Finance Bill

House of Commons

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 14 — R&D expenditure credits
Part 2 — Consequential amendments
258

“relevant research and
section 1042 (as applied

development (in Chapter
by section 104Y)”;

6A of Part 3)

“research and
section 1041 (as applied

development (in Chapter
by section 104Y)”;

5

6A of Part 3)

“small or medium-sized
section 1119 (as applied

enterprise (in Chapter 6A
by section 104Y)”;

of Part 3)

“software or consumable
section 1125 (as applied

10

items (in Chapter 6A of
by section 104Y)”;

Part 3)

“staffing costs (in
section 1123 (as applied

Chapter 6A of Part 3)
by section 104Y)”;

“subsidised qualifying
section 104F”.

15

expenditure (in Chapter

6A of Part 3)

Part 2
Consequential amendments
FA 1998
20
4
Schedule 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.
25
      (2)
In 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—
30
“(aa)
an 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
35
“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”.
40

Finance Bill
Schedule 14 — R&D expenditure credits
Part 3 — Abolition of certain relief under Part 13 of CTA 2009
259

      (4)
Accordingly, 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—
5
“(ia)
an 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
10
In 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
15
accounting 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-
20
paragraph (i);
(b)
after 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
25
2009,”;
(c)
at 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
30
Amendments of Part 13 of CTA 2009
12
Part 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)—
35
(a)
for “Chapters 2 to 4” substitute “Chapter 2”;
(b)
omit paragraphs (b) and (c).
      (3)
Omit subsection (4).
      (4)
In subsection (5)—
(a)
for “Chapters 2 to 5” substitute “Chapter 2”;
40
(b)
omit paragraphs (b) and (c).

Finance Bill
Schedule 14 — R&D expenditure credits
Part 3 — Abolition of certain relief under Part 13 of CTA 2009
260

14
Omit 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
5
as 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
10
tax).
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”.
15
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
20
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
25

“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
30
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.
35
      (3)
In Schedule 16, omit paragraph 190.

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
261

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.
28
Subject to paragraph 29, the amendments made by Part 3 of this Schedule
5
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
relation to expenditure incurred by the company on or after the first day of
10
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.
Schedule 15
15
Section 35

Tax relief for television production
Part 1
Amendments of CTA 2009
1
After Part 15 of CTA 2009 insert—
“Part 15A
20
Television production
Chapter 1
Introduction
Introductory
1216A
Overview of Part
25
(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—
(a)
section 1216AB, which explains what is meant by a “relevant
30
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.

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
262

(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
5
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
10
(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
15
trades.
(6)
Chapter 5 provides—
(a)
for 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
20
that must be met for such relief to be given are not actually
met.
Meaning of “television programme”, “relevant programme” etc
1216AA
“Television programme”
(1)
This section applies for the purposes of this Part.
25
(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
combination of those things.
30
(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
which it can reasonably be regarded as ready for broadcast to the
35
general public.
1216AB
“Relevant programme”
(1)
This section applies for the purposes of this Part.
(2)
A television programme is a “relevant programme” if—
(a)
conditions A and B are met, and
40
(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—

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

(a)
a 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
5
(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.
10

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)
This section applies for the purposes of this Part.
15
(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
20
person or persons performing, whether by way of speech,
acting, 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
25
constitutes at least 51% of the total core expenditure on the
completed 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
30
subsections—
(a)
subsection (2) (advertisements etc),
(b)
subsection (3) (current affairs etc),
(c)
subsection (4) (entertainment shows),
(d)
subsection (5) (competitions),
35
(e)
subsection (6) (live performances),
(f)
subsection (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.
40
(4)
Head 3 is any quiz show, game show, panel show, variety show, chat
show or similar entertainment.
(5)
Head 4 is any programme consisting of or including—

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

(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.
(7)
Head 6 is any programme produced for training purposes.
5
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.
(2)
There cannot be more than one television production company in
10
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)—
(a)
is responsible—
15
(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
20
post-production, and
(c)
directly 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
25
company (otherwise than in partnership)—
(a)
is 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
30
subsection (3) or (4), the company that is most directly engaged in the
activities 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
35
relevant programme.
(7)
A 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
40
company tax return for an accounting period (and may be
included 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.
45