Investing in films

Every so often I get a call and an email from people wanting me to invest in films – claimed 10% return within 12 months. Then profits after a year

Everything looks legit – other than the wording of not being controlled by the financial regulators

Email copied below – what is the story with this? Is it an outright scam ? I did read something about UK government and investing in films as a tax benefit,

As promised, we have two loan agreements which come with guaranteed returns in less than 12 months then onto a percentage of the profits. These have no risk due to the distribution deals already in place for worldwide showing of the films/TV shows, so there is already money in the pot from the pre sales which will go back to investors

The first is for Extremis which is a psychological Thriller with an twist in the tail… starring David O’Hara,(Braveheart) Isabelle Allen (Les Miserables)and Toyah Wilcox, this offers a guaranteed return by January 2017. How this is structured, you realise your capital back plus 10% in less than 12 months and then go onto a 10% of the films net profits (from all worldwide platforms) paid back to investors on a pro rata basis.

http://www.imdb.com/title/tt4081012/?ref_=nm_flmg_act_2

http://www.examiner.co.uk/whats-on/film-news/film-crews-back-huddersfield-shoot-8931353

Secondly we have an American Sci Fi 1-0 part Tv Series called Endeavour from the same production company as Dystopia, you can view the trailer which will give you an idea as to the quality of the series here http://www.flickeringmyth.com/2015/07/first-sneak-peek-promo-for-sci-fi-series-dystopia.html

With this you realise your capital back plus 10% Guaranteed before 16th December this year then onto 50% of the net profits from series 1, please let me know if you would like me to send a following email with the details, brochure and sample loan agreement etc

Both of these are completely risk free so if you wanted to diversify and start a portfolio you would have a waterfall income coming in from the royalties at different times throughout the year, Minimum Investment £8,000 per project

Please let me know if you would like any further information on either of these or to reserve an allocation as the loan agreements get snapped up very quickly

DRAFT

This Loan Agreement and the content of this promotion is not authorised under the Financial

Services and Markets Act 2000 (FSMA). As a Lender, you should be aware that the Financial

Ombudsman Service and the Financial Services Compensation Scheme are not available if

you deal with an unauthorised company or individual. Reliance on the promotion for the

purpose of engaging in any investment activity may expose an individual to a significant risk

of losing all of the investment. The Lender acknowledges the basis of this promotion and

confirms that they are aware of and accept the risks associated therewith.

Both of these are completely risk free

I would be intrigued to know who is promoting this – but I can pretty much guarantee there is no such thing as a risk free investment in the film industry yielding 10%.

I have done a bit of film work. Nothing massive, and the last one was the absolutely awful ‘He Who Dares:Downing Street siege’ which gives you an idea of the sort of thing I mean! (I’m the bad guy in black with the pump action shotgun instead of the MP5.)
Anyway was chatting with the director of that one and he explained that the film co get investors to stick in a certain amount, let’s say 20k each. That gets them a profit share on 8 films.
The film co make these films on a very quick turnaround, based on what is popular in the cinema at present (hence all the rubbish straight to cable/ppv clone films you get, these are they.) Budgets are really low, crews often doing it for experience rather than money, single camera setups, that sort of thing. The Downing Stone didn’t even offer catering for anyone other than the two lead actors!
They don’t expect each film to do well but usually at least one of the 8 does enough to give the return the investors are expecting. It’s never going to make you a mint but the return is there. Think they were offering 4%
Whether this is actually what you are being offered is another thing entirely. I’m just relating what I was told by someone in the industry.

They don’t expect each film to do well but usually at least one of the 8 does enough to give the return the investors are expecting. It’s never going to make you a mint but the return is there.

For the people setting it up, not for the investor. There is a long and inglorious history of people being suckered by the glamour of the film industry into making dumb financial decisions.

I’m quite sure of that, seeing what that end of the industry was like to work in I think glamorous is the last word I’d use.
To be fair, the highlight of my film career is being bought fish and chips by Danny Dyer after I gave him my lighter at 10pm in the freezing cold one Feb night in a cruddy Thames dock whilst filming Vendetta. (Was a man in black again on that one, Police this time…)

close correlation between use of terms like guaranteed return and actual returns – sadly normally a negative one

If the investment is completely risk free and gives a guaranteed yield ofd more than 20 times the base rate in less than a year….. why are they asking total strangers for money? Why not just ask a bank? They’d more than happily loan on that and wouldn’t even need to be woo’d with shares from sales.

How this is structured, you realise your capital back plus 10% in less than 12 months and then go onto a 10% of the films net profits (from all worldwide platforms) paid back to investors on a pro rata basis.

I’ve been an head of department on various films over the years and often get offered ‘back end’ deals for a share of the profits from sales and distribution on top of my day rate. Do you want know how much money I’ve made from them over the last 12 years – with worldwide screen, DVD and TV distribution? Absolutely duck all.

How do you make a small fortune in the film industry? Start with a big one. Wacka wacka wacka!!

They phoned me before Christmas about something to do with one of the actors from the inbetweeners.

Red Rock Entertainment Executive Producers – Home2

I wonder who came up with this idea of calling people to loan to the film companies for big returns?

I must be a sophisticated investor to sign up. I like Special Brew, does that count?

There are FOUR EIS primary tax reliefs as follows:

1. Income Tax Relief (30% upfront income tax relief).

2. Capital Gains Tax deferral Relief.

3. EIS Loss Relief against Income or Capital Gains

(loss set against income to reduce tax).

4. IHT Relief and Business Property Relief

(100% IHT relief after two years).

Income Tax Relief

In order to qualify for Income Tax Relief, an investor must hold a

qualifying investment for a minimum period of three years from

the date of issue, or when trade commences if later. In order

to claim IncomeTax Relief, the investor must not be deemed

connected with the issuing company. A definition of a connected

investor is contained below in Note A on page 4.

A qualifying investor will attract UK Income Tax Relief at 30% of

the investment, subject to having sufficient taxable income.

An Income Tax Saving Example

Mr. Brown has income in the tax year as a result of which he

would owe £3,000 income tax to HMRC.

If Mr. Brown were to invest £10,000 into a qualifying EIS company

in the same tax year (or the next tax year), his income tax liability

to HMRC would be reduced to zero. His investment into the EIS

company would therefore have effectively cost him £7,000 for an

investment in shares worth £10,000.