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Session 2013 - 14
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Finance Bill


Finance Bill
Schedule 14 — R&D expenditure credits
Part 2 — Consequential amendments

256

 

Part 2

Consequential amendments

FA 1998

4          

Schedule 18 to FA 1998 (company tax returns, assessments and related

matters) is amended as follows.

5

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)  

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

“(bza)   

R&D expenditure credit under Chapter 6A of Part 3 of the

10

Corporation Tax Act 2009,”.

      (3)  

In sub-paragraph (5)—

(a)   

after paragraph (a) insert—

“(aa)   

an amount of R&D expenditure credit paid to a

company for an accounting period,”;

15

(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

“to—

(a)   

claims for R&D expenditure credits under Chapter 6A of

20

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)  

Accordingly, the heading of the Part becomes “CLAIMS FOR R&D

EXPENDITURE CREDITS OR R&D TAX RELIEF”.

25

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)   

an R&D expenditure credit under Chapter 6A of

Part 3 of CTA 2009,”.

30

CTA 2010

9          

Part 8A of CTA 2010 (profits arising from the exploitation of patents etc) is

amended as follows.

10         

In section 357CG (adjustments in calculating profits of trade), in subsection

(4), after “amounts to be deducted are” insert “—

35

(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

accounting period, and

(b)   

”.

40

 
 

Finance Bill
Schedule 14 — R&D expenditure credits
Part 3 — Abolition of certain relief under Part 13 of CTA 2009

257

 

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)   

after that sub-paragraph insert “, or

5

(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)   

at the beginning of paragraph (b) insert “where the company obtains

10

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         

Part 13 of CTA 2009 (additional relief for expenditure on research and

15

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)   

omit paragraphs (b) and (c).

20

      (3)  

Omit subsection (4).

      (4)  

In subsection (5)—

(a)   

for “Chapters 2 to 5” substitute “Chapter 2”;

(b)   

omit paragraphs (b) and (c).

14         

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

25

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

as follows.

30

      (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

tax).

35

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”.

 
 

Finance Bill
Schedule 14 — R&D expenditure credits
Part 4 — Commencement and transitional provision

258

 

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),”.

Consequential amendments

5

23         

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

entries—

   

“capped R&D expenditure (in Part 13)”,

   

“qualifying Chapter 3 expenditure (in Part 13)”,

   

“qualifying Chapter 4 expenditure (in Part 13)”, and

10

   

“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)  

In section 1173, in Part 1 of the table in subsection (2), omit the entry relating

15

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)  

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

20

      (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

relation to expenditure incurred on or after 1 April 2013.

25

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

amendments made by Part 3 of this Schedule are treated as having effect in

30

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

by the company on or after that day.

35

 
 

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009

259

 

Schedule 15

Section 35

 

Tax relief for television production

Part 1

Amendments of CTA 2009

1          

After Part 15 of CTA 2009 insert—

5

“Part 15A

Television production

Chapter 1

Introduction

Introductory

10

1216A   

Overview of Part

(1)   

This Part is about television production.

(2)   

Sections 1216AA to 1216AJ contain definitions and other provisions

about interpretation that apply for the purposes of this Part.

   

See, in particular—

15

(a)   

section 1216AB, which explains what is meant by a “relevant

programme”, and

(b)   

section 1216AE, which explains how a company comes to be

treated as the television production company in relation to a

relevant programme.

20

(3)   

Chapter 2 is about the taxation of the activities of a television

production company and includes—

(a)   

provision 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

25

that trade.

(4)   

Chapter 3 is about relief (called “television tax relief”) which can be

given 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

30

(b)   

by way of a payment (a “television tax credit”) to be made on

the company’s surrender of losses from that trade.

(5)   

Chapter 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

35

trades.

(6)   

Chapter 5 provides—

(a)   

for relief under Chapters 3 and 4 to be given on a provisional

basis, and

 
 

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009

260

 

(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  

“Television programme”

5

(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)   

consists of moving or still images or of legible text or of a

10

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)   

A television programme is completed when it is first in a form in

15

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)   

A television programme is a “relevant programme” if—

20

(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)   

a drama,

25

(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

(see section 1216AD).

30

(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.

   

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

35

(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)   

This section applies for the purposes of this Part.

(2)   

A programme is a “drama” if—

40

(a)   

it consists wholly or mainly of a depiction of events,

 
 

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009

261

 

(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,

acting, singing or dancing, involves the playing of a role,

5

   

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

completed programme.

10

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)   

subsection (2) (advertisements etc),

15

(b)   

subsection (3) (current affairs etc),

(c)   

subsection (4) (entertainment shows),

(d)   

subsection (5) (competitions),

(e)   

subsection (6) (live performances),

(f)   

subsection (7) (training programmes).

20

(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

show or similar entertainment.

25

(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

performance given otherwise than for the purpose of being filmed.

30

(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

be read in accordance with this section.

35

(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

partnership)—

40

(a)   

is responsible—

(i)   

for pre-production, principal photography and post-

production of the programme, and

 
 

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009

262

 

(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)   

directly negotiates, contracts and pays for rights, goods and

5

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)   

is a co-producer, and

10

(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

activities referred to in that subsection is the television production

15

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)   

A company may elect to be regarded as a company which does not

20

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

included in the return originally made or by amendment),

25

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

commence principal photography in that or any subsequent

30

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-

production, principal photography and post-production of the

35

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)   

The Treasury may by regulations—

40

(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)   

provide that, in relation to a specified description of relevant

45

programme, references to television production activities of a

 
 

 
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