IPA submits proposal to HM Treasury to extend creative tax break to include advertising industry
The IPA has submitted its response to the Creative Sector Tax Reliefs Consultation being run by HM Treasury opposing the stance to exclude advertising from its proposed tax breaks for the creative sector.
The consultation, which is set to close on 10 September, has sought comments on a proposed tax relief system announced during this year’s budget that would introduce corporation tax relief for the animation, high-end television and video games industries from April next year.
The move was welcomed by TIGA, the video games association, which has long argued for a tax relief in order to strengthen the UK sector, however, the advertising sector was not included in the proposition.
As a result, the IPA has argued that it should be included, stating that it is ‘illogical’ to exclude advertising material, claiming that advertising is at the forefront of the technological development that the tax break is aiming to nurture, being in use across new and traditional media.
Also argued is that advertising agencies employ the same production companies that also specialise in both animation and high-end television, and that without a ‘flourishing’ advertising agency, these productions would be unable to hire skilled production crew and animators, forcing them to look abroad for talent.
The IPA has highlighted the TV commercial production businesses in Cape Town, Prague, Budapest and Buenos Aires as having being built on work which would have previously gone to UK talent, and said that the criteria of the tax relief should be the nature of the creative work itself.
Alex Hunter, finance director for the IPA, explained: “If the true intent of this tax relief is to promote and encourage the UK’s technological innovation in the face of overseas competition, then the use of the output should be secondary to the nature of the production work. By specifically denying tax relief on advertising work, it is encouraging production houses to switch their efforts away from a creative industry which is key to the UK economy.”