relief”—have been incentivizing and attracting something less welcome than the desired investment in the local movie industry. These reliefs have provided opportunities and motivations for systemic tax abuse. Such abuse includes tax evasion—that is, criminal behavior such as fraudulent tax relief claims for movies that were never to be made2 or based on false invoices.3 Such abuses also include tax avoidance—that is, elaborate contractual and business arrangements that exploit the law to recategorize otherwise taxable activities in a non-taxable form.4 These forms of abuse are systemic in many ways.

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