Finance Bill (HC Bill 102)

Finance BillPage 470

(a) expenditure on any matters not directly involved with
putting on the exhibition (for instance, financing, marketing,
legal services and promotional events),

(b) speculative development expenditure on initial exhibition
5concepts and feasibility,

(c) expenditure on the ordinary running of the exhibition (for
instance, invigilation and the maintenance of exhibits),

(d) expenditure in relation to any live performance,

(e) expenditure on further development of the exhibition during
10the running stage,

(f) expenditure on purchasing the exhibits, and

(g) expenditure on infrastructure, unless that expenditure is
incurred solely for the purposes of the exhibition.

Additional deduction
1218ZCE 15 Claim for additional deduction

(1) A company which qualifies for museums and galleries exhibition tax
relief in relation to the production of an exhibition may claim an
additional deduction in relation to the production.

(2) A claim under subsection (1) is made with respect to an accounting
20period.

(3) Where a company has made a claim, the company is entitled to make
an additional deduction, in accordance with section 1218ZCF, in
calculating the profit or loss of the separate exhibition trade for the
accounting period concerned.

(4) 25Where 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 exhibition trade, the company must make any
amendments of company tax returns for earlier periods that may be
necessary.

(5) 30Any 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.

1218ZCF Amount of additional deduction

(1) The amount of an additional deduction to which a company is
35entitled as a result of a claim under section 1218ZCE is calculated as
follows.

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

(a) 40so 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.

Finance BillPage 471

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


E − P

where E is—

(a) 5so 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
10periods.

(4) The Treasury may by regulations amend the percentage specified in
subsection (2) or (3).

(5) If a period of account of the separate exhibition 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.

1218ZCG “Qualifying expenditure”

(1) In this Chapter “qualifying expenditure”, in relation to the
production of an exhibition, means core expenditure (see section
201218ZCD) on the production that—

(a) falls to be taken into account under sections 1218ZBA to
1218ZBF in calculating the profit or loss of the separate
exhibition trade for tax purposes,

(b) is not expenditure which is otherwise relievable, and

(c) 25is incurred on or before 31 March 2022.

(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) an R&D expenditure credit under Chapter 6A of Part 3,

(b) 30relief under Part 13 (additional relief for expenditure on
research and development),

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

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

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

(f) 35an additional deduction under Part 15C (theatrical
productions),

(g) a theatre tax credit under Part 15C, or

(h) orchestra tax relief under Chapter 3 of Part 15D.

(3) The Treasury may by regulations amend paragraph (c) of subsection
40(1) so as to substitute a later date for the date for the time being
specified in that paragraph.

Finance BillPage 472

Museums and galleries exhibition tax credits
1218ZCH Museums and galleries exhibition tax credit claimable if company
has surrenderable loss

(1) A company which qualifies for museums and galleries exhibition tax
5relief in relation to the production of an exhibition may claim a
museums and galleries exhibition tax credit in relation to the
production for an accounting period in which the company has a
surrenderable loss.

(2) Section 1218ZCI sets out how to calculate the amount of any
10surrenderable 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) Subject to section 1218ZCK, the amount of the museums and
galleries exhibition tax credit to which a company making a claim is
15entitled for the accounting period is—

(a) 25% of the amount of the loss surrendered if the exhibition is
a touring exhibition (see section 1218ZAB), or

(b) 20% of the amount of the loss surrendered if the exhibition is
not a touring exhibition.

(5) 20The company’s available loss for the accounting period (see section
1218ZCI(2)) is reduced by the amount surrendered.

1218ZCI 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
25exhibition 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—


L + RUL

30where—

  • L is the amount of the company’s loss for the period in the
    separate exhibition trade, and

  • RUL is the amount of any relevant unused loss of the company
    (see subsection (3)).

(3) 35The “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 1218ZCH, or

(b) carried forward under section 45 or 45B of CTA 2010 and set
40against profits of the separate exhibition trade.

(4) For the first period of account during which the separate exhibition
trade is carried on, the available qualifying expenditure is the
amount that is E for that period for the purposes of section
1218ZCF(2).

Finance BillPage 473

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


E − S

where—

  • 5E is the amount that is E for that period for the purposes of
    section 1218ZCF(3), and

  • S is the total amount previously surrendered under section
    1218ZCH.

(6) If a period of account of the separate exhibition trade does not
10coincide with an accounting period, any necessary apportionments
are to be made by reference to the number of days in the periods
concerned.

1218ZCJ Payment in respect of museums and galleries exhibition tax credit

(1) If a company—

(a) 15is entitled to a museums and galleries exhibition 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) 20An amount payable in respect of—

(a) a museums and galleries exhibition tax credit, or

(b) interest on a museums and galleries exhibition tax credit
under section 826 of ICTA,

may be applied in discharging any liability of the company to pay
25corporation 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
30museums and galleries exhibition 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) 35No payment need be made in respect of a museums and galleries
exhibition 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, or

(b) 40in 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 museums and galleries exhibition tax
45credit is not income of the company for any tax purpose.

Finance BillPage 474

1218ZCK Maximum museums and galleries exhibition tax credits payable

(1) Subsections (2) and (3) prescribe the maximum amount of museums
and galleries exhibition tax credits which may be paid to a company
under section 1218ZCJ in respect of the company’s separate
5exhibition trade.

(2) Where the separate exhibition trade relates to the production of a
touring exhibition, the maximum amount which may be paid to the
company is £100,000.

(3) Where the separate exhibition trade relates to the production of an
10exhibition which is not a touring exhibition, the maximum amount
which may be paid to the company is £80,000.

(4) In accordance with Commission Regulation (EU) No. 651/2014 of 17
June 2014 declaring certain categories of aid compatible with the
internal market, the total amount of museums and galleries
15exhibition tax credits payable under section 1218ZCJ in the case of
any undertaking is not to exceed 75 million euros per year.

1218ZCL No account to be taken of amount if unpaid

(1) In determining for the purposes of this Chapter the amount of costs
incurred on a production of an exhibition at the end of a period of
20account, 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 1218ZBD (when
costs are taken to be incurred).

Anti-avoidance etc
1218ZCM 25 Tax avoidance arrangements

(1) A company does not qualify for museums and galleries exhibition
tax relief in relation to the production of an exhibition if there are any
tax avoidance arrangements relating to the production.

(2) Arrangements are “tax avoidance arrangements” if their main
30purpose, 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;

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

1218ZCN Transactions not entered into for genuine commercial reasons

(1) A transaction is to be ignored for the purpose of determining
museums and galleries exhibition tax relief so far as the transaction
40is 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”
have the same meaning as in section 1218ZCM.

Finance BillPage 475

CHAPTER 4 Losses of separate exhibition trade

1218ZD Application of sections 1218ZDA to 1218ZDC

(1) Sections 1218ZDA to 1218ZDC apply to a company which is treated
5under section 1218ZB(2) as carrying on a separate trade in relation to
the production of an exhibition.

(2) In those sections “the completion period” means the accounting
period in which the company ceases to carry on the separate
exhibition trade.

1218ZDA 10 Restriction on use of losses before completion period

(1) This section applies if a loss is made by the company in the separate
exhibition trade in an accounting period preceding the completion
period.

(2) The loss is not available for loss relief, except to the extent that the
15loss may be carried forward under section 45 or 45B of CTA 2010 to
be deducted from profits of the separate exhibition trade in a
subsequent period.

(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate exhibition trade in a
20subsequent period, the deduction is to be ignored for the purposes of
section 269ZB of CTA 2010 (restriction on deductions from trading
profits).

(4) In this section “loss relief” includes any means by which a loss might
be used to reduce the amount in respect of which a company, or any
25other person, is chargeable to tax.

1218ZDB Use of losses in the completion period

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

(2) 30So much (if any) of the loss as is not attributable to museums and
galleries exhibition tax relief (see subsection (4)) may be treated for
the purposes of section 37 and Part 5 of CTA 2010 as if it were a loss
made in the completion period.

(3) If a loss is made in the separate exhibition trade in the completion
35period, 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 museums
40and galleries exhibition tax relief (see subsection (4)).

(4) The amount of a loss in any period that is attributable to museums
and galleries exhibition tax relief is found by—

Finance BillPage 476

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

(5) 5This section does not apply to a loss surrendered, or treated as
carried forward, under section 1218ZDC (terminal losses).

1218ZDC Terminal losses

(1) This section applies if—

(a) the company ceases to carry on the separate exhibition trade,
10and

(b) if the company had not ceased to carry on that trade, it could
have carried forward an amount under section 45 or 45B of
CTA 2010 to be set against profits of that trade in a later
period (“the terminal loss”).

15Below in this section the company is referred to as “company A” and
the separate exhibition trade is referred to as “trade 1”.

(2) If company A—

(a) is treated under section 1218ZB(2) as carrying on a separate
trade in relation to the production of another exhibition
20(“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) The election is to have the terminal loss (or a part of it) treated—

(a) 25in a case where the loss could have been carried forward
under section 45 of CTA 2010 had trade 1 not ceased, as if it
were a loss carried forward under that section to be set
against the profits of trade 2 of the first accounting period
beginning after the cessation and so on, and

(b) 30in a case where the loss could have been carried forward
under section 45B of CTA 2010 had trade 1 not ceased, as if it
were a loss made in trade 2 which has been carried forward
under that section to the first accounting period beginning
after the cessation.

(4) 35Subsection (5) applies if—

(a) another company (“company B”) is treated under section
1218ZB(2) as carrying on a separate trade (“company B’s
trade”) in relation to the production of—

(i) the exhibition which is the subject of trade 1, or

(ii) 40another exhibition,

(b) company B is carrying on company B’s 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) 45Company 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
treated—

Finance BillPage 477

(a) in a case where the amount could have been carried forward
under section 45 of CTA 2010 had trade 1 not ceased, as if it
were a loss carried forward by company B under that section
to be set against the profits of company B’s trade of the first
5accounting period beginning after the cessation and so on,
and

(b) in a case where the amount could have been carried forward
under section 45B of CTA 2010 had trade 1 not ceased, as if it
were a loss made in company B’s trade which has been
10carried forward under that section to the first accounting
period beginning after the cessation.

(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) 15“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).

(9) A deduction under section 45 or 45B of CTA 2010 which is made in
20reliance on this section is to be ignored for the purposes of section
269ZB of that Act (restriction on deductions from trading profits).

CHAPTER 5 Provisional entitlement to relief

1218ZE Provisional entitlement to relief

(1) In relation to a company and the production of an exhibition,
25“interim accounting period” means any accounting period that—

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

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

(2) A company is not entitled to museums and galleries exhibition tax
30relief for an interim accounting period unless—

(a) its company tax return for the period states the amount of
planned core expenditure on the production of the exhibition
that is EEA expenditure (see section 1218ZCC(2)), and

(b) that amount is such as to indicate that the EEA expenditure
35condition (see section 1218ZCC) will be met.

If those requirements are met, the company is provisionally treated
in relation to that period as if the EEA expenditure condition were
met.

1218ZEA Clawback of provisional relief

(1) 40If a statement is made under section 1218ZE(2) but it subsequently
appears that the EEA expenditure condition will not be met on the
company’s ceasing to carry on the separate exhibition trade, the
company—

Finance BillPage 478

(a) is not entitled to museums and galleries exhibition tax relief
for any period for which its entitlement depended on such a
statement, and

(b) must amend accordingly its company tax return for any such
5period.

(2) When a company ceases to carry on the separate exhibition 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
10exhibition trade, and

(b) be accompanied by a final statement of the amount of the core
expenditure on the production of the exhibition that is EEA
expenditure.

(3) If that statement shows that the EEA expenditure condition is not
15met—

(a) the company is not entitled to museums and galleries
exhibition tax relief or to relief under section 1218ZDC
(transfer of terminal losses) for any period, and

(b) must amend accordingly its company tax return for any
20period for which such relief was claimed.

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

CHAPTER 6 25Interpretation

1218ZF Regulations about activities in relation to an exhibition

The Treasury may by regulations amend section 1218ZBC (costs of
the production) or 1218ZCD (“core expenditure”) for the purpose of
providing that activities of a specified description are, or are not, to
30be regarded as activities involved in developing or (as the case may
be) producing, running, deinstalling or closing—

(a) an exhibition, or

(b) an exhibition of a specified description.

1218ZFA Interpretation

35In this Part—

  • “company tax return” has the same meaning as in Schedule 18
    to FA 1998 (see paragraph 3(1) of that Schedule);

  • “core expenditure” has the meaning given by section 1218ZCD;

  • “costs”, in relation to an exhibition, has the meaning given by
    40section 1218ZBC;

  • EEA expenditure” has the meaning given by section
    1218ZCC(2);

  • EEA expenditure condition” has the meaning given by section
    1218ZCC;

  • 45“exhibition” has the meaning given by section 1218ZAA;

  • Finance BillPage 479

  • “income”, in relation to an exhibition, has the meaning given by
    section 1218ZBB;

  • “museums and galleries exhibition tax relief” is to be read in
    accordance with Chapter 3 (see in particular section
    51218ZC(1));

  • “primary production company” has the meaning given by
    section 1218ZAC;

  • “qualifying expenditure” has the meaning given by section
    1218ZCG;

  • 10“secondary production company” has the meaning given by
    section 1218ZAD;

  • “the separate exhibition trade” is to be read in accordance with
    section 1218ZB;

  • “touring exhibition” has the meaning given by section
    151218ZAB.”

Part 2 Consequential amendments

ICTA

2 (1) Section 826 of ICTA (interest on tax overpaid) is amended as follows.

(2) 20In subsection (1), after paragraph (fd) insert—

(fe) a payment of museums and galleries exhibition tax credit
falls to be made to a company; or”.

(3) In subsection (3C), for “or orchestra tax credit” substitute “, orchestra tax
credit or museums and galleries exhibition tax credit”.

(4) 25In subsection (8A)—

(a) in paragraph (a), for “or (fd)” substitute “, (fd) or (fe)”, and

(b) in paragraph (b)(ii), after “orchestra tax credit” insert “or museums
and galleries exhibition tax credit”.

(5) In subsection (8BA), after “orchestra tax credit” (in both places) insert “or
30museums and galleries exhibition tax credit”.

FA 1998

3 Schedule 18 to FA 1998 (company tax returns, assessments and related
matters) is amended in accordance with paragraphs 4 to 6.

4 In paragraph 10 (other claims and elections to be included in return), in sub-
35paragraph (4), for “or 15D” substitute “, 15D or 15E”.

5 (1) Paragraph 52 (recovery of excessive repayments etc) is amended as follows.

(2) In sub-paragraph (2), after paragraph (bh) insert—

(bi) museums and galleries exhibition tax credit under Part 15E
of that Act,”.

(3) 40In sub-paragraph (5)—