The Pact Production Levy is designed to charge a fee on productions that are serviced by Pact, but would not get captured in a company’s membership fee because they are run through an SPV rather than being reflected in the turnover of the member company.
Where a UK company runs a TV production though an SPV (usually to take advantage of the High-end TV Tax Credit) the parent company will be asked to join as a member of Pact and the Pact Production Levy is charged to ensure that fees are collected on the production that otherwise may not have been collected if the turnover of the SPV was not included on the parent accounts.
Considering that the Levy provides access to Pact’s services just for the life of the production, rather than annual membership, the cap was put in place at £31,000. This is considered a reasonable maximum levy per production, especially for the overseas SVODs and Studios that register multiple productions a year with us.
However, to ensure that this is fair to all UK TV members that pay a membership fee on their annual turnover, a top-up membership fee will be calculated at the point of renewal in any instance where a budget has exceeded the £50m cap.
For example:
Company A pays a levy of £31,000 on a production (Project A), with a budget of £56m.
Upon a future renewal, Company A provides either consolidated accounts that include production income from Project A, or individual accounts for its parent company and Project A which are added together. The total turnover as per these accounts is £62m.
Company A would therefore pay a membership fee at the rate relevant to turnover of £62m and the £31,000 levy already paid would be deducted from this so that they would only pay the balance.
This ensures that all members are ultimately paying membership fees at the same rates, regardless of whether the production is run through an SPV or through the parent company accounts.
In order to support our members, we are open to having conversations on a case by case basis, regarding charging a levy on the whole budget (and then deducting this from any future membership fee at the point that the production income is included in the parent accounts) if this would suit a company’s financial arrangements.