EP NowStoreAcademySupportProduction LotProducts by Country
Blog Home

Incentives Estimate or Opinion Letter: Which One Is Right for My Production?

Looking to obtain funding for your production? Learn whether an incentives estimate or an opinion letter is right for you.
September 25, 2024

Lloyd Gunton

People on set discuss incentives estimates

With any production, it’s a good idea to get an incentives estimate to help you lock down your finance plan and be confident that your creative vision can become a reality. However, sometimes you may want to go a step further and get a formal document that you can rely on to obtain funding. This is when an opinion letter may be right for you.

What is an opinion letter?

An opinion letter (sometimes known as a “comfort letter” or “letter of comfort”) is a formal, detailed document prepared by a third party (normally an accountant if claiming the UK incentive) which covers all qualification criteria for a given incentive for both a production and a company. This includes estimated timings for when the incentive is likely to be received and, crucially, a formal opinion on the value of the incentive.

A UK incentive opinion letter will typically opine on:

  • Qualification of the production company as the “Film/Television Production Company”;

  • Qualification of the film or programme under the Cultural Test;

  • Qualification of the film or programme as intended for theatrical release or broadcast;

  • In the case of television programmes, qualification as a “Qualifying Television Programme”; 

  • The value of the incentive to be received; and 

  • The estimated timing of receipt of the incentive. 

Why would I need an opinion letter rather than an incentives estimate?

Generally, opinion letters are required when a financier is lending against the incentive to be applied for by the production. In order to get comfort over the potential value of the incentive, and therefore what value they are willing to lend, a financier will typically require that an opinion letter is provided as part of the financial close of a project.

Financiers want an opinion letter because it gives them far greater security than a simple estimate. The accountant is effectively certifying that all qualification criteria are met and is formally giving their opinion on the minimum value of incentive to be obtained. In the case of an estimate, there is no formal element to the figure provided by the accountant; no other qualification criteria are necessarily reviewed and therefore there is far less security.

Further, for an opinion letter, the financier will be a party to a tri-partite engagement with the accountant and the production company. This gives the financier legal redress to the accountant in the (hopefully very unlikely) event that the production is ineligible for the incentive or the incentive is lower than the opinion provided—subject to provisos in the opinion and the terms and conditions of engagement of course.

Sometimes, even if there is no external loan against the incentive (e.g., where it is funded by a distributor or broadcaster), there will still be a request for an opinion letter to provide additional assurance over the incentive element of the finance plan.

When does an opinion letter typically get issued?

Generally, opinion letters are issued as part of the financial close process for a production. The earlier the need for an opinion letter can be established the better, as this allows both the production and the accountant to work to a desired date and hopefully avoid any last-minute requests.

With respect to timing, one key element is movement within the budget. An opinion letter will always be based on a specific iteration of the budget—ideally, the final locked budget.

If the budget is still undergoing final tweaks, it may not be the right time to do the incentive calculation element of the opinion, as all the changes will need to be appropriately reflected in the final opinion. However, your accountant can still progress with other elements of the opinion, such as qualification as British and qualification as the production company.

What is involved in drafting an opinion letter?

The main thing that most parties are looking for in an opinion letter is the value of the incentive to be obtained. To get to this figure, the accountant will undertake a line-by-line analysis of the total production budget.

While this is the same process as for an incentives estimate, the accountant will typically go a layer deeper in their analysis for an opinion letter, checking key elements of the budget against contracts (e.g., for the producer, executive producer, director and cast fees) to get a greater level of certainty over the veracity of the budget.

In order to opine on the other elements listed above, the accountant will also require copies of, and review, other documents such as your key production contracts, chain of title, rights acquisition agreements, finance plan, distribution contracts and Cultural Test applications.

The request list for an opinion letter is therefore considerably more extensive than for an incentives estimate.

Does it cost more (and take longer) to get an opinion letter than an incentives estimate?

In short – yes.

An incentives estimate, or at least the first draft of one, can normally be turned around in 24-48 hours.

Opinion letters tend to take 5-10 working days to prepare and be ready for distribution to the financier and production company. This timeframe starts from the date the last piece of information is provided to your accountant, so it’s a good idea to have the necessary documents ready to go when you make your request.

The interlinked nature of all the elements being opined on means that while your accountant can get started, final opinions cannot be determined until all elements of the production have been appropriately reviewed.

Given the level of risk involved for an accountant, opinion letters are reviewed in great detail at a very senior level; therefore, this time also needs to be factored into the turnaround.

For the same reasons, an opinion letter is significantly more expensive than an incentives estimate. Ultimately, opinion letters require more work and therefore provide greater security than an incentives estimate, so the fee is commensurately higher.

What happens if there are changes to the budget, finance plan or production after an opinion letter is issued?

An opinion letter is based on the set of facts, documents and representations made at the time it is issued. If there are changes to those after the fact, the impact of those changes on the opinion is outside the accountant’s control and limits any redress to the opinion.

That said, if there was a sudden change post-issuance of an opinion letter, most accountants would happily revisit the opinion and reissue it in light of the changed circumstances. This would however be a separate piece of work and would likely be subject to an additional fee if significant re-work is required.

Summary: Incentives estimates versus opinion letters

The table below sets out the key differences between incentives estimates and opinion letters.

Screenshot 2024-09-13 at 09.48.33.png

How can EP help with obtaining an opinion letter?

If you’re still unsure whether an opinion letter or incentives estimate is right for you, please reach out to me, Lloyd Gunton, Director of Creative Sector Tax Reliefs at FLB Accountants (an Entertainment Partners company). We can provide opinion letters and estimates for the UK incentive regime, including the new Independent Film Tax Credit. We work with the major incentive financiers in both the UK and the US and would be happy to assist you with all your incentive needs.

As a UK-based accounting firm with expertise in media and entertainment accounting, tax and tax incentives, finance, and accounting, FLB can also provide structuring and qualification advice for productions that are looking to come to the UK for elements of production (remember: not all of a production needs to take place in the UK to qualify for UK tax relief). This includes assisting you with the Cultural Test and the actual process of accessing and monetising the tax credit in the UK.

Related Content

Film crew on UK independent film tax credit production

UK Independent Film Tax Credit (IFTC) Approved: Key Updates for Producers

10/10/2024
The UK government has passed the new Independent Film Tax Credit (IFTC) into law, providing welcome...
More
Cameramen with professional equipment films two young people

What is an Incentives Estimate and Why Do I Need One?

8/21/2024
Find out how an incentives estimate can help you to lock down your production's finance plan and turn your...
Camera man and production crew on a film set

Curious About Co-productions? What Producers Need to Know.

4/9/2024
Discover the advantages, requirements, and strategies for successful co-productions in the film industry.

What Does the UK's New Independent Film Tax Credit (IFTC) Mean for Productions?

3/7/2024
As the UK government strengthens its support for productions, find out what the latest changes to the...
RTS Film & TV Mini MBA students

Royal Television Society Launches Film & TV Mini MBA with Support from EP’s FLB Accountants

10/3/2024
This first-of-its-kind course is aimed at media professionals who want to broaden their skillset and...
Dark-haired woman operates a steadycam on set

The Producer’s Guide to Unions in the UK Film and TV Industry

10/1/2024
Take a whistlestop tour of the main unions governing the UK film and TV industry so that you can be...

California vs. the World: The Race to Nab Film and TV Productions

8/22/2024
Locales from Atlanta to Tokyo are steadily beefing up their tax relief programs in bids to attract...
UK Phases Out Biometric Residence Documents

More Right to Work Changes as UK Phases Out Biometric Residence Documents

8/8/2024
Find out what UK productions should do to prepare for the expiration of biometric residence permits on...
Topic: Legal
More
Man looking at a computer screen with film editing software

Budgeting Tips and Best Practices for Post-Production and Delivery

8/7/2024
Expert advice about post-production and distribution to help filmmakers manage budgets and keep projects...
Camera man on a film set

How Could the UK’s New Labour Government Impact Employers in the Film & TV Industry?

7/25/2024
Learn about policies proposed under the Labour government's 'New Deal for Working People' that may impact...
Checklist

Indie Producer's Checklist: 6 Steps to Prep Your Production Company for Filming

7/24/2024
Essential tasks every producer must complete to ensure their project is well-organized, legally compliant,...

8 Locations Independent Filmmakers Should Consider for Their Next Project

7/16/2024
Global jurisdictions with enticing incentive packages (and low minimum spend!) every filmmaker should know...

The Filmmaker’s Guide to Equity Financing and Compliance

7/2/2024
Get answers to common questions about equity financing and what corporate compliance responsibilities...

How to Secure Film Financing: An Overview for Independent Producers

6/19/2024
From choosing the right funding source to setting up LLCs and agreements, learn about the financing...
EP News_SQUARE_Breaking Down Barriers-How Leading UK Organisations are Driving Inclusion in Film and TV

Breaking Down Barriers: How Leading UK Organisations are Driving Inclusion in Film and TV

6/17/2024
Notable UK training bodies and industry partners gather to reaffirm their mission to drive change and...
Woman looking at a laptop

20 IR35 Terms Every Production Worker Should Know

5/28/2024
Find out how to apply the UK’s IR35 rules to your film and TV productions with this helpful overview.
Master Series Thumbnail–UK indie film tax credit

Boost Your Budget with the Independent Film Tax Credit

5/9/2024
Learn how to maximize UK incentive dollars with the new IFTC!
Fully Focused-Thumbnail-480

Entertainment Partners and Fully Focused Partner to Support the Future of UK Production

5/7/2024
New partnership aims to foster the next generation of UK production professionals and break down barriers...

Spotlight: Lloyd Gunton, UK Tax Credit Expert

5/7/2024
Meet the creative sector tax expert helping EP clients from indies to major studios maximize incentives...
Cameraman filming outside in a field

HMRC Announces Changes to Claiming UK Creative Sector Tax Incentives

4/26/2024
What productions should know about the increased disclosure requirements under the UK's Audio-Visual...
EP Blog-Bob Clarke-Mama Youth

Celebrating (Almost) 20 Years of MAMA Youth Project

4/17/2024
UK charity’s founder, Bob Clarke, shares how this unique initiative is breaking down barriers to...
Producer and actor standing on a film set

How to Prepare for an Audit: Tips for UK Productions

4/16/2024
Discover key strategies UK film and TV production companies can use to effectively prepare for an audit.
Topic: UK
More
National Film and Television School

Entertainment Partners To Provide Funding For Future Assistant Directors And Floor Managers

3/28/2024
Two new scholarship opportunities are now available for those looking to train in the field of assistant...
Four panelists discuss co-production-square

Unlocking the Myths and Benefits of Co-Production

2/15/2024
Learn the difference between an official co-production and PSA, and how to leverage these opportunities to...
EP Newsroom-Thumbnail-PGGB

Million Youth Media Wins The Duke of Edinburgh Film & TV Inclusion Award 2024 at PGGB Talent Showcase

2/14/2024
The Duke of Edinburgh Film & TV Inclusion Award presented to Million Youth Media, an organisation offering...
Blue square with white letters and UK flag: Changes to UK Paternity Leave Regulations

Changes to UK Paternity Leave Regulations

1/19/2024
Effective March 8th, modified paternity leave to provide more flexibility for UK fathers.
Topic: Alerts
More
Big Ben, London

5 Things to Consider Before Transitioning to the UK’s New AVEC Regime

1/16/2024
A comprehensive overview to help determine if you should use the UK’s new incentive regime to fund your...

Payroll & Finances

PayrollResidualsSmartStartSmartTimeProduction PortalEP On LocationSmartAccountingEP LiveSmartPOCASHétPayPaymaster Rate GuideEP ResidencyMoneypenny

Manage Multiple Productions

AssetHubSmartHub

Additional Services

Academy
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2024 Entertainment Partners. All rights reserved.