House of Commons Amendments

Session 2014 - 15
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Other Bills before Parliament

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—


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—


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—


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).

20

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).

21

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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