Finance Bill

Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
263

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)
This section applies for the purposes of this Part.
5
(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
production expenditure on pre-production, principal photography
10
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
in the United Kingdom.
15
(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
“Qualifying co-production” and “co-producer”
20

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
Majesty’s Government in the United Kingdom and any other
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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”

In this Part “company tax return” has the same meaning as in
30
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
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(1)
This 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
40
any activities in relation to any other television programme).

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
264

(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)
when pre-production begins, or
5
(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
losses of the separate programme trade.
10
(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)
as a credit, the proportion of the estimated total income from
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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)
as a debit, the difference between the amount of the costs of
20
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
estimated total income from the relevant programme treated
25
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—

where—
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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
I is the estimated total income from the relevant programme.
Supplementary
35
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
exploitation of the programme.
(2)
This includes—
40
(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 Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
265

(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
capital nature are treated as being of a revenue nature.
5
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
programme, or
10
(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)
Expenditure that (apart from this subsection) would be regarded as
15
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)
For the purposes of this Chapter costs are incurred when they are
20
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)
deferred payments are recognised to the extent that the work
25
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)
If an obligation is linked to income being earned from the relevant
30
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)
This section applies if, before the company began to carry on the
35
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
began to carry on that trade.
40
(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 Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
266

(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

Estimates for the purposes of this Chapter must be made as at the
5
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
10
1216C
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
15
company 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).
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(3)
Television 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—
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(a)
the 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.
30
(5)
Sections 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).
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(7)
See Schedule 18 to FA 1998 (in particular, Part 9D) for information
about the procedure for making claims for television tax relief.