(b) the reference in subsection (2) to qualifying R&D expenditure
allowable as a deduction in calculating the profits of a trade
for an accounting period were a reference to any such
expenditure that would be allowable as such a deduction if
5the company were to calculate its BLAGAB trade profit or
loss for the period.

(3) Any receipt to be brought into account by virtue of this section is to
be treated for the purposes of section 92 of FA 2012 (certain BLAGAB
trading receipts to count as deemed I-E receipts) as if it had been
10taken into account in calculating the company’s BLAGAB trade
profit or loss for the period.

(4) In this section “BLAGAB trade profit” and “BLAGAB trade loss”
have the meaning given by section 136 of FA 2012.

Group companies

104W 15R&D expenditure of group companies

(1) This section applies if—

(a) a company (“A”) incurs expenditure on making a payment to
another company (“B”) in respect of activities contracted out
by A to B,

(b) 20the activities would, if carried out by A, be research and
development of A (taken together with A’s other activities),
and

(c) A and B are members of the same group at the time the
payment is made.

(2) 25If the activities are undertaken by B itself, they are to be treated for
the purposes of this Chapter (so far as it would not otherwise be the
case) as research and development undertaken by B itself.

(3) If B makes a payment to a third party (“C”), any of the activities—

(a) contracted out by B to C, and

(b) 30undertaken by C itself,

are to be treated for the purposes of this Chapter (so far as it would
not otherwise be the case) as research and development contracted
out by B to C.

Anti-avoidance

104X 35Artificially inflated claims for credit

(1) To the extent that a transaction is attributable to arrangements
entered into wholly or mainly for a disqualifying purpose, it is to be
disregarded for the purpose of determining for an accounting period
R&D expenditure credits to which a company is entitled under this
40Chapter.

(2) Arrangements are entered into wholly or mainly for a “disqualifying
purpose” if their main object, or one of their main objects, is to enable
a company to obtain—

(a) an R&D expenditure credit under this Chapter to which it
45would not otherwise be entitled, or

(b) an R&D expenditure credit under this Chapter of a greater
amount than that to which it would otherwise be entitled.

(3) In this section “arrangements” includes any scheme, agreement or
understanding, whether or not legally enforceable.

5Interpretation

104Y Interpretation

(1) In this Chapter the following terms have the same meaning as they
have in Part 13 (additional relief for expenditure on R&D)—

(none) “large company” (see section 1122),

(none) 10“payment period” (see section 1141),

(none) “qualifying body” (see section 1142),

(none) “relevant research and development” (see section 1042),

(none) “research and development” (see section 1041),

(none) “small or medium-sized enterprise” (see section 1119).

(2) 15The following sections apply for the purposes of this Chapter as they
apply for the purposes of Part 13—

(none) sections 1123 and 1124 (staffing costs),

(none) sections 1125 and 1126 (software or consumable items),

(none) sections 1127 to 1132 (qualifying expenditure on externally
20provided workers),

(none) sections 1133 to 1136 (sub-contractor payments),

(none) section 1138 (“subsidised expenditure”),

(none) section 1140 (relevant payments to the subjects of a clinical
trial).

(3) 25For the purposes of this Chapter two companies are members of the
same group if they are members of the same group of companies for
the purposes of Part 5 of CTA 2010 (group relief).”

2 (1) Part 13 of CTA 2009 (additional relief for expenditure on research and
development) is amended as follows.

(2) 30After section 1040 (and before the cross-heading “Interpretation”) insert—

“1040A R&D expenditure credits

(1) For provision enabling a company carrying on a trade to make a
claim for an amount in respect of expenditure on research and
development (an “R&D expenditure credit”) to be brought into
35account as a receipt in calculating the profits of the trade for an
accounting period, see Chapter 6A of Part 3.

(2) For provision prohibiting a company from making a claim for an
R&D expenditure credit and for relief under this Part in respect of the
same expenditure, see section 104B.”

(3) 40In section 1138 (meaning of “subsidised expenditure”), in subsection (3),
omit the “and” at the end of paragraph (a) and after paragraph (b) insert—

“(c) R&D expenditure credits under Chapter 6A of Part 3.”

3 In Schedule 4 to CTA 2009 (index of defined expressions), at the appropriate

place insert—

Part 2 Consequential amendments

FA 1998

4 40Schedule 18 to FA 1998 (company tax returns, assessments and related
matters) is amended as follows.

5 In paragraph 10(2) (other claims and elections to be included in return), after
“first-year tax credits” insert “, R&D expenditure credits”.

6 (1) Paragraph 52 (recovery of excessive repayments etc) is amended as follows.

(2) 45In sub-paragraph (2), after paragraph (b) insert—

“(bza) R&D expenditure credit under Chapter 6A of Part 3 of the
Corporation Tax Act 2009,”.

(3) In sub-paragraph (5)—

(a) after paragraph (a) insert—

“(aa) 50an amount of R&D expenditure credit paid to a
company for an accounting period,”;

(b) after “paragraph (a),” insert “(aa),”.

7 (1) Part 9A (claims for R&D tax relief) is amended as follows.

(2) In paragraph 83A (introduction), for the words after “applies” substitute
55“to—

“(a) claims for R&D expenditure credits under Chapter 6A of
Part 3 of the Corporation Tax Act 2009, and

(b) claims for R&D tax relief under Part 13 of that Act.”

(3) In paragraph 83C (content of claim), before “relief” insert “credit or”.

(4) 60Accordingly, the heading of the Part becomes “CLAIMS FOR R&D
EXPENDITURE CREDITS OR R&D TAX RELIEF”.

FA 2007

8 In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa)
(definition of “corporation tax credit”), after sub-paragraph (i) insert—

“(ia) 65an R&D expenditure credit under Chapter 6A of
Part 3 of CTA 2009,”.

CTA 2010

9 Part 8A of CTA 2010 (profits arising from the exploitation of patents etc) is
amended as follows.

10 70In section 357CG (adjustments in calculating profits of trade), in subsection
(4), after “amounts to be deducted are” insert “—

(a) the amount of any R&D expenditure credits (within the
meaning of Chapter 6A of Part 3 of CTA 2009) brought into
account in calculating the profits of the trade for the
75accounting period, and

(b)”.

11 In section 357CK (deductions that are not routine deductions), in subsection
(3)—

(a) in paragraph (a), the words from “for which” to the end become sub-
paragraph (i);

(b) 5after that sub-paragraph insert “, or

(ii) in respect of which the company is entitled to
an R&D expenditure credit for the accounting
period under Chapter 6A of Part 3 of CTA
2009,”;

(c) 10at the beginning of paragraph (b) insert “where the company obtains
an additional deduction as mentioned in paragraph (a)(i),”.

Part 3 Abolition of certain relief under Part 13 of CTA 2009

Amendments of Part 13 of CTA 2009

12 15Part 13 of CTA 2009 (additional relief for expenditure on research and
development) is amended as follows.

13 (1) Section 1039 (overview of Part) is amended as follows.

(2) In subsection (3)—

(a) for “Chapters 2 to 4” substitute “Chapter 2”;

(b) 20omit paragraphs (b) and (c).

(3) Omit subsection (4).

(4) In subsection (5)—

(a) for “Chapters 2 to 5” substitute “Chapter 2”;

(b) omit paragraphs (b) and (c).

14 25Omit Chapter 3 (relief for SMEs: R&D sub-contracted to SME).

15 Omit Chapter 4 (relief for SMEs: subsidised and capped expenditure on
R&D).

16 Omit Chapter 5 (relief for large companies).

17 (1) Section 1081 (insurance companies treated as large companies) is amended
30as follows.

(2) In subsection (2), for “Chapters 2 to 5” substitute “Chapter 2”.

(3) Omit subsection (3).

18 Omit section 1082 (R&D expenditure of group companies).

19 Omit section 1083 (refunds of expenditure treated as income chargeable to
35tax).

20 (1) Section 1084 (artificially inflated claims for relief or tax credit) is amended as
follows.

(2) In subsection (2)(a), for “Chapters 2 to 5” substitute “Chapter 2”.

(3) In subsection (3)(a) and (b), for “Chapters 2 to 5” substitute “Chapter 2”.

21 In section 1119 (meaning of “small or medium-sized enterprise”), in
subsection (3), for “Chapters 2 to 5” substitute “Chapter 2”.

22 In section 1133 (meaning of “sub-contractor” etc), in subsection (3), omit
“section 1072(1)(a),”.

5Consequential amendments

23 In Schedule 4 to CTA 2009 (index of defined expressions), omit the following
entries—

(none) “capped R&D expenditure (in Part 13)”,

(none) “qualifying Chapter 3 expenditure (in Part 13)”,

(none) 10“qualifying Chapter 4 expenditure (in Part 13)”, and

(none) “qualifying Chapter 5 expenditure (in Part 13)”.

24 (1) CTA 2010 is amended as follows.

(2) In section 312 (ring fence expenditure supplement: qualifying pre-
commencement expenditure), omit subsections (8) and (9).

(3) 15In section 1173, in Part 1 of the table in subsection (2), omit the entry relating
to section 1083(5) of CTA 2009.

(4) In Schedule 1, omit paragraph 671.

25 In section 13 of F(No.3)A 2010, omit subsections (4) and (5).

26 (1) FA 2012 is amended as follows.

(2) 20In section 78(3), omit the entry relating to section 1080(2) of CTA 2009.

(3) In Schedule 16, omit paragraph 190.

Part 4 Commencement and transitional provision

27 The amendments made by Parts 1 and 2 of this Schedule have effect in
25relation to expenditure incurred on or after 1 April 2013.

28 Subject to paragraph 29, the amendments made by Part 3 of this Schedule
have effect in relation to expenditure incurred on or after 1 April 2016.

29 (1) If a company claims an R&D expenditure credit under section 104A of CTA
2009 for an accounting period beginning before 1 April 2016, the
30amendments made by Part 3 of this Schedule are treated as having effect in
relation to expenditure incurred by the company on or after the first day of
that accounting period.

(2) But in a case where the accounting period includes 1 April 2013, those
amendments are treated as having effect in relation to expenditure incurred
35by the company on or after that day.

Section 35

SCHEDULE 15 Tax relief for television production

Part 1 Amendments of CTA 2009

1 5After Part 15 of CTA 2009 insert—

“CHAPTER 1 Introduction

Introductory

1216A Overview of Part

(1) This Part is about television production.

(2) 10Sections 1216AA to 1216AJ contain definitions and other provisions
about interpretation that apply for the purposes of this Part.

See, in particular—

(a) section 1216AB, which explains what is meant by a “relevant
programme”, and

(b) 15section 1216AE, which explains how a company comes to be
treated as the television production company in relation to a
relevant programme.

(3) Chapter 2 is about the taxation of the activities of a television
production company and includes—

(a) 20provision for the company’s activities in relation to its
relevant programme to be treated as a separate trade, and

(b) provision about the calculation of the profits and losses of
that trade.

(4) Chapter 3 is about relief (called “television tax relief”) which can be
25given to a television production company—

(a) by way of additional deductions to be made in calculating the
profits or losses of the company’s separate trade, or

(b) by way of a payment (a “television tax credit”) to be made on
the company’s surrender of losses from that trade.

(5) 30Chapter 4 is about the relief which can be given for losses made by a
television production company in its separate trade, including
provision for certain such losses to be transferred to other separate
trades.

(6) Chapter 5 provides—

(a) 35for relief under Chapters 3 and 4 to be given on a provisional
basis, and

(b) for such relief to be withdrawn if it turns out that conditions
that must be met for such relief to be given are not actually
met.

Meaning of “television programme”, “relevant programme” etc

1216AA 5 “Television programme”

(1) This section applies for the purposes of this Part.

(2) “Television programme” means any programme (with or without
sounds) which—

(a) is produced to be seen on television, and

(b) 10consists of moving or still images or of legible text or of a
combination of those things.

(3) In subsection (2) “television” includes the internet.

(4) Any television programmes that are commissioned together under
the same agreement are treated as a single television programme.

(5) 15A television programme is completed when it is first in a form in
which it can reasonably be regarded as ready for broadcast to the
general public.

1216AB “Relevant programme”

(1) This section applies for the purposes of this Part.

(2) 20A television programme is a “relevant programme” if—

(a) conditions A and B are met, and

(b) in the case of a television programme that is not animation,
conditions C and D are met.

(3) Condition A is that the programme is—

(a) 25a drama,

(b) a documentary, or

(c) animation.

For further provision about these terms, see section 1216AC.

(4) Condition B is that the programme is not an excluded programme
30(see section 1216AD).

(5) Condition C is that the slot length in relation to the programme is
greater than 30 minutes.

(6) Condition D is that the average core expenditure per hour of slot
length in relation to the programme is not less than £1 million.

35For the meaning of “core expenditure”, see section 1216AG.

For the meaning of “core expenditure”, see section 1216AG.

(7) “Slot length”, in relation to a television programme, means the
period of time which the programme is commissioned to fill.

1216AC Types of programme eligible to be relevant programmes

(1) 40This section applies for the purposes of this Part.

(2) A programme is a “drama” if—

(a) it consists wholly or mainly of a depiction of events,

(b) the events are depicted (wholly or mainly) by one or more
persons performing, and

(c) the whole or a major proportion of what is done by the
person or persons performing, whether by way of speech,
5acting, singing or dancing, involves the playing of a role,

and for these purposes “drama” includes comedy.

(3) A drama or documentary that includes animation is to be treated as
animation if the core expenditure on the completed animation
constitutes at least 51% of the total core expenditure on the
10completed programme.

1216AD Excluded programmes

(1) For the purposes of this Part a television programme is an excluded
programme if it falls within any of the Heads set out in the following
subsections—

(a) 15subsection (2) (advertisements etc),

(b) subsection (3) (current affairs etc),

(c) subsection (4) (entertainment shows),

(d) subsection (5) (competitions),

(e) subsection (6) (live performances),

(f) 20subsection (7) (training programmes).

(2) Head 1 is any advertisement or other promotional programme.

(3) Head 2 is any news or current affairs programme or discussion
programme.

(4) Head 3 is any quiz show, game show, panel show, variety show, chat
25show or similar entertainment.

(5) Head 4 is any programme consisting of or including—

(a) a competition or contest, or

(b) the results of a competition or contest.

(6) Head 5 is any broadcast of a live event or of a theatrical or artistic
30performance given otherwise than for the purpose of being filmed.

(7) Head 6 is any programme produced for training purposes.

Other interpretation

1216AE Television production company

(1) For the purposes of this Part “television production company” is to
35be read in accordance with this section.

(2) There cannot be more than one television production company in
relation to a relevant programme.

(3) A company is the television production company in relation to a
relevant programme if the company (otherwise than in
40partnership)—

(a) is responsible—

(i) for pre-production, principal photography and post-
production of the programme, and

(ii) for delivery of the programme,

(b) is actively engaged in production planning and decision-
making during pre-production, principal photography and
post-production, and

(c) 5directly negotiates, contracts and pays for rights, goods and
services in relation to the programme.

(4) A company is the television production company in relation to a
relevant programme that is a qualifying co-production if the
company (otherwise than in partnership)—

(a) 10is a co-producer, and

(b) makes an effective creative, technical and artistic
contribution to the programme.

(5) If there is more than one company meeting the description in
subsection (3) or (4), the company that is most directly engaged in the
15activities referred to in that subsection is the television production
company in relation to the relevant programme.

(6) If there is no company meeting the description in subsection (3) or
(4), there is no television production company in relation to the
relevant programme.

(7) 20A company may elect to be regarded as a company which does not
meet the description in subsection (3) or (4).

(8) The election—

(a) must be made by the company by being included in its
company tax return for an accounting period (and may be
25included in the return originally made or by amendment),
and

(b) may be withdrawn by the company only by amending its
company tax return for that accounting period.

(9) The election has effect in relation to relevant programmes which
30commence principal photography in that or any subsequent
accounting period.

1216AF “Television production activities” etc

(1) In this Part “television production activities”, in relation to a relevant
programme, means the activities involved in development, pre-
35production, principal photography and post-production of the
programme.

(2) If all or any of the images in a relevant programme are generated by
computer, references in this Part to principal photography are to be
read as references to, or as including, the generation of those images.

(3) 40The Treasury may by regulations—

(a) amend subsections (1) and (2),

(b) provide that specified activities are or are not to be regarded
as television production activities or as television production
activities of a particular description, and

(c) 45provide that, in relation to a specified description of relevant
programme, references to television production activities of a

particular description are to be read as references to such
activities as may be specified.

“Specified” means specified in the regulations.

1216AG “Production expenditure” and “core expenditure”

(1) 5This section applies for the purposes of this Part.

(2) “Production expenditure”, in relation to a relevant programme,
means expenditure on television production activities in connection
with the programme.

(3) “Core expenditure”, in relation to a relevant programme, means
10production expenditure on pre-production, principal photography
and post-production of the programme.

1216AH “UK expenditure” etc

(1) In this Part “UK expenditure”, in relation to a relevant programme,
means expenditure on goods or services that are used or consumed
15in the United Kingdom.

(2) Any apportionment of expenditure as between UK expenditure and
non-UK expenditure for the purposes of this Part is to be made on a
just and reasonable basis.

(3) The Treasury may by regulations amend subsection (1).

1216AI 20 “Qualifying co-production” and “co-producer”

In this Part—

(a) “qualifying co-production” means a relevant programme
that is eligible to be certified as a British programme under
section 1216CB as a result of an agreement between Her
25Majesty’s Government in the United Kingdom and any other
government, international organisation or authority, and

(b) “co-producer” means a person who is a co-producer for the
purposes of the agreement mentioned in paragraph (a).

1216AJ “Company tax return”

30In this Part “company tax return” has the same meaning as in
Schedule 18 to FA 1998 (see paragraph 3(1)).

CHAPTER 2 Taxation of activities of television production company

Separate programme trade

1216B Activities of television production company treated as a separate trade

(1) 35This Chapter applies for corporation tax purposes to a company that
is the television production company in relation to a relevant
programme.

(2) The company’s activities in relation to the programme are treated as
a trade separate from any other activities of the company (including
40any activities in relation to any other television programme).