House of Commons Amendments

Session 2014 - 15
Internet Publications
Other Bills before Parliament

Consideration of Bill:
431

, continued

(3)
Expenditure which, apart from this subsection, would be regarded as

being of a capital nature only because it is incurred on the creation of

an asset (i.e. the theatrical production) is treated as being of a revenue

nature.

1217ID
When costs are taken to be incurred

(1)
For the purposes of this Part, the costs that have been incurred on a

theatrical production at a given time—

(a)
are those costs of the production that are represented in the

state of completion of the work in progress, but

(b)
do not include any amount that has not been paid unless it is

the subject of an unconditional obligation to pay.

(2)
In accordance with subsection (1)(a)—

(a)
payments in advance of work to be done are ignored until the

work has been carried out;

(b)
deferred payments are recognised to the extent that the goods

or services in question are represented in the state of

completion of the work in progress (but this is subject to

subsection (1)(b)).

(3)
Where an obligation to pay an account is linked to income being

earned from the theatrical production, the obligation is not treated as

having become unconditional unless an appropriate amount of income

is or has been brought into account under section 1217IA.

(4)
In determining for the purposes of this Part the amount of costs

incurred on a theatrical production at the end of a period of account,

any amount that has not been paid 4 months after the end of that period

is to be ignored.

1217IE
Pre-trading expenditure

(1)
This section applies if, before the company begins to carry on the

separate theatrical trade, it incurs expenditure on activities falling

within section 1217IC(1)(a).

(2)
The expenditure may be treated as expenditure of the separate

theatrical trade and as if incurred immediately after the company

begins to carry on that trade.

(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.

(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.

1217IF
Estimates


Estimates for the purposes of section 1217IA 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.

Consideration of Bill:
432

, continued

Amount of additional deduction

1217J
Amount of additional deduction

(1)
The amount of an additional deduction to which a company is entitled

as a result of a claim under section 1217H is calculated as follows.

(2)
For the first period of account during which the separate theatrical

trade is carried on, the amount of the additional deduction is E,

where—

E is—

(a)
so much of the qualifying expenditure incurred to date as is EEA

expenditure, or

(b)
if less, 80% of the total amount of qualifying expenditure

incurred to date.

(3)
For any period of account after the first, the amount of the additional

deduction is—


where—

E is—

(a)
so much of the qualifying expenditure incurred to date as is EEA

expenditure, or

(b)
if less, 80% of the total amount of qualifying expenditure

incurred to date, and

P is the total amount of the additional deductions given for previous

periods.

(4)
The Treasury may by regulations amend the percentage specified in

subsection (2) or (3).

1217JA
“Qualifying expenditure”

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

production, means core expenditure (see section 1217GC) on the

theatrical production that—

(a)
falls to be taken into account under sections 1217IA to 1217IF

in calculating the profit or loss of the separate theatrical trade

for tax purposes, and

(b)
is not excluded by subsection (2).

(2)
The following expenditure is excluded—

(a)
expenditure in respect of which the company is entitled to an

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

(b)
expenditure in respect of which the company has obtained

relief under Part 13 (additional relief for expenditure on

research and development).

Theatre tax credits

1217K
Theatre tax credit claimable if company has surrenderable loss

(1)
A company which—

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

trade during the whole or part of an accounting period, and

(b)
has a surrenderable loss in that period,

Consideration of Bill:
433

, continued


may claim a theatre tax credit for that accounting period.

(2)
Section 1217KA sets out how to calculate the amount of any

surrenderable loss that the company has in the accounting period.

(3)
A company making a claim may surrender the whole or part of its

surrenderable loss in the accounting period.

(4)
The amount of the theatre tax credit to which a company making a

claim is entitled for the accounting period is—

(a)
25% of the amount of the loss surrendered if the theatrical

production is a touring production, or

(b)
20% of the amount of the loss surrendered if the theatrical

production is not a touring production.

(5)
The company’s available loss for the accounting period (see section

1217KA(2)) is reduced by the amount surrendered.

(6)
A theatrical production is a “touring production” only if the company

intends at the beginning of the production phase—

(a)
that it will present performances of the production in 6 or

more separate premises, or

(b)
that it will present performances of the production in at least

two separate premises and that the number of performances

will be at least 14.

(7)
See Schedule 18 to FA 1998 (in particular, Part 9D) for provision

about the procedure for making claims under subsection (1).

1217KA
Amount of surrenderable loss

(1)
The company’s surrenderable loss in the accounting period is—

(a)
the company’s available loss for the period in the separate

theatrical trade (see subsections (2) and (3)), or

(b)
if less, the available qualifying expenditure for the period (see

subsections (4) and (5)).

(2)
The company’s available loss for an accounting period is—


where—

L is the amount of the company’s loss for the period in the separate

theatrical trade, and

RUL is the amount of any relevant unused loss of the company (see

subsection (3)).

(3)
The “relevant unused loss” of a company is so much of any available

loss of the company for the previous accounting period as has not

been—

(a)
surrendered under section 1217K, or

(b)
carried forward under section 45 of CTA 2010 and set against

profits of the separate theatrical trade.

(4)
For the first period of account during which the separate theatrical

trade is carried on, the available qualifying expenditure is the amount

that is E for that period for the purposes of section 1217J(2).

Consideration of Bill:
434

, continued

(5)
For any period of account after the first, the available qualifying

expenditure is—


where—

E is the amount that is E for that period for the purposes of section

1217J(3), and

S is the total amount previously surrendered under section 1217K.

(6)
If a period of account of the separate theatrical trade does not coincide

with an accounting period, any necessary apportionments are to be

made by reference to the number of days in the periods concerned.

1217KB
Payment in respect of theatre tax credit

(1)
If a company—

(a)
is entitled to a theatre tax credit for an accounting period, and

(b)
makes a claim,


the Commissioners for Her Majesty’s Revenue and Customs (“the

Commissioners”) must pay the amount of the credit to the company.

(2)
An amount payable in respect of—

(a)
a theatre tax credit, or

(b)
interest on a theatre tax credit under section 826 of ICTA,


may be applied in discharging any liability of the company to pay

corporation tax.


To the extent that it is so applied the Commissioners’ liability under

subsection (1) is discharged.

(3)
If the company’s company tax return for the accounting period is

enquired into by the Commissioners, no payment in respect of a

theatre tax credit for that period need be made before the

Commissioners’ enquiries are completed (see paragraph 32 of

Schedule 18 to FA 1998).


In those circumstances the Commissioners may make a payment on a

provisional basis of such amount as they consider appropriate.

(4)
No payment need be made in respect of a theatre tax credit for an

accounting period before the company has paid to the Commissioners

any amount that it is required to pay for payment periods ending in that

accounting period—

(a)
under PAYE regulations,

(b)
under section 966 of ITA 2007 (visiting performers), or

(c)
in respect of Class 1 national insurance contributions under

Part 1 of the Social Security Contributions and Benefits Act

1992 or Part 1 of the Social Security Contributions and

Benefits (Northern Ireland) Act 1992.

(5)
A payment in respect of a theatre tax credit is not income of the

company for any tax purpose.

1217KC
Limit on State aid

(1)
The total amount of any theatre tax credits payable under section

1217KB in the case of any undertaking is not to exceed 50 million

euros per year.

Consideration of Bill:
435

, continued

(2)
In this section “undertaking” has the same meaning as in the General

Block Exemption Regulation.

(3)
In this section “the General Block Exemption Regulation” means any

regulation that—

(a)
is for the time being in force under Article 1 of Council

Regulation (EC) No 994/98, and

(b)
makes, in relation to aid in favour of culture and heritage

conservation, the declaration provided for by that Article.

Anti-avoidance etc

1217LA
Tax avoidance arrangements

(1)
A company does not qualify for relief in relation to a theatrical

production if there are any tax avoidance arrangements relating to the

production.

(2)
Arrangements are “tax avoidance arrangements” if their main purpose,

or one of their main purposes, is the obtaining of a tax advantage.

(3)
In this section—

“arrangements” includes any scheme, agreement or understanding,

whether or not legally enforceable;

“tax advantage” has the meaning given by section 1139 of CTA 2010.

1217LB
Transactions not entered into for genuine commercial reasons

(1)
A transaction is to be ignored for the purpose of determining a relief

mentioned in subsection (2) so far as the transaction is attributable to

arrangements (other than tax avoidance arrangements) entered into

otherwise than for genuine commercial reasons.

(2)
The reliefs mentioned in subsection (1) are—

(a)
any additional deduction which a company may make under

this Part, and

(b)
any theatre tax credit to be given to a company.

(3)
In this section “arrangements” and “tax avoidance arrangements” have

the same meaning as in section 1217LA.

Use of losses

1217M
Application of sections 1217MA to 1217MC

(1)
Sections 1217MA to 1217MC apply to a company that is treated under

section 1217H(3) as carrying on a separate trade in relation to a

theatrical production.

(2)
In those sections—

“the completion period” means the accounting period in which the

company ceases to carry on the separate theatrical trade;

“loss relief” includes any means by which a loss might be used to reduce

the amount in respect of which a company, or any other person, is

chargeable to tax.

Consideration of Bill:
436

, continued

1217MA
Restriction on use of losses before completion period

(1)
Subsection (2) applies if a loss is made by the company in the separate

theatrical trade in an accounting period preceding the completion

period.

(2)
The loss is not available for loss relief, except to the extent that the loss

may be carried forward under section 45 of CTA 2010 to be set against

profits of the separate theatrical trade in a subsequent period.

1217MB
Use of losses in the completion period

(1)
Subsection (2) applies if a loss made in the separate theatrical trade is

carried forward under section 45 of CTA 2010 to the completion

period.

(2)
So much (if any) of the loss as is not attributable to relief under section

1217H (see subsection (4)) may be treated for the purposes of loss

relief as if it were a loss made in the completion period.

(3)
If a loss is made in the separate theatrical trade in the completion

period, the amount of the loss that may be—

(a)
deducted from total profits of the same or an earlier period

under section 37 of CTA 2010, or

(b)
surrendered as group relief under Part 5 of that Act,


is restricted to the amount (if any) that is not attributable to relief under

section 1217H.

(4)
The amount of a loss in any period that is attributable to relief under

section 1217H is found by—

(a)
calculating what the amount of the loss would have been if

there had been no additional deduction under that section in

that or any earlier period, and

(b)
deducting that amount from the total amount of the loss.

(5)
This section does not apply to loss surrendered, or treated as carried

forward, under section 1217MC (terminal losses).

1217MC
Terminal losses

(1)
This section applies if—

(a)
the company ceases to carry on the separate theatrical trade,

and

(b)
if the company had not ceased to carry on the separate

theatrical trade, it could have carried forward an amount under

section 45 of CTA 2010 to be set against profits of that trade

in a later period (“the terminal loss”).


Below in this section the company is referred to as “company A” and

the separate theatrical trade is referred to as “trade 1”.

(2)
If company A—

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

theatrical trade in relation to another theatrical production

(“trade 2”), and

(b)
is carrying on trade 2 when it ceases to carry on trade 1,


company A may (on making a claim) elect to transfer the terminal loss

(or a part of it) to trade 2.

Consideration of Bill:
437

, continued

(3)
If company A makes an election under subsection (2), the terminal

loss (or part of the loss) is treated as if it were a loss brought forward

under section 45 of CTA 2010 to be set against the profits of trade 2

of the first accounting period beginning after the cessation and so on.

(4)
Subsection (5) applies if—

(a)
another company (“company B”) is treated under section

1217H(3) as carrying on a separate theatrical trade (“company

B’s trade”) in relation to another theatrical production,

(b)
company B is carrying on that trade when company A ceases

to carry on trade 1, and

(c)
company B is in the same group as company A for the

purposes of Part 5 of CTA 2010 (group relief).

(5)
Company A may surrender the loss (or part of it) to company B.

(6)
On the making of a claim by company B the amount surrendered is

treated as if it were a loss brought forward by company B under

section 45 of CTA 2010 to be set against the profits of company B’s

trade of the first accounting period beginning after the cessation and

so on.

(7)
The Treasury may by regulations make administrative provision in

relation to the surrender of a loss under subsection (5) and the resulting

claim under subsection (6).

(8)
“Administrative provision” means provision corresponding, subject to

such adaptations or other modifications as appear to the Treasury to be

appropriate, to that made by Part 8 of Schedule 18 to FA 1998

(company tax returns: claims for group relief).

Provisional entitlement to relief

1217N
Provisional entitlement to relief

(1)
In relation to a company that has made a claim under section 1217H in

relation to a theatrical production, “interim accounting period” means

any accounting period that—

(a)
is one in which the company carries on the separate theatrical

trade, and

(b)
precedes the accounting period in which it ceases to do so.

(2)
A company is not entitled to relief under any of the relieving

provisions for an interim accounting period unless—

(a)
its company tax return for the period states the amount of

planned core expenditure on the theatrical production that is

EEA expenditure, and

(b)
that amount is such as to indicate that the EEA expenditure

condition (see section 1217GB) will be met in relation to the

production.


If those requirements are met, the company is provisionally treated in

relation to that period as if the EEA expenditure condition were met.

(3)
In this section “the relieving provisions” means—

(a)
section 1217H (additional deduction),

(b)
section 1217K (theatre tax credits), and

(c)
section 1217MC (terminal losses).



© Parliamentary copyright	Revised 1 July 2014