Finance (No. 2) Bill

Session 2012 - 13
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Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 17 — Television and video games tax relief: consequential amendments
302

      (3)
At the appropriate place insert—

“the company (in
section 1217E(1)”;

Chapter 5 of Part 15B)

“company tax return (in
section 1217AF”;

Part 15B)

5

“the completion period
section 1217E(1)”;

(in Chapter 5 of Part 15B)

“core expenditure (in
section 1217AD”;

Part 15B)

“costs of the video game
section 1217BC”;

10

(in Chapter 2 of Part 15B)

“final certificate (in
section 1217CC”;

Chapter 5 of Part 15B)

“income from the video
section 1217BB”;

game (in Chapter 2 of

15

Part 15B)

“interim accounting
section 1217E(1)”;

period (in Chapter 5 of

Part 15B)

“interim certificate (in
section 1217CC”;

20

Chapter 5 of Part 15B)

“qualifying expenditure
section 1217CF(3)”;

(in Chapter 3 of Part 15B)

“the separate video game
section 1217B(3)”;

trade (in Chapters 2, 3

25

and 5 of Part 15B)

“special video games
section 1217E(1)”;

relief (in Chapter 5 of

Part 15B)

“UK expenditure (in Part
section 1217AE”;

30

15B)

“video game (in Part 15B)
section 1217AA”;

“video games
section 1217AC”;

development activities

(in Part 15B)

35

“video games
section 1217AB”;

development company

(in Part 15B)

“video games tax relief
section 1217C(2)”.

(in Part 15B)

40

Finance (No. 2) Bill
Schedule 17 — Television and video games tax relief: consequential amendments
303

FA 2009
16
In Schedule 54A to FA 2009 (further provision as to late payment interest
and repayment interest), in paragraph 2(2), omit the “or” at the end of
paragraph (d) and after paragraph (e) insert—
“(f)
a payment of television tax credit under Chapter 3 of Part
5
15 of CTA 2009 for an accounting period, or
(g)
a payment of video game tax credit under Chapter 3 of Part
15B of CTA 2009 for an accounting period.”
CTA 2010
17
Part 8A of CTA 2010 (profits arising from the exploitation of patents etc) is
10
amended as follows.
18    (1)
Section 357CG (adjustments in calculating profits of trade) is amended as
follows.
      (2)
In subsection (3), omit the “and” at the end of paragraph (a) and after
paragraph (b) insert—
15
“(c)
the amount of any additional deduction for the accounting
period obtained by the company under Part 15A of CTA 2009
in respect of qualifying expenditure on a television
programme, and
(d)
the amount of any additional deduction for the accounting
20
period obtained by the company under Part 15B of CTA 2009
in respect of qualifying expenditure on a video game.”
      (3)
After subsection (5) insert—
“(5A)
In a case where—
(a)
the company is—
25
(i)
a television production company in relation to a
television programme, or
(ii)
a video games development company in relation to a
video game, and
(b)
there is a shortfall in qualifying expenditure in relation to the
30
separate programme trade or (as the case may be) the
separate video game trade for a relevant accounting period
(see section 357CHA),

the amount of qualifying expenditure brought into account in
calculating the profits of the trade for that accounting period is to be
35
increased by the amount mentioned in section 357CHA(2).”
      (4)
In subsection (6)—
(a)
for “subsection (5)” substitute “subsections (5) and (5A)”;
(b)
before the definition of “R&D expenditure” insert—
““qualifying expenditure”—
40
(a)
in relation to a company that is a television
production company, has the same meaning
as in Chapter 3 of Part 15A of CTA 2009, and
(b)
in relation to a company that is a video games
development company, has the same meaning
45
as in Chapter 3 of Part 15B of that Act,”;

Finance (No. 2) Bill
Schedule 17 — Television and video games tax relief: consequential amendments
304

(c)
omit the “and” before the definition of “research and development”;
(d)
after that definition insert—
““the separate programme trade”, in relation to a
television production company, has the same
meaning as in Chapter 2 of Part 15A of CTA 2009 (see
5
section 1216B),
“the separate video game trade”, in relation to a video
games development company, has the same meaning
as in Chapter 2 of Part 15B of CTA 2009 (see section
1217B),
10
“television production company” has the same meaning
as in Part 15A of CTA 2009 (see section 1216AE), and
“video games development company” has the same
meaning as in Part 15B of CTA 2009 (see section
1217AB).”
15
19
After section 357CH insert—
“357CHA
Shortfall in qualifying expenditure
(1)
There is a shortfall in qualifying expenditure in relation to the
separate programme trade of a television production company or (as
the case may be) the separate video game trade of a video games
20
development company for a relevant accounting period if the actual
qualifying expenditure of the trade for the accounting period (as
adjusted under subsections (8) to (11)) is less than 75% of the average
amount of qualifying expenditure.
(2)
The amount that is to be added to the actual qualifying expenditure
25
for the purposes of section 357CG(5A) is an amount equal to the
difference between—
(a)
75% of the average amount of qualifying expenditure, and
(b)
the actual qualifying expenditure, as adjusted under
subsections (8) to (11).
30
(3)
In this section—
(a)
the “actual qualifying expenditure” of a trade of a company
for an accounting period is the amount of qualifying
expenditure that (ignoring section 357CG(5A)) is brought
into account in calculating the profits of the trade for the
35
accounting period, and
(b)
the following terms have the meaning given by section
357CG(6)—
“qualifying expenditure”,
“relevant accounting period”,
40
“the separate programme trade”,
“the separate video game trade”,
“television production company”,
“video games development company”.
(4)
The average amount of qualifying expenditure is—
45

where—

Finance (No. 2) Bill
Schedule 17 — Television and video games tax relief: consequential amendments
305

E is the amount of qualifying expenditure that—
(a)
has been incurred by the company during the
relevant period, and
(b)
has been brought into account in calculating the
profits of the trade for any accounting period ending
5
before the first relevant accounting period, and
N is the number of days in the relevant period.
(5)
The relevant period is the shorter of—
(a)
the period of 4 years ending immediately before the first
relevant accounting period, and
10
(b)
the period beginning with the day on which the company
begins to carry on the trade and ending immediately before
the first relevant accounting period.
(6)
For a relevant accounting period of less than 12 months, the average
amount of qualifying expenditure is proportionately reduced.
15
(7)
Subsections (8) to (11) apply for the purposes of determining—
(a)
whether there is a shortfall in qualifying expenditure for a
relevant accounting period, and
(b)
if there is such a shortfall, the amount to be added by virtue
of subsection (2).
20
(8)
If the amount of the actual qualifying expenditure for a relevant
accounting period is greater than the average amount of qualifying
expenditure, the difference between the two amounts is to be added
to the actual qualifying expenditure for the next relevant accounting
period.
25
(9)
If—
(a)
there is not a shortfall in qualifying expenditure for a relevant
accounting period, but
(b)
in the absence of any additional amount, there would be a
shortfall in qualifying expenditure for that accounting
30
period,

the remaining portion of the additional amount is to be added to the
actual qualifying expenditure for the next relevant accounting
period.
(10)
For the purposes of this section—
35
“additional amount”, in relation to a relevant accounting
period, means any amount added to the actual qualifying
expenditure for that accounting period by virtue of
subsection (8), (9) or (11), and
“the remaining portion” of an additional amount is so much of
40
that amount as exceeds the difference between—
(a)
the actual qualifying expenditure for the relevant
accounting period in the absence of the additional
amount, and
(b)
75% of the average amount of qualifying expenditure.
45
(11)
If—
(a)
there is not a shortfall in qualifying expenditure for a relevant
accounting period, and

Finance (No. 2) Bill
Schedule 17 — Television and video games tax relief: consequential amendments
306

(b)
there would not be a shortfall in qualifying expenditure for
that accounting period in the absence of any additional
amount,

the additional amount is to be added to the actual qualifying
expenditure for the next relevant accounting period (in addition to
5
any additional amount so added by virtue of subsection (8)).”
20    (1)
Section 357CK (deductions that are not routine deductions) is amended as
follows.
      (2)
In subsection (1), at the end insert—
“(e)
subsection (7A) (television production expenditure),
10
(f)
subsection (7B) (video games development expenditure).”
      (3)
After subsection (7) insert—
“(7A)
Head 5 is—
(a)
the amount of any qualifying expenditure on a television
programme for which an additional deduction for the
15
accounting period is obtained by the company under Part
15A of CTA 2009, and
(b)
the amount of that additional deduction.
(7B)
Head 6 is—
(a)
the amount of any qualifying expenditure on a video game
20
for which an additional deduction for the accounting period
is obtained by the company under Part 15B of CTA 2009, and
(b)
the amount of that additional deduction.”
Consequential renumbering
21    (1)
Sections 1217 and 1218 of CTA 2009 are renumbered as follows—
25
(a)
section 1217 becomes section 1218A, and
(b)
section 1218 becomes section 1218B.
      (2)
In the following provisions of CTA 2009, for “section 1218” substitute
“section 1218B”—

section 985(3),
30

section 999(4),

section 1000(3),

section 1013(3), and

section 1021(3).
      (3)
In Schedule 4 to CTA 2009—
35
(a)
in the entry for “company with investment business (in Part 16)”, for
“section 1218(1) and (2)” substitute “section 1218B(1) and (2)”, and
(b)
in the entry for “investment business in a company (in Part 16)”, for
“section 1218(3)” substitute “section 1218B(3)”.
      (4)
In section 18 of CAA 2001, for “section 1218” substitute “section 1218B”.
40
Commencement
22    (1)
The amendments made by this Schedule come into force in accordance with
provision contained in an order made by the Treasury.

Finance (No. 2) Bill
Schedule 18 — Real estate investment trusts: UK REITs which invest in other UK REITs
307

      (2)
An order under sub-paragraph (1)—
(a)
may make different provision for different purposes;
(b)
may make such adaptations of provisions of this Schedule brought
into force as appear to be necessary or expedient in consequence of
other provisions of this Act not yet having come into force.
5
23    (1)
The amendments made by this Schedule have effect in relation to accounting
periods beginning on or after 1 April 2013.
      (2)
For provision about the case where a company has an accounting period
beginning before 1 April 2013 and ending on or after that date, see
paragraph 3(3) of Schedule 15 or (as the case may be) Schedule 16.
10
Schedule 18
Section 38

Real estate investment trusts: UK REITs which invest in other UK REITs
1
Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.
2     (1)
Section 530 (condition as to distribution of profits) is amended as follows.
      (2)
For subsection (1) substitute—
15
“(1)
In the case of a group UK REIT, the condition in this section is met in
relation to an accounting period if—
(a)
so much of the group’s UK profits arising in the period as are
UK REIT investment profits (see section 549A), and
(b)
at least 90% of the rest of the group’s UK profits arising in the
20
period,

are distributed by the principal company of the group on or before
the filing date for the principal company’s tax return for the period
(see paragraph 14 of Schedule 18 to FA 1998).”
      (3)
For subsection (4) substitute—
25
“(4)
In the case of a company UK REIT, the condition in this section is met
in relation to an accounting period if—
(a)
so much of the profits of the company’s property rental
business arising in the period as are UK REIT investment
profits (see section 549A), and
30
(b)
at least 90% of the rest of the profits of the company’s
property rental business arising in the period,

are distributed on or before the filing date for the company’s tax
return for the period (see paragraph 14 of Schedule 18 to FA 1998).
(4A)
For the purposes of subsection (4) profits of the company’s property
35
rental business are to be calculated in accordance with section 599.”
3     (1)
Section 530A (condition as to distribution of profits: increase in profits after
delivery of tax return) is amended as follows.
      (2)
In subsection (2) for “530(1)(c)” substitute “530(1)”.
      (3)
In subsection (6) for “530(4)(b)” substitute “530(4)”.
40

Finance (No. 2) Bill
Schedule 18 — Real estate investment trusts: UK REITs which invest in other UK REITs
308

      (4)
After subsection (9) insert—
“(10)
This section cannot be relied upon to satisfy the requirement of
section 530(1)(a) or (4)(a).”
4     (1)
Section 531 (conditions as to balance of business) is amended as follows.
      (2)
In subsection (5)(b) after “cash” insert “or relevant UK REIT shares”.
5
      (3)
In subsection (6)(b) after “cash” insert “and relevant UK REIT shares”.
      (4)
After subsection (8) insert—
“(9)
In this section “relevant UK REIT shares” means—
(a)
in the case of a group UK REIT, shares held by a member of
the group in the principal company of another group UK
10
REIT or in a company UK REIT, and
(b)
in the case of a company UK REIT, shares held by the
company in the principal company of a group UK REIT or in
another company UK REIT.”
5
In section 548 (distributions: liability to tax) in subsections (1) and (3) after
15
“distribution” insert “(other than one falling within section 549A(5) or (7))”.
6
In section 549 (distributions: supplementary) in subsection (3)(a) and (b)
after “distribution” insert “(other than one falling within section 549A(5) or
(7))”.
7
After section 549 insert—
20
“549A
Distributions from one UK REIT to another UK REIT
(1)
If a company receives a distribution falling within subsection (5) or
(7), the distribution is to be treated as profits of a property rental
business carried on by the company in the United Kingdom.

Such profits are referred to in this Part as “UK REIT investment
25
profits”.
(2)
The property rental business mentioned in subsection (1) is to be
treated as separate from any other property rental business of the
company.
(3)
References to profits of property rental business or UK property
30
rental business are to be read as including UK REIT investment
profits accordingly, including where the profits referred to are
otherwise profits calculated in accordance with international
accounting standards or section 599.
(4)
Section 549(2) and (2A) applies in relation to distributions falling
35
within subsection (5) or (7) as it applies in relation to relevant
distributions.
(5)
A distribution falls within this subsection if—
(a)
it is made by the principal company of a group UK REIT to a
shareholder of the company which is—
40
(i)
a member of another group UK REIT, or
(ii)
a company UK REIT, and