Session 2014 - 15
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15

 
 

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—equation: plus[char[E],minus[char[P]]]

 

    

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—

 
 

 
 

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(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,

 

    

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—equation: plus[char[L],times[char[R],char[U],char[L]]]

 

    

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

 
 

 
 

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(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).

 

(5)    

For any period of account after the first, the available qualifying

 

expenditure is—equation: plus[char[E],minus[char[S]]]

 

    

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

 
 

 
 

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(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.

 

(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.

 
 

 
 

19

 
 

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.

 

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).

 
 

 
 

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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.

 

(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).

 
 

 
 

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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).

 

1217NA 

 Clawback of provisional relief

 

(1)    

If a statement is made under section 1217N(2) but it subsequently

 

appears that the EEA expenditure condition will not be met on

 

the company’s ceasing to carry on the separate theatrical trade,

 

the company—

 

(a)    

is not entitled to relief under any of the relieving

 

provisions for any period for which its entitlement

 

depended on such a statement, and

 

(b)    

must amend its company tax return for any such period

 

accordingly.

 

(2)    

When a company which has made a claim under section 1217H

 

ceases to carry on the separate theatrical trade, the company’s

 

company tax return for the period in which that cessation occurs

 

must—

 

(a)    

state that the company has ceased to carry on the separate

 

theatrical trade, and

 

(b)    

be accompanied by a final statement of the amount of the

 

core expenditure on the theatrical production that is EEA

 

expenditure.

 

(3)    

If that statement shows that the EEA expenditure condition is not

 

met—

 

(a)    

the company is not entitled to relief under any of the

 

relieving provisions for any period,

 
 

 
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