In 2004, some 1,888 taxpayers invested €58.1 million in qualifying film productions, with a tax cost to the Exchequer of €19.5 million, according to estimates from the Revenue Commissioners. Meanwhile, some 2,599 people invested €50.1 million in various BES projects, with a tax cost of €21.1 million. These estimates are subject to change.

To avoid losing money to "phantom" films, investors should make sure they see a Section 481 certificate and copies of pre-sale agreements before committing any money. BES investors should ask to see an investment prospectus, check if the company's projections are realistic and investigate if the company provides indemnities against clawback of the tax relief.

To claim tax relief in respect of Section 481, investors will need a form called the Film 3 that will be issued by the production company following authorisation by the Revenue. Tax relief can be claimed at any time after principal photography has commenced. The company must use the money within two years.

If the BES company is an established one, investors can get tax relief as soon as the company meets the Revenue's conditions. The relief is in respect of the tax year in which the shares are issued. In the case of new companies, relief will not be given unless it has been trading for four months. Companies must be engaged in activities such as tourism, R&D, service or music recording.

PAYE investors can arrange to put a credit for their film or BES investment on their tax credits certificate, says Sonya Manzor, tax partner at William Fry. Self-assessed taxpayers paying preliminary tax based on 100 per cent of last year's liability should be careful to take any previous investments into account. To avoid interest and penalties, they should pay preliminary tax based on what their liability would have been last year if they had not made the investment.

Tax relief can be carried forward if the taxpayers' income does not give rise to a high enough tax bill in that year to absorb the relief. BES investors can invest more than the annual maximum and carry forward the unrelieved amount up to 2006. To qualify for relief, investors must not be connected with the BES or film production company.

Other qualifying conditions apply. Further information is available at www.revenue.ie.