Finance Bill

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Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
265

(9)
The election has effect in relation to relevant programmes which
commence 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
5
programme, means the activities involved in development, pre-
production, 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
10
read as references to, or as including, the generation of those images.
(3)
The 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
15
activities of a particular description, and
(c)
provide 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.
20

“Specified” means specified in the regulations.
1216AG
“Production expenditure” and “core expenditure”
(1)
This 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
25
with the programme.
(3)
“Core expenditure”, in relation to a relevant programme, means
production expenditure on pre-production, principal photography
and post-production of the programme.
1216AH
“UK expenditure” etc
30
(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.
(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
35
just and reasonable basis.
(3)
The Treasury may by regulations amend subsection (1).
1216AI
“Qualifying co-production” and “co-producer”

In this Part—
(a)
“qualifying co-production” means a relevant programme
40
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
government, international organisation or authority, and

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
266

(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
Schedule 18 to FA 1998 (see paragraph 3(1)).
5
Chapter 2
Taxation of activities of television production company
Separate programme trade
1216B
Activities of television production company treated as a separate trade
(1)
This Chapter applies for corporation tax purposes to a company that
10
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
any activities in relation to any other television programme).
15
(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
20
(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.
25
(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
30
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
35
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
40
as earned at the end of that period and the corresponding
amount for the previous period.

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
267

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

where—
C is the total to date of costs incurred (and represented in work
done),
5
T is the estimated total cost of the relevant programme, and
I 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
10
are to any receipts by the company in connection with the making or
exploitation 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
15
aspects of it (for example, characters or music),
(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
20
capital 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
25
programme, 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.
30
(3)
Expenditure 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
35
(1)
For 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
40
(b)
deferred payments are recognised to the extent that the work
is represented in the state of completion.

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
268

(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
programme, no amount is to be brought into account in respect of the
5
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
separate programme trade, it incurred expenditure on development
10
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.
(3)
If expenditure so treated has previously been taken into account for
15
other tax purposes, the company must amend any relevant company
tax return accordingly.
(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.
20
1216BF
Estimates

Estimates 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
25
Television tax relief
Introductory
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
30
programme.
(2)
Relief under this Chapter (“television tax relief”) is available to the
company if the conditions specified in the following sections are met
in relation to the programme—
(a)
section 1216CA (intended for broadcast),
35
(b)
section 1216CB (British programme), and
(c)
section 1216CE (UK expenditure).
(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).
40
(4)
But television tax relief is not available in respect of any expenditure
if—

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
269

(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.
5
(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).
10
(7)
See Schedule 18 to FA 1998 (in particular, Part 9D) for information
about the procedure for making claims for television tax relief.
“Intended for broadcast”
1216CA
Intended for broadcast
(1)
The relevant programme must be intended for broadcast to the
15
general public.
(2)
Whether 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
20
ceases to be the intention, and
(b)
where a relevant programme is not originally intended for
broadcast, this condition is not met even if that becomes the
intention.
British programmes
25
1216CB
British programme
(1)
The 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
30
programme before it may be certified as a British programme.

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,
35
(b)
provide 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.
40

“Specified” means specified in the regulations.
(4)
Regulations under subsection (2) are to be made by statutory
instrument.

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
270

(5)
A statutory instrument containing regulations under subsection (2)
is subject to annulment in pursuance of a resolution of the House of
Commons.
(6)
Sections 1216CC and 1216CD contain further provision about
certification of programmes as British programmes, including
5
provision about applications for, and withdrawal of, certification.
1216CC
Applications for certification
(1)
An 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.
10
(2)
The application may be for an interim or final certificate.
(3)
An interim certificate is a certificate that—
(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
15
programme.
(4)
A 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
20
documents or information which the Secretary of State requires in
order 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
25
information.
(7)
The 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
30
satisfying the Secretary of State that a programme meets the
cultural 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
35
regulations.
(8)
Regulations 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
40
Commons.
1216CD
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

Finance Bill
Schedule 15 — Tax relief for television production
Part 1 — Amendments of CTA 2009
271

programme, the Secretary of State must certify the programme
accordingly.
(2)
If the Secretary of State is not satisfied that those requirements are
met, the Secretary of State must refuse the application.
(3)
An interim certificate—
5
(a)
may be given subject to conditions, and (unless the Secretary
of State directs otherwise) is of no effect if the conditions are
not met, and
(b)
may be expressed to expire after a specified period, and
(unless the Secretary of State directs otherwise) ceases to have
10
effect at the end of that period.
(4)
An interim certificate ceases to have effect when a final certificate is
issued.
(5)
If it appears to the Secretary of State that a relevant programme
certified under this Part ought not to have been certified, the
15
Secretary of State may revoke its certification.
(6)
Unless the Secretary of State directs otherwise, a certificate that is
revoked is treated as never having had effect.
UK expenditure
1216CE
UK expenditure
20
(1)
At least 25% of the core expenditure on the relevant programme
incurred—
(a)
in 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-
25
producers,

must be UK expenditure.
(2)
The Treasury may by regulations amend the percentage specified in
subsection (1).
Additional deductions
30
1216CF
Additional deduction for qualifying expenditure
(1)
If television tax relief is available to the company, it may (on making
a 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
35
programme trade.
(3)
In this Chapter “qualifying expenditure” means core expenditure on
the 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.
40
(4)
The Treasury may by regulations—
(a)
amend subsection (3), and