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Finance (No. 2) BillPage 260

(3) In this Chapter the separate trade is called “the separate programme
trade”.

(4) The company is treated as beginning to carry on the separate
programme trade—

(a) 5when pre-production begins, or

(b) if earlier, when any income from the relevant programme is
received by the company.

1216BA Calculation of profits or losses of separate programme trade

(1) This section applies for the purpose of calculating the profits or
10losses of the separate programme trade.

(2) For the first period of account the following are brought into
account—

(a) as a debit, the costs of the relevant programme incurred (and
represented in work done) to date, and

(b) 15as a credit, the proportion of the estimated total income from
the relevant programme treated as earned at the end of that
period.

(3) For subsequent periods of account the following are brought into
account—

(a) 20as a debit, the difference between the amount of the costs of
the relevant programme incurred (and represented in work
done) to date and the corresponding amount for the previous
period, and

(b) as a credit, the difference between the proportion of the
25estimated total income from the relevant programme treated
as earned at the end of that period and the corresponding
amount for the previous period.

(4) The proportion of the estimated total income treated as earned at the
end of a period of account is given by—


30

where—

  • C is the total to date of costs incurred (and represented in work
    done),

  • T is the estimated total cost of the relevant programme, and

  • 35I is the estimated total income from the relevant programme.

Supplementary
1216BB Income from the relevant programme

(1) References in this Chapter to income from the relevant programme
are to any receipts by the company in connection with the making or
40exploitation of the programme.

(2) This includes—

(a) receipts from the sale of the programme or rights in it,

(b) royalties or other payments for use of the programme or
aspects of it (for example, characters or music),

Finance (No. 2) BillPage 261

(c) payments for rights to produce games or other merchandise,
and

(d) receipts by the company by way of a profit share agreement.

(3) Receipts that (apart from this subsection) would be regarded as of a
5capital nature are treated as being of a revenue nature.

1216BC Costs of the relevant programme

(1) References in this Chapter to the costs of the relevant programme are
to expenditure incurred by the company on—

(a) television production activities in connection with the
10programme, or

(b) activities with a view to exploiting the programme.

(2) This is subject to any provision of the Corporation Tax Acts
prohibiting the making of a deduction, or restricting the extent to
which a deduction is allowed, in calculating the profits of a trade.

(3) 15Expenditure that (apart from this subsection) would be regarded as
of a capital nature by reason only of being incurred on the creation of
an asset (the relevant programme) is treated as being of a revenue
nature.

1216BD When costs are taken to be incurred

(1) 20For the purposes of this Chapter costs are incurred when they are
represented in the state of completion of the work in progress.

(2) Accordingly—

(a) payments in advance for work to be done are ignored until
the work has been carried out, and

(b) 25deferred payments are recognised to the extent that the work
is represented in the state of completion.

(3) The costs incurred on the relevant programme are taken to include
an amount that has not been paid only if it is the subject of an
unconditional obligation to pay.

(4) 30If an obligation is linked to income being earned from the relevant
programme, no amount is to be brought into account in respect of the
costs of the obligation unless an appropriate amount of income is or
has been brought into account.

1216BE Pre-trading expenditure

(1) 35This section applies if, before the company began to carry on the
separate programme trade, it incurred expenditure on development
of the relevant programme.

(2) The expenditure may be treated as expenditure of the separate
programme trade and as if incurred immediately after the company
40began to carry on that trade.

(3) If expenditure so treated has previously been taken into account for
other tax purposes, the company must amend any relevant company
tax return accordingly.

Finance (No. 2) BillPage 262

(4) Any amendment or assessment necessary to give effect to subsection
(3) may be made despite any limitation on the time within which an
amendment or assessment may normally be made.

1216BF Estimates

5Estimates for the purposes of this Chapter must be made as at the
balance sheet date for each period of account, on a just and
reasonable basis taking into consideration all relevant circumstances.

CHAPTER 3 Television tax relief

Introductory
1216C 10 Availability and overview of television tax relief

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

(2) Relief under this Chapter (“television tax relief”) is available to the
15company if the conditions specified in the following sections are met
in relation to the programme—

(a) section 1216CA (intended for broadcast),

(b) section 1216CB (British programme), and

(c) section 1216CE (UK expenditure).

(3) 20Television tax relief is given by way of—

(a) additional deductions (see sections 1216CF and 1216CG), and

(b) television tax credits (see sections 1216CH to 1216CJ).

(4) But television tax relief is not available in respect of any expenditure
if—

(a) 25the company is entitled to an R&D expenditure credit under
Chapter 6A of Part 3 in respect of the expenditure, or

(b) the company has obtained relief under Part 13 (additional
relief for expenditure on research and development) in
respect of the expenditure.

(5) 30Sections 1216CK to 1216CN contain provision about unpaid costs,
artificially inflated claims and confidentiality of information.

(6) In this Chapter “the separate programme trade” means the
company’s separate trade in relation to the relevant programme (see
section 1216B).

(7) 35See Schedule 18 to FA 1998 (in particular, Part 9D) for information
about the procedure for making claims for television tax relief.

Finance (No. 2) BillPage 263

“Intended for broadcast”
1216CA Intended for broadcast

(1) The relevant programme must be intended for broadcast to the
general public.

(2) 5Whether this condition is met is determined when television
production activities begin, so that—

(a) where a relevant programme is originally intended for
broadcast, this condition continues to be met even if that
ceases to be the intention, and

(b) 10where a relevant programme is not originally intended for
broadcast, this condition is not met even if that becomes the
intention.

British programmes
1216CB British programme

(1) 15The relevant programme must be certified by the Secretary of State
as a British programme.

(2) The Secretary of State, with the approval of the Treasury, may by
regulations specify conditions which must be met by a relevant
programme before it may be certified as a British programme.

20These conditions are known as the “cultural test”.

These conditions are known as the “cultural test”.

(3) Regulations under subsection (2) may—

(a) specify different conditions in relation to different
descriptions of relevant programme,

(b) 25provide that specified descriptions of programme may not be
certified as a British programme, and

(c) enable the Secretary of State to direct that any provision
made by virtue of paragraph (b) does not apply to a
programme that meets specified conditions.

30“Specified” means specified in the regulations.

(4) Regulations under subsection (2) are to be made by statutory
instrument.

(5) A statutory instrument containing regulations under subsection (2)
is subject to annulment in pursuance of a resolution of the House of
35Commons.

(6) Sections 1216CC and 1216CD contain further provision about
certification of programmes as British programmes, including
provision about applications for, and withdrawal of, certification.

1216CC Applications for certification

(1) 40An application for certification of a relevant programme as a British
programme is to be made to the Secretary of State by the television
production company.

(2) The application may be for an interim or final certificate.

(3) An interim certificate is a certificate that—

Finance (No. 2) BillPage 264

(a) is granted before the programme is completed, and

(b) states that the programme, if completed in accordance with
the proposals set out in the application, will be a British
programme.

(4) 5A final certificate is a certificate that—

(a) is granted after the programme is completed, and

(b) states that the programme is a British programme.

(5) The applicant must provide the Secretary of State with any
documents or information which the Secretary of State requires in
10order to determine the application.

(6) The Secretary of State may require information provided for the
purposes of the application to be accompanied by a statutory
declaration, made by the person providing it, as to the truth of the
information.

(7) 15The Secretary of State may by regulations make provision
supplementing this section, including—

(a) provision about the form of applications,

(b) provision about the particulars and evidence necessary for
satisfying the Secretary of State that a programme meets the
20cultural test, and

(c) provision that any statutory declaration which is required by
subsection (6) to be made by any person may be made on the
person’s behalf by such person as is specified in the
regulations.

(8) 25Regulations under subsection (7) are to be made by statutory
instrument.

(9) A statutory instrument containing regulations under subsection (7)
is subject to annulment in pursuance of a resolution of the House of
Commons.

1216CD 30 Certification and withdrawal of certification

(1) If the Secretary of State is satisfied that the requirements are met for
interim or final certification of a relevant programme as a British
programme, the Secretary of State must certify the programme
accordingly.

(2) 35If the Secretary of State is not satisfied that those requirements are
met, the Secretary of State must refuse the application.

(3) An interim certificate—

(a) may be given subject to conditions, and (unless the Secretary
of State directs otherwise) is of no effect if the conditions are
40not met, and

(b) may be expressed to expire after a specified period, and
(unless the Secretary of State directs otherwise) ceases to have
effect at the end of that period.

(4) An interim certificate ceases to have effect when a final certificate is
45issued.

Finance (No. 2) BillPage 265

(5) If it appears to the Secretary of State that a relevant programme
certified under this Part ought not to have been certified, the
Secretary of State may revoke its certification.

(6) Unless the Secretary of State directs otherwise, a certificate that is
5revoked is treated as never having had effect.

UK expenditure
1216CE UK expenditure

(1) At least 25% of the core expenditure on the relevant programme
incurred—

(a) 10in the case of a British programme that is not a qualifying co-
production, by the company, and

(b) in the case of a qualifying co-production, by the co-
producers,

must be UK expenditure.

(2) 15The Treasury may by regulations amend the percentage specified in
subsection (1).

Additional deductions
1216CF Additional deduction for qualifying expenditure

(1) If television tax relief is available to the company, it may (on making
20a claim) make an additional deduction in respect of qualifying
expenditure on the relevant programme.

(2) The deduction is made in calculating the profit or loss of the separate
programme trade.

(3) In this Chapter “qualifying expenditure” means core expenditure on
25the relevant programme that falls to be taken into account under
Chapter 2 in calculating the profit or loss of the separate programme
trade for tax purposes.

(4) The Treasury may by regulations—

(a) amend subsection (3), and

(b) 30provide that expenditure of a specified description is or is not
to be regarded as qualifying expenditure.

1216CG Amount of additional deduction

(1) For the first period of account during which the separate programme
trade is carried on, the amount of the additional deduction is—


35

E

where E is—

(a) so much of the qualifying expenditure as is UK expenditure,
or

(b) if less, 80% of the total amount of qualifying expenditure.

(2) 40For any period of account after the first, the amount of the additional
deduction is given by—


E − P

where—

  • E is—

    (a)

    45so much of the qualifying expenditure incurred to
    date as is UK expenditure, or

    (b)

    if less, 80% of the total amount of qualifying
    expenditure incurred to date, and

  • P is the total amount of the additional deductions given for
    50previous periods.

Finance (No. 2) BillPage 266

(3) The Treasury may by regulations amend this section.

Television tax credits
1216CH Television tax credit claimable if company has surrenderable loss

(1) If television tax relief is available to the company, it may claim a
5television tax credit for an accounting period in which it has a
surrenderable loss.

(2) The company’s surrenderable loss in an accounting period is—

(a) the company’s available loss for the period in the separate
programme trade (see subsection (3)), or

(b) 10if less, the available qualifying expenditure for the period (see
subsections (5) and (6)).

(3) The company’s available loss for an accounting period is given by—


L + RUL

where—

  • 15L is the amount of the company’s loss for the period in the
    separate programme trade, and

  • RUL is the amount of any relevant unused loss of the company
    (see subsection (4)).

(4) The “relevant unused loss” of a company is so much of any available
20loss of the company for the previous accounting period as has not
been—

(a) surrendered under section 1216CI(1), or

(b) carried forward under section 45 of CTA 2010 and set against
profits of the separate programme trade.

(5) 25For the first period of account during which the separate programme
trade is carried on, the available qualifying expenditure is the
amount that is E for that period for the purposes of section
1216CG(1).

(6) For any period of account after the first, the available qualifying
30expenditure is given by—


E − S

where—

  • E is the amount that is E for that period for the purposes of
    section 1216CG(2), and

  • 35S is the total amount previously surrendered under section
    1216CI(1).

Finance (No. 2) BillPage 267

(7) If a period of account of the separate programme trade does not
coincide with an accounting period, any necessary apportionments
are to be made by reference to the number of days in the periods
concerned.

1216CI 5 Surrendering of loss and amount of television tax credit

(1) The company may surrender the whole or part of its surrenderable
loss in an accounting period.

(2) If the company surrenders the whole or part of that loss, the amount
of the television tax credit to which it is entitled for the accounting
10period is 25% of the amount of the loss surrendered.

(3) The company’s available loss for the accounting period is reduced by
the amount surrendered.

1216CJ Payment in respect of television tax credit

(1) If the company—

(a) 15is entitled to a television tax credit for a period, and

(b) makes a claim,

the Commissioners for Her Majesty’s Revenue and Customs (“the
Commissioners”) must pay to the company the amount of the credit.

(2) An amount payable in respect of—

(a) 20a television tax credit, or

(b) interest on a television tax credit under section 826 of ICTA,

may be applied in discharging any liability of the company to pay
corporation tax.

To the extent that it is so applied the Commissioners’ liability under
25subsection (1) is discharged.

To the extent that it is so applied the Commissioners’ liability under
subsection (1) is discharged.

(3) If the company’s company tax return for the accounting period is
enquired into by the Commissioners, no payment in respect of a
30television tax credit for that period need be made before the
Commissioners’  enquiries are completed (see paragraph 32 of
Schedule 18 to FA 1998).

In those circumstances the Commissioners may make a payment on
a provisional basis of such amount as they consider appropriate.

35In those circumstances the Commissioners may make a payment on
a provisional basis of such amount as they consider appropriate.

(4) No payment need be made in respect of a television tax credit for an
accounting period before the company has paid to the
Commissioners any amount that it is required to pay for payment
40periods ending in that accounting period—

(a) under PAYE regulations,

(b) under section 966 of ITA 2007 (visiting performers), or

(c) in respect of Class 1 national insurance contributions under
Part 1 of the Social Security Contributions and Benefits Act
451992 or Part 1 of the Social Security Contributions and
Benefits (Northern Ireland) Act 1992.

(5) A payment in respect of a television tax credit is not income of the
company for any tax purpose.

Finance (No. 2) BillPage 268

Miscellaneous
1216CK No account to be taken of amount if unpaid

(1) In determining for the purposes of this Chapter the amount of costs
incurred on a relevant programme at the end of a period of account,
5ignore any amount that has not been paid 4 months after the end of
that period.

(2) This is without prejudice to the operation of section 1216BD (when
costs are taken to be incurred).

1216CL Artificially inflated claims for additional deduction or tax credit

(1) 10So far as a transaction is attributable to arrangements entered into
wholly or mainly for a disqualifying purpose, it is to be ignored in
determining for any period—

(a) any additional deduction which a company may make under
this Chapter, and

(b) 15any television tax credit to be given to a company.

(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 additional deduction under this Chapter to which it
20would not otherwise be entitled or of a greater amount than
that to which it would otherwise be entitled, or

(b) a television tax credit to which it would not otherwise be
entitled or of a greater amount than that to which it would
otherwise be entitled.

(3) 25“Arrangements” includes any scheme, agreement or understanding,
whether or not legally enforceable.

1216CM Confidentiality of information

(1) Section 18(1) of the Commissioners for Revenue and Customs Act
2005 (restriction on disclosure by Revenue and Customs officials)
30does not prevent disclosure to the Secretary of State for the purposes
of the Secretary of State’s functions under any of the provisions listed
in subsection (2).

(2) The provisions referred to in subsection (1) are—

(a) sections 1216CB to 1216CD (certification of relevant
35programmes as British),

(b) sections 1217CB to 1217CD (certification of video games as
British), and

(c) Schedule 1 to the Films Act 1985 (certification of films as
British).

(3) 40Information so disclosed may be disclosed to the British Film
Institute.

(4) The Treasury may by order amend subsection (3)—

(a) so as to substitute for the person or body specified in that
subsection a different person or body, or

(b) 45in consequence of a change in the name of the person or body
so specified.

Finance (No. 2) BillPage 269

(5) A person to whom information is disclosed under subsection (1) or
(3) may not otherwise disclose it except—

(a) for the purposes of the Secretary of State’s functions under
any of the provisions listed in subsection (2),

(b) 5if the disclosure is authorised by an enactment,

(c) in pursuance of an order of a court,

(d) for the purposes of a criminal investigation or legal
proceedings (whether civil or criminal) connected with the
operation of any of Parts 15 to 15B of this Act or Schedule 1 to
10the Films Act 1985,

(e) with the consent of the Commissioners for Her Majesty’s
Revenue and Customs, or

(f) with the consent of each person to whom the information
relates.

1216CN 15 Wrongful disclosure

(1) A person (“X”) commits an offence if—

(a) X discloses revenue and customs information relating to a
person (as defined in section 19(2) of the Commissioners for
Revenue and Customs Act 2005),

(b) 20the identity of the person to whom the information relates is
specified in the disclosure or can be deduced from it, and

(c) the disclosure contravenes section 1216CM(5).

(2) If a person (“Y”) is charged with an offence under subsection (1), it is
a defence for Y to prove that Y reasonably believed—

(a) 25that the disclosure was lawful, or

(b) that the information had already and lawfully been made
available to the public.

(3) A person guilty of an offence under subsection (1) is liable—

(a) on conviction on indictment, to imprisonment for a term not
30exceeding two years or a fine or both, or

(b) on summary conviction, to imprisonment for a term not
exceeding 12 months or a fine not exceeding the statutory
maximum or both.

(4) A prosecution for an offence under subsection (1) may be brought in
35England and Wales only—

(a) by the Director of Revenue and Customs Prosecutions, or

(b) with the consent of the Director of Public Prosecutions.

(5) A prosecution for an offence under subsection (1) may be brought in
Northern Ireland only—

(a) 40by the Commissioners for Her Majesty’s Revenue and
Customs, or

(b) with the consent of the Director of Public Prosecutions for
Northern Ireland.

(6) In the application of this section—

(a) 45in England and Wales, in relation to an offence committed
before the commencement of section 282 of the Criminal
Justice Act 2003, or

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