House of Commons Amendments

Session 2014 - 15
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Other Bills before Parliament

Consideration of Bill:
424

, continued

(c)
an SCE formed in accordance with Council

Regulation (EC) No 1435/2003 on the Statute for a

European Cooperative Society,”.

11
In paragraph 110 (which amends section 887 of ITA 2007), in the subsection

(5) substituted by sub-paragraph (5)—

(a)
omit the “or” following paragraph (a), and

(b)
after paragraph (b) insert—

“(c)
a society registered as a credit union under the Credit

Unions (Northern Ireland) Order 1985 (S.I. 1985/

1205 (N.I. 12)), or

(d)
an SCE formed in accordance with Council

Regulation (EC) No 1435/2003 on the Statute for a

European Cooperative Society.”.

12
In paragraph 158 (which amends section 90 of CTA 2010), in the definition of

“registered society” inserted by sub-paragraph (3)—

(a)
omit the “or” following paragraph (a), and

(b)
at the end of paragraph (b) insert “or

(c)
an SCE formed in accordance with Council

Regulation (EC) No 1435/2003 on the Statute for a

European Cooperative Society,”.

13
In paragraph 168 (which amends section 1119 of CTA 2010), in the definition

of “registered society” inserted by sub-paragraph (3), for paragraph (c) and the

“or” before it substitute—

“(c)
a society registered as a credit union under the Credit Unions

(Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or

(d)
an SCE formed in accordance with Council Regulation (EC)

No 1435/2003 on the Statute for a European Cooperative

Society,”.

14
In paragraph 171 (which amends section 118 of TIOPA 2010)—

(a)
in sub-paragraph (2), after “Co-operative and Community Benefit

Societies Act 2014” insert “or a society registered or treated as

registered under the Industrial and Provident Societies Act (Northern

Ireland) 1969”, and

(b)
in sub-paragraph (3), after “Co-operative and Community Benefit

Societies Act 2014” insert “, a society registered or treated as

registered under the Industrial and Provident Societies Act (Northern

Ireland) 1969”.

Commencement

15
The amendments made by this Schedule come into force on 1 August 2014.”

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Mr Chancellor of the Exchequer

NS4

To move the following Schedule—

“Tax relief for theatrical production

Amendments of CTA 2009

1
Before Part 16 of CTA 2009 insert—

theatrical productions

Introduction

1217F
Overview

(1)
This Part contains provision about tax relief for production companies

in respect of their theatrical productions.

(2)
Sections 1217FA to 1217FC define “production company” and

“theatrical production”.

(3)
Section 1217G sets out the conditions a production company must

meet to qualify for relief in relation to its theatrical production.

(4)
Section 1217H provides for relief by way of additional deductions in

respect of certain expenditure (and section 1217J is about the amount

of the additional deduction).

(5)
This Part also contains provision—

(a)
for a company that claims relief to be treated as carrying on a

separate trade relating to the theatrical production (see section

1217H(3)), and

(b)
about the calculation of the profits and losses of that trade (see

sections 1217I to 1217IF).

(6)
Sections 1217K to 1217KC—

(a)
provide for relief by way of payments (called “theatre tax

credits”) to be made on the company’s surrender of certain

losses of that trade, and

(b)
set out an upper limit on relief, in connection with State aid

legislation.

(7)
Sections 1217LA and 1217LB are about certain cases involving tax

avoidance arrangements or arrangements entered into otherwise than

for genuine commercial reasons.

(8)
Sections 1217M to 1217MC contain provision about the use of losses

of the separate trade (including provision about relief for terminal

losses).

(9)
Sections 1217N and 1217NA are concerned with the provisional

nature of relief given for periods preceding the period in which the

company ceases to carry on the separate theatrical trade.

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1217FA
“Theatrical production”

(1)
In this Part “theatrical production” means a dramatic production or a

ballet (and any ballet is therefore a theatrical production, whether or

not it is also a dramatic production).


But see section 1217FB.

(2)
“Dramatic production” means a production of a play, opera, musical,

or other dramatic piece (whether or not involving improvisation) in

relation to which the following conditions are met—

(a)
the actors, singers, dancers or other performers are to give

their performances wholly or mainly through the playing of

roles,

(b)
each performance in the proposed run of performances is to be

live, and

(c)
the presentation of live performances is the main object, or

one of the main objects, of the company’s activities in relation

to the production.

(3)
“Dramatic piece” may also include, for example, a show that is to be

performed by a circus.

(4)
For the purposes of this section a performance is “live” if it is to an

audience before whom the performers are actually present.

1217FB
Productions not regarded as theatrical

(1)
A dramatic production or ballet is not regarded as a theatrical

production if—

(a)
the main purpose, or one of the main purposes, for which it is

made is to advertise or promote any goods or services,

(b)
the performances are to consist of or include a competition or

contest,

(c)
a wild animal is to be used in any performance,

(d)
the production is of a sexual nature (see subsection (3)), or

(e)
the making of a relevant recording is the main object, or one

of the main objects, of the company’s activities in relation to

the production.

(2)
For the purposes of subsection (1)(c) an animal is used in a

performance if the animal performs, or is shown, in the course of the

performance.

(3)
A production is of a sexual nature for the purposes of subsection (1)(d)

if the performances are to include any content the nature of which is

such that, ignoring financial gain, it would be reasonable to assume the

content to be included solely or principally for the purpose of sexually

stimulating any member of the audience (whether by verbal or other

means).

(4)
“Relevant recording” means a recording of a performance—

(a)
as a film (or part of a film) for exhibition to the paying general

public at the commercial cinema, or

(b)
for broadcast to the general public.

(5)
In this section—

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“broadcast” means broadcast by any means (including television, radio

or the internet);

“film” has the same meaning as in Part 15 (see section 1181);

“wild animal” means an animal of a kind which is not commonly

domesticated in the British Islands (and in this definition “animal” has

the meaning given by section 1(1) of the Animal Welfare Act 2006).

1217FC
“Production company”

(1)
A company is the production company in relation to a theatrical

production if the company (acting otherwise than in partnership)—

(a)
is responsible for producing, running and closing the

theatrical production,

(b)
is actively engaged in decision-making during the production,

running and closing phases,

(c)
makes an effective creative, technical and artistic contribution

to the production, and

(d)
directly negotiates for, contracts for and pays for rights, goods

and services in relation to the production.

(2)
No more than one company can be the production company in relation

to a theatrical production.

(3)
If more than one company meets the conditions in subsection (1) in

relation to a theatrical production, the company that is most directly

engaged in the activities mentioned in subsection (1) is the production

company.

(4)
If there is no company meeting the conditions in subsection (1), there

is no production company in relation to the production.

Companies qualifying for relief

1217G
How a company qualifies for relief

(1)
A company qualifies for relief in relation to a theatrical production

if—

(a)
it is the production company in relation to the production, and

(b)
the commercial purpose condition (see section 1217GA) and

the EEA expenditure condition (see section 1217GB) are met.

(2)
There is further provision relating to subsection (1) in section 1217LA

(tax avoidance arrangements).

1217GA
The commercial purpose condition

(1)
The “commercial purpose condition” is that at the beginning of the

production phase the company intends that all, or a high proportion of,

the live performances that it proposes to run will be—

(a)
to paying members of the general public, or

(b)
provided for educational purposes.

(2)
The reference in subsection (1) to “live performances” is to be read in

accordance with section 1217FA(4).

(3)
A performance is not regarded as provided for educational purposes if

the production company is, or is associated with, a person who—

(a)
has responsibility for the beneficiaries, or

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(b)
is otherwise connected with the beneficiaries (for instance, by

being their employer).

(4)
For the purposes of subsection (3), a production company is associated

with a person (“P”) if—

(a)
P controls the production company, or

(b)
P is a company which is controlled by the production

company or by a person who also controls the production

company.

(5)
In this section—

“the beneficiaries” means persons for whose benefit the performance will

or may be provided;

“control” has the same meaning as in Part 10 of CTA 2010 (see section

450 of that Act).

1217GB
The EEA expenditure condition

(1)
The “EEA expenditure condition” is that at least 25% of the core

expenditure on the theatrical production incurred by the company is

EEA expenditure.

(2)
In this Part “EEA expenditure” means expenditure on goods or

services that are provided from within the European Economic Area.

(3)
Any apportionment of expenditure as between EEA and non-EEA

expenditure for the purposes of this Part is to be made on a just and

reasonable basis.

(4)
The Treasury may by regulations—

(a)
amend the percentage specified in subsection (1);

(b)
amend subsection (2).

(5)
See also sections 1217N and 1217NA (which are about the giving of

relief provisionally on the basis that the EEA expenditure condition

will be met).

1217GC
“Core expenditure”

(1)
In this Part “core expenditure”, in relation to a theatrical production,

means expenditure on the activities involved in—

(a)
producing the production, and

(b)
closing the production.

(2)
The reference in subsection (1)(a) to “expenditure on the activities

involved in producing the production”—

(a)
does not include expenditure on any matters not directly

involved in producing the production (for instance, financing,

marketing, legal services or storage);

(b)
does not include expenditure on the ordinary running of the

production; but expenditure incurred on or after the date of the

first performance of the production to the paying general

public may fall within subsection (1)(a) (for instance, if it is

incurred in connection with a substantial recasting or a

substantial redesign of the set).

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Claim for additional deduction

1217H
Claim for additional deduction

(1)
A company which qualifies for relief in relation to a theatrical

production may claim an additional deduction in relation to the

production.

(2)
A claim under subsection (1) is made with respect to an accounting

period.


(See Schedule 18 to FA 1998, and in particular, Part 9D, for provision

about the procedure for making claims.)

(3)
Where a company has made a claim under subsection (1)—

(a)
the company’s activities in relation to the theatrical

production are treated for corporation tax purposes as a trade

separate from any other activities of the company (including

activities in relation to any other theatrical production), and

(b)
the company is entitled to make an additional deduction, in

accordance with section 1217J, in calculating the profit or loss

of the separate trade for the accounting period concerned.

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

(a)
when the production phase begins, or

(b)
if earlier, at the time of the first receipt by the company of any

income from the theatrical production.

(5)
Where the company tax return in which a claim under subsection (1)

is made is for an accounting period later than that in which the

company begins to carry on the separate trade, the company must

make any amendments of company tax returns for earlier periods that

may be necessary.

(6)
Any amendment or assessment necessary to give effect to subsection

(5) may be made despite any limitation on the time within which an

amendment or assessment may normally be made.

(7)
If the company ceases at any time to meet the conditions in section

1217FC(1) (meaning of “production company”) in relation to the

production, it is treated as ceasing to carry on the separate trade at that

time.

The separate theatrical trade

1217I
Introduction to sections 1217IA to 1217IF


Where a company is treated under section 1217H(3)(a) as carrying on

a separate trade (“the separate theatrical trade”), the profits or losses

of the trade are calculated for corporation tax purposes in accordance

with sections 1217IA to 1217IF.

1217IA
Calculation of profits or losses of separate theatrical trade

(1)
For the first period of account during which the separate theatrical

trade is carried on, the following are brought into account—

(a)
as a debit, the costs of the theatrical production incurred (and

represented in work done) to date;

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(b)
as a credit, the proportion of the estimated total income from

the production treated as earned at the end of that period.

(2)
For subsequent periods of account the following are brought into

account—

(a)
as a debit, the difference between the amount (“C”) of the

costs of the theatrical production incurred (and represented in

work done) to date and the amount corresponding to C for the

previous period, and

(b)
as a credit, the difference between the proportion (“PI”) of the

estimated total income from the production treated as earned

at the end of that period and the amount corresponding to PI

for the previous period.

(3)
The proportion of the estimated total income treated as earned at the

end of a period of account is—


where—


C is the total to date of costs incurred (and represented in work

done);


T is the estimated total cost of the theatrical production;


I is the estimated total income from the theatrical production.

1217IB
Income from the production

(1)
References in this Part to income from a theatrical production are to

any receipts by the company in connection with the making or

exploitation of the production.

(2)
This includes—

(a)
receipts from the sale of tickets or of rights in the theatrical

production;

(b)
royalties or other payments for use of aspects of the theatrical

production (for example, characters or music);

(c)
payments for rights to produce merchandise;

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

(3)
Receipts that (apart from this subsection) would be regarded as being

of a capital nature are treated as being of a revenue nature.

1217IC
Costs of the production

(1)
References in this Part to the costs of a theatrical production are to

expenditure incurred by the company on—

(a)
the activities involved in developing, producing, running and

closing the production, or

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

(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.



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