Finance Bill (HC Bill 47)

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(b) as a credit, the difference between the proportion (“PI”) of the
estimated total income from that production treated as
earned at the end of that period and the amount
corresponding to PI for the previous period.

(4) 5The 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;

  • 10T is the estimated total cost of the production of the concert or
    concert series;

  • I is the estimated total income from the production of the
    concert or concert series.

1217QC Income from the production

(1) 15References in this Chapter to income from a production of a concert
or concert series are to any receipts by the company in connection
with the production or exploitation of the concert or concert series.

(2) This includes—

(a) receipts from the sale of tickets or of rights in the concert or
20concert series;

(b) royalties or other payments for use of the concert or concert
series;

(c) payments for rights to produce merchandise;

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

(3) 25Receipts that (apart from this subsection) would be regarded as
being of a capital nature are treated as being of a revenue nature.

1217QD Costs of the production

(1) References in this Chapter to the costs of a production of a concert or
concert series are to expenditure incurred by the company on—

(a) 30activities involved in developing and putting on the concert
or concert series, or

(b) activities with a view to exploiting the concert or concert
series.

(2) This is subject to any provision of the Corporation Tax Acts
35prohibiting the making of a deduction, or restricting the extent to
which a deduction is allowed, in calculating the profits of a trade.

(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 (the concert or concert series) is treated as being of a
40revenue nature.

1217QE When costs are taken to be incurred

(1) For the purposes of this Chapter, the costs that have been incurred
on a production of a concert or concert series at a given time do not

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include any amount that has not been paid unless it is the subject of
an unconditional obligation to pay.

(2) Where an obligation to pay an amount is linked to income being
earned from the production of the concert or concert series, the
5obligation is not treated as having become unconditional unless an
appropriate amount of income is or has been brought into account
under section 1217QB.

1217QF Pre-trading expenditure

(1) This section applies if, before the company begins to carry on the
10separate orchestral trade, it incurs expenditure on activities falling
within section 1217QD(1)(a).

(2) The expenditure may be treated as expenditure of the separate
orchestral trade and as if incurred immediately after the company
begins to carry on that trade.

(3) 15If 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
20amendment or assessment may normally be made.

1217QG Estimates

Estimates for the purposes of section 1217QB 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 25Orchestra tax relief
Introduction
1217R Overview of orchestra tax relief

(1) Relief under this Chapter (“orchestra tax relief”) is given by way of—

(a) additional deductions (see sections 1217RD to 1217RF), and

(b) 30orchestra tax credits (see sections 1217RG to 1217RJ).

(2) See Schedule 18 to FA 1998 (in particular, Part 9D) for provision
about the procedure for making claims for orchestra tax relief.

Companies qualifying for orchestra tax relief
1217RA Companies qualifying for orchestra tax relief

(1) 35Subsection (2) applies in the case of an orchestral concert which is not
included in a concert series in relation to which an election has been
made under section 1217Q(4).

(2) A company qualifies for orchestra tax relief in relation to the
production of a concert if—

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(a) the concert is a qualifying orchestral concert,

(b) the company is the production company in relation to the
concert,

(c) the company intends that the concert should be performed
5live—

(i) before the paying public, or

(ii) for educational purposes, and

(d) the EEA expenditure condition is met in relation to the
concert (see section 1217RB).

(3) 10In this Part “qualifying orchestral concert” means an orchestral
concert—

(a) in which the instrumentalists number at least 12, and

(b) in which none of the musical instruments to be played, or a
minority of those instruments, is electronically or directly
15amplified.

(4) A company qualifies for orchestra tax relief in relation to the
production of a concert series if—

(a) the concert series is a qualifying orchestral concert series,

(b) the company is the production company in relation to every
20concert in the series,

(c) the company intends that all or a high proportion of the
concerts in the series should be performed live—

(i) before the paying public, or

(ii) for educational purposes,

(d) 25the EEA expenditure condition is met in relation to the series,
and

(e) the company has made an election under section 1217Q(4) in
relation to the series.

(5) In this section “qualifying orchestral concert series” means two or
30more orchestral concerts, all or a high proportion of which are
qualifying orchestral concerts.

(6) For the purposes of this section a concert is “live” if it is to an
audience before whom the musicians are actually present.

(7) A concert is not regarded as performed for educational purposes if
35the production company is, or is associated with, a person who—

(a) has responsibility for the beneficiaries, or

(b) is otherwise connected with the beneficiaries (for instance, by
being their employer).

(8) For the purposes of subsection (7), a production company is
40associated 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.

(9) 45In this section—

  • “the beneficiaries” means persons for whose benefit the concert
    will or may be performed;

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  • “control” has the same meaning as in Part 10 of CTA 2010 (see
    section 450 of that Act).

(10) There is further related provision in section 1217RL (tax avoidance
arrangements).

1217RB 5 The EEA expenditure condition

(1) The “EEA expenditure condition” is that at least 25% of the core
expenditure on the production of the concert or concert series
incurred by the company is EEA expenditure.

(2) In this Part “EEA expenditure” means expenditure on goods or
10services 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) 15amend the percentage specified in subsection (1);

(b) amend subsection (2).

(5) See also sections 1217T and 1217TA (which are about the giving of
relief provisionally on the basis that the EEA expenditure condition
will be met).

1217RC 20 “Core expenditure”

(1) In this Part “core expenditure”, in relation to the production of a
concert or concert series, means expenditure on the activities
involved in producing the concert or concert series.

(2) The reference in subsection (1) to “expenditure on the activities
25involved in producing the concert or concert series” includes
expenditure on travel to and from a venue which is not a usual venue
for concerts produced by the company.

(3) But that reference does not include—

(a) expenditure on any matters not directly involved with
30putting on the concert or concerts (for instance, financing,
marketing, legal services or storage),

(b) speculative expenditure on activities not involved with
putting on the concert or concerts, and

(c) expenditure on the actual performance or performances (for
35instance, payments to musicians for their performances in the
concert or concert series).

Additional deduction
1217RD Claim for additional deduction

(1) A company which qualifies for orchestra tax relief in relation to the
40production of a concert or concert series may claim an additional
deduction in relation to the production.

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

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(3) Where a company has made a claim, the company is entitled to make
an additional deduction, in accordance with section 1217RE, in
calculating the profit or loss of the separate orchestral trade for the
accounting period concerned.

(4) 5Where the company tax return in which a claim is made is for an
accounting period later than that in which the company begins to
carry on the separate orchestral trade, the company must make any
amendments of company tax returns for earlier periods that may be
necessary.

(5) 10Any amendment or assessment necessary to give effect to subsection
(4) may be made despite any limitation on the time within which an
amendment or assessment may normally be made.

1217RE Amount of additional deduction

(1) The amount of an additional deduction to which a company is
15entitled as a result of a claim under section 1217RD is calculated as
follows.

(2) For the first period of account during which the separate orchestral
trade is carried on, the amount of the additional deduction is E,
where E is—

(a) 20so 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
25deduction is—


E − P

where E is—

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

(b) 30if 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
35subsection (2) or (3).

1217RF “Qualifying expenditure”

(1) In this Chapter “qualifying expenditure”, in relation to the
production of a concert or concert series, means core expenditure
(see section 1217RC) on the production that—

(a) 40falls to be taken into account under sections 1217QB to
1217QG in calculating the profit or loss of the separate
orchestral trade for tax purposes, and

(b) is not expenditure which is otherwise relievable.

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(2) For the purposes of this section expenditure is otherwise relievable if
it is expenditure in respect of which (assuming a claim were made)
the company would be entitled to—

(a) film tax relief under Chapter 3 of Part 15,

(b) 5television tax relief under Chapter 3 of Part 15A,

(c) video games tax relief under Chapter 3 of Part 15B,

(d) an additional deduction under Part 15C (theatrical
productions), or

(e) a theatre tax credit under Part 15C.

10Orchestra tax credits
1217RG Orchestra tax credit claimable if company has surrenderable loss

(1) A company which qualifies for orchestra tax relief in relation to the
production of a concert or concert series may claim an orchestra tax
credit in relation to the production for an accounting period in which
15the company has a surrenderable loss.

(2) Section 1217RH 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) 20The amount of the orchestra tax credit to which a company making
a claim is entitled for the accounting period is 25% of the amount of
the loss surrendered.

(5) The company’s available loss for the accounting period (see section
1217RH(2)) is reduced by the amount surrendered.

1217RH 25 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
orchestral trade (see subsections (2) and (3)), or

(b) if less, the available qualifying expenditure for the period (see
30subsections (4) and (5)).

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


L + RUL

where—

  • L is the amount of the company’s loss for the period in the
    35separate orchestral 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
40been—

(a) surrendered under section 1217RG, or

(b) carried forward under section 45 of CTA 2010 and set against
profits of the separate orchestral trade.

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(4) For the first period of account during which the separate orchestral
trade is carried on, the available qualifying expenditure is the
amount that is E for that period for the purposes of section
1217RE(2).

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


E − S

where—

  • E is the amount that is E for that period for the purposes of
    10section 1217RE(3), and

  • S is the total amount previously surrendered under section
    1217RG.

(6) If a period of account of the separate orchestral trade does not
coincide with an accounting period, any necessary apportionments
15are to be made by reference to the number of days in the periods
concerned.

1217RI Payment in respect of orchestra tax credit

(1) If a company—

(a) is entitled to an orchestra tax credit for an accounting period,
20and

(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) 25an orchestra tax credit, or

(b) interest on an orchestra 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
30subsection (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 an
orchestra tax credit for that period need be made before the
Commissioners’ enquiries are completed (see paragraph 32 of
35Schedule 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 an orchestra tax credit for an
accounting period before the company has paid to the
40Commissioners 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
45Part 1 of the Social Security Contributions and Benefits Act
1992 or Part 1 of the Social Security Contributions and
Benefits (Northern Ireland) Act 1992.

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(5) A payment in respect of an orchestra tax credit is not income of the
company for any tax purpose.

1217RJ Limit on State aid

In accordance with Commission Regulation (EU) No. 651/2014 of 17
5June 2014 declaring certain categories of aid compatible with the
internal market, the total amount of orchestra tax credits payable
under section 1217RI in the case of any undertaking is not to exceed
50 million euros per year.

1217RK No account to be taken of amount if unpaid

(1) 10In determining for the purposes of this Chapter the amount of costs
incurred on a production of a concert or concert series at the end of a
period of account, ignore any amount that has not been paid 4
months after the end of that period.

(2) This is without prejudice to the operation of section 1217QE (when
15costs are taken to be incurred).

Anti-avoidance etc
1217RL Tax avoidance arrangements

(1) A company does not qualify for orchestra tax relief in relation to the
production of a concert or concert series if there are any tax
20avoidance 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—

  • 25“arrangements” includes any scheme, agreement or
    understanding, whether or not legally enforceable;

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

1217RM Transactions not entered into for genuine commercial reasons

(1) 30A transaction is to be ignored for the purpose of determining
orchestra tax relief so far as the transaction is attributable to
arrangements (other than tax avoidance arrangements) entered into
otherwise than for genuine commercial reasons.

(2) In this section “arrangements” and “tax avoidance arrangements”
35have the same meaning as in section 1217RL.

CHAPTER 4 Losses of separate orchestral trade
1217S Application of sections 1217SA to 1217SC

(1) Sections 1217SA to 1217SC apply to a company which is treated
under section 1217Q(2) or (5) as carrying on a separate trade in
40relation to the production of a concert or concert series.

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(2) In those sections—

(a) “the completion period” means the accounting period in
which the company ceases to carry on the separate orchestral
trade;

(b) 5“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.

1217SA Restriction on use of losses before completion period

(1) Subsection (2) applies if a loss is made by the company in the
10separate orchestral 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 orchestral trade in a subsequent
15period.

1217SB Use of losses in the completion period

(1) Subsection (2) applies if a loss made in the separate orchestral trade
is carried forward under section 45 of CTA 2010 to the completion
period.

(2) 20So much (if any) of the loss as is not attributable to orchestra tax relief
(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 orchestral trade in the completion
period, the amount of the loss that may be—

(a) 25deducted 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 orchestra
tax relief (see subsection (4)).

(4) 30The amount of a loss in any period that is attributable to orchestra tax
relief is found by—

(a) calculating what the amount of the loss would have been if
there had been no additional deduction under Chapter 3 in
that or any earlier period, and

(b) 35deducting 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 1217SC (terminal losses).

1217SC Terminal losses

(1) This section applies if—

(a) 40the company ceases to carry on the separate orchestral trade,
and

(b) if the company had not ceased to carry on that 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
45(“the terminal loss”).

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Below in this section the company is referred to as “company A” and
the separate orchestral trade is referred to as “trade 1”.

(2) If company A—

(a) is treated under section 1217Q(2) or (5) as carrying on a
5separate trade in relation to the production of another concert
or concert series (“trade 2”), and

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

company A may (on making a claim) make an election under
subsection (3).

(3) 10The election is to have the terminal loss (or a part of it) 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) 15another company (“company B”) is treated under section
1217Q(2) or (5) as carrying on a separate trade (“company B’s
trade”) in relation to the production of another concert or
concert series,

(b) company B is carrying on that trade when company A ceases
20to 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 a part of it) to company B.

(6) On the making of a claim by company B the amount surrendered is
25treated 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
30relation 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
35(company tax returns: claims for group relief).

CHAPTER 5 Provisional entitlement to relief
1217T Provisional entitlement to relief

(1) In relation to a company and the production of a concert or concert
series, “interim accounting period” means any accounting period
40that—

(a) is one in which the company carries on a separate orchestral
trade, and

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