Wednesday, April 18, 2012

A hypothetical situation...

Just suppose... humour me, please... just suppose that you have a production company that is, shall we say 'downsizing', or in straitened circumstances. And you are about a year behind in your rent to the landlord and owe them say, €60,000, and you have to vacate the premises.

However, one of your other companies has a production gig in hand, the Section 481 funding is lined up, some broadcasters are buying in, and some other funding is in place. So, you need a production office for about ten weeks.

You get on to the landlord who has been sending you solicitor's letters threatening court action and you tell them you can't pay them all you owe them but if they rent you some of the vacated space for this production you'll be able to advance them an 'enhanced' rent from the production funding, up front, in order to purge at least some of the debt you owe them.

It's a sort of something or nothing offer which the landlord accepts. The landlord doesn't care where the money comes from, or that it might cause accounting issues for the production.

And of course it's money that won't be on the screen in the finished production so it will look a bit cheap. And if it seems that the production has paid over the odds for its office space then, well, that'll just look like carelessness, or a lack of thrift. And the Revenue won't have any awkward questions to ask... or will they, and not only because your faltering business is also a bit behind on its tax returns?

It's the 'robbing Peter to pay Paul' syndrome and, I'm told, while the hypothetical situation above is somewhat extreme it's not an altogether unusual way of dealing with overhead in the business - costs to the production that aren't on the screen.

As the man said, Follow the money...

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