The Revenue Commissioners have written to investors in the Merlin Premiere Film Fund informing them tax relief may be withdrawn because some of the fund's monies may have been invested in a Philippines-based company.

The Revenue's anti-avoidance unit has told investors that submissions on the issue will be accepted until May 24th.

According to a letter sent to investors, money has been invested with Galway-based company Concorde Anois Teo.

The letter says some of this money was transferred to Transpacific Corporation, based in the Philippines.

However, the Revenue point out that to claim 80 per cent tax relief under section 481, money must be spent on the employment of Irish personnel and on the purchase of Irish goods and services. Their letter says: "As a consequence, I am not satisfied that the conditions detailed above were met."

Last night Mr Kieran Corrigan, a leading tax adviser and chief executive of Merlin, said the issue was before the Circuit Court.

He said it was normal in the film business to bring in services from abroad. He said he believed investors in the project would not end up being disadvantaged.

He said accounts for all film projects associated with Merlin were audited and signed off by an accountancy practice.

"I am convinced our project complies with all technical requirements under the legislation."