Finance Bill (HC Bill 116)

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

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—

(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).

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

(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.

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.

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 10Restriction 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—

(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—

(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) 25In relation to a company and the production of an exhibition,
“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) 30A company is not entitled to museums and galleries exhibition tax
relief 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) 35that amount is such as to indicate that the EEA expenditure
condition (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 40 Clawback of provisional relief

(1) If 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—

(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;

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• “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)—

(a) after paragraph (aj) insert—

“(ak) an amount of museums and galleries exhibition tax
credit paid to a company for an accounting
period,”, and”

(b) 5in the words after paragraph (b), after “(aj)” insert “, (ak)”.

6 In Part 9D (certain claims for tax relief)—

(a) in the heading, for “or 15D” substitute “, 15D or 15E”, and

(b) in paragraph 83S (introduction), after sub-paragraph (f) insert—

“(g) museums and galleries exhibition tax relief.””

10CAA 2001

7 In Schedule A1 to CAA 2001 (first-year tax credits), in paragraph 11(4), omit
the “and” at the end of paragraph (f) and after paragraph (g) insert “, and

(h) Chapter 3 of Part 15E of that Act (museums and galleries
exhibition tax credits).””

15FA 2007

8 In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa)
(meaning of “corporation tax credit”), omit the “or” at the end of paragraph
(ivd) and after that paragraph insert—

“(ive) a museums and galleries exhibition tax credit under
20Chapter 3 of Part 15E of that Act, or”.”

CTA 2009

9 CTA 2009 is amended in accordance with paragraphs 10 to 14.

10 In section 104BA (restriction on claiming other tax reliefs), after subsection
(4) insert—

“(5) 25For provision prohibiting an R&D expenditure credit being given
under this Chapter and relief being given under Chapter 3 of Part
15E (museums and galleries exhibition tax relief), see section
1218ZCG(2).””

11 In Part 8 (intangible fixed assets), in Chapter 10 (excluded assets), after
30section 808D insert—

“808E Assets representing expenditure incurred in course of separate
exhibition trade

(1) This Part does not apply to an intangible fixed asset held by a
museums and galleries exhibition production company so far as the
35asset represents expenditure on an exhibition that is treated under
Part 15E as expenditure of a separate trade (see particularly sections
1218ZB and 1218ZBE).

(2) In this section—

• “exhibition” has the same meaning as in Part 15E (see section
  401218ZAA);

• “museums and galleries exhibition production company”
  means a company which, for the purposes of that Part, is the
  primary production company or a secondary production

  Finance BillPage 481

  company for an exhibition (see sections 1218ZAC and
  1218ZAD).””

12 In section 1040ZA (restriction on claiming other tax reliefs), after subsection
(4) insert—

“(5) 5For provision prohibiting relief being given under this Part and
under Chapter 3 of Part 15E (museums and galleries exhibition tax
relief), see section 1218ZCG(2).””

13 In section 1310 (orders and regulations), in subsection (4), after paragraph
(eo) insert—

“(ep) 10section 1218ZCC (EEA expenditure condition),

(eq) section 1218ZCF (amount of additional deduction),

(er) section 1218ZF (regulations about activities in relation to
exhibition),”.”

14 In Schedule 4 (index of defined expressions), insert at the appropriate
15places—

30FA 2009

15 In Schedule 54A to FA 2009 (which is prospectively inserted by F(No. 3)A
2010 and contains provision about the recovery of certain amounts of
interest paid by HMRC), in paragraph 2—

(a) in sub-paragraph (2), omit the “or” at the end of paragraph (h) and
35after paragraph (i) insert “, or

(j) a payment of museums and galleries exhibition tax
credit under Chapter 3 of Part 15E of CTA 2009 for
an accounting period.”;”

(b) in sub-paragraph (4), for “(i)” substitute “(j)”.

CTA 2010

16 In Part 8B of CTA 2010 (trading profits taxable at Northern Ireland rate), in
section 357H(7) (introduction), after “Chapter 14A for provision about
5orchestra tax relief;” insert “Chapter 14B for provision about museums and
galleries exhibition tax relief;”.

17 In Part 8B of CTA 2010, after section 357UQ insert—

““CHAPTER 14B Museums and galleries exhibition tax relief

10Introductory

357UR Introduction and interpretation

(1) This Chapter makes provision about the operation of Part 15E of
CTA 2009 (museums and galleries exhibition tax relief) in relation to
expenditure incurred by a company in an accounting period in
15which it is a Northern Ireland company.

(2) In this Chapter—

(a) “Northern Ireland expenditure” means expenditure incurred
in a trade to the extent that the expenditure forms part of the
Northern Ireland profits or Northern Ireland losses of the
20trade;

(b) “the separate exhibition trade” has the same meaning as in
Part 15E of CTA 2009 (see section 1218ZB(3) of that Act);

(c) “qualifying expenditure” has the same meaning as in Chapter
3 of that Part (see section 1218ZCG of that Act).

(3) 25References in Part 15E of CTA 2009 to “museums and galleries
exhibition tax relief” include relief under this Chapter.

Museums and galleries exhibition tax relief

357US Northern Ireland additional deduction

(1) In this Chapter “a Northern Ireland additional deduction” means so
30much of a deduction under section 1218ZCE of CTA 2009 (claim for
additional deduction) as is calculated by reference to qualifying
expenditure that is Northern Ireland expenditure.

(2) A Northern Ireland additional deduction forms part of the Northern
Ireland profits or Northern Ireland losses of the separate exhibition
35trade.

357UT Northern Ireland supplementary deduction

(1) This section applies where—

(a) a company is entitled under section 1218ZCE of CTA 2009 to
an additional deduction in calculating the profit or loss of the
40separate exhibition trade in an accounting period,

(b) the company is a Northern Ireland company in the period,

(c) the additional deduction is wholly or partly a Northern
Ireland additional deduction, and

(d) any of the following conditions is met—

(i) the company does not have a surrenderable loss in the
5accounting period;

(ii) the company has a surrenderable loss in the
accounting period, but does not make a claim under
section 1218ZCH of CTA 2009 (museums and
galleries exhibition tax credit claimable if company
10has surrenderable loss) for the period;

(iii) the company has a surrenderable loss in the
accounting period and makes a claim under that
section for the period, but the amount of Northern
Ireland losses surrendered on the claim is less than
15the Northern Ireland additional deduction.

(2) The company is entitled to make another deduction (“a Northern
Ireland supplementary deduction”) in respect of qualifying
expenditure.

(3) See section 357UU for provision about the amount of the Northern
20Ireland supplementary deduction.

(4) The Northern Ireland supplementary deduction—

(a) is made in calculating the profit or loss of the separate
exhibition trade, and

(b) forms part of the Northern Ireland profits or Northern
25Ireland losses of the separate exhibition trade.

(5) In this section “surrenderable loss” has the meaning given by section
1218ZCI of CTA 2009.

357UU Northern Ireland supplementary deduction: amount

(1) This section contains provision for the purposes of section 357UT(2)
30about the amount of the Northern Ireland supplementary deduction.

(2) If the accounting period falls within only one financial year, the
amount of the Northern Ireland supplementary deduction is—

where—

• 35A is the amount of the Northern Ireland additional deduction
  brought into account in the accounting period;

• B is the amount of Northern Ireland losses surrendered in any
  claim under section 1218ZCH of CTA 2009 for the accounting
  period;

• 40MR is the main rate for the financial year;

• NIR is the Northern Ireland rate for the financial year.

(3) If the accounting period falls within more than one financial year, the
amount of the Northern Ireland supplementary deduction is
determined by taking the following steps.

• 45Step 1

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• Calculate, for each financial year, the amount that would be the
  Northern Ireland supplementary deduction for the
  accounting period if it fell within only that financial year (see
  subsection (2)).

• 5Step 2

• Multiply each amount calculated under step 1 by the proportion
  of the accounting period that falls within the financial year
  for which it is calculated.

• Step 3

• 10Add together each amount found under step 2.

357UV Museums and galleries exhibition tax credit: Northern Ireland
supplementary deduction ignored

For the purpose of determining the available loss of a company
under section 1218ZCI of CTA 2009 (amount of surrenderable loss)
15for any accounting period, any Northern Ireland supplementary
deduction made by the company in the period (and any Northern
Ireland supplementary deduction made in any previous accounting
period) is to be ignored.

Losses of separate exhibition trade

357UW 20 Restriction on use of losses before completion period

(1) Section 1218ZDA of CTA 2009 (restriction on use of losses before
completion period) has effect subject as follows.

(2) The reference in subsection (1) of that section to a loss made in the
separate exhibition trade in an accounting period preceding the
25completion period is, if the company is a Northern Ireland company
in that period, a reference to—

(a) any Northern Ireland losses of the trade of the period, or

(b) any mainstream losses of the trade of the period;

and references to losses in subsections (2) and (3) of that section are
30to be read accordingly.

(3) Subsection (4) applies if a Northern Ireland company has, in an
accounting period preceding the completion period—

(a) both Northern Ireland losses of the trade and mainstream
profits of the trade, or

(b) 35both mainstream losses of the trade and Northern Ireland
profits of the trade.

(4) The company may make a claim under section 37 (relief for trade
losses against total profits) for relief for the losses mentioned in
subsection (3)(a) or (b).

(5) 40But relief on such a claim is available only—

(a) in the case of a claim for relief for Northern Ireland losses,
against mainstream profits of the trade of the same period;

(b) in the case of a claim for relief for mainstream losses, against
Northern Ireland profits of the trade of the same period.

(6) 45In this section “the completion period” has the same meaning as in
section 1218ZDA of CTA 2009 (see section 1218ZD(2) of that Act).

357UX Use of losses in the completion period

(1) Section 1218ZDB of CTA 2009 (use of losses in the completion
period) has effect subject as follows.

(2) The reference in subsection (1) of that section to a loss made in the
5separate exhibition trade is, in relation to a loss made in a period in
which the company is a Northern Ireland company, a reference to—

(a) any Northern Ireland losses of the trade of the period, or

(b) any mainstream losses of the trade of the period;

and references to losses in subsections (2) and (4) of that section are
10to be read accordingly.

(3) The references in subsection (3) of that section to a loss made in the
separate exhibition trade in the completion period are, where the
company is a Northern Ireland company in the period, references
to—

(a) 15any Northern Ireland losses of the trade of the period, or

(b) any mainstream losses of the trade of the period;

and references to losses in subsection (4) of that section are to be read
accordingly.

(4) Subsection (4) of that section has effect, in relation to Northern
20Ireland losses, as if the reference to an additional deduction under
Chapter 3 of Part 15E of CTA 2009 included a reference to a Northern
Ireland supplementary deduction under this Chapter.

357UY Terminal losses

(1) Section 1218ZDC of CTA 2009 (terminal losses) has effect subject as
25follows.

(2) Where—

(a) a company makes an election under subsection (3) of that
section (election to treat terminal loss as loss brought forward
of different trade) in relation to all or part of a terminal loss,
30and

(b) the terminal loss is a Northern Ireland loss,

that subsection has effect as if the reference in it to a loss brought
forward were to a Northern Ireland loss brought forward.

(3) Where—

(a) 35a company makes a claim under subsection (6) of that section
(claim to treat terminal loss as loss brought forward by
different company) in relation to part or all of a terminal loss,
and

(b) the terminal loss is a Northern Ireland loss,

40that subsection has effect as if the reference in it to a loss brought
forward were to a Northern Ireland loss brought forward.””

18 (1) Schedule 4 to CTA 2010 (index of defined expressions) is amended as
follows.

(2) In the entry for “Northern Ireland expenditure”—

(a) 45for “14A” substitute “14B”, and

(b) for “and 357UJ(2)” substitute “, 357UJ(2) and 357UR(2)”.

(3) Insert at the appropriate places—

FA 2016

19 In Schedule 24 to FA 2016 (tax advantages constituting the grant of state aid),
in Part 1, in the table headed “Creative tax reliefs”, after the entry for
“Orchestra tax relief” insert—

Part 3 Commencement

20 Any power to make regulations conferred on the Treasury by virtue of this
15Schedule comes into force on the day on which this Act is passed.

21 (1) The amendments made by the following provisions of this Schedule have
effect in relation to accounting periods beginning on or after 1 April 2017—

(a) Part 1, and

(b) in Part 2, paragraphs 2 to 15 and 19.

(2) 20Sub-paragraph (3) applies where a company has an accounting period
beginning before 1 April 2017 and ending on or after that date (“the
straddling period”).

(3) For the purposes of Part 15E of CTA 2009—

(a) so much of the straddling period as falls before 1 April 2017, and so
25much of that period as falls on or after that date, are separate
accounting periods, and

(b) any amounts brought into account for the purposes of calculating for
corporation tax purposes the profits of a trade for the straddling
period are apportioned to the two separate accounting periods on
30such basis as is just and reasonable.

22 (1) Section 4 of CT(NI)A 2015 (power to make consequential amendments) has
effect as if paragraphs 16 to 18 of this Schedule were contained in that Act.

(2) Section 5(4) to (6) of CT(NI)A 2015 (commencement) has effect as if—

(a) references to Part 8B of CTA 2010 were to that Part as amended by
35paragraphs 16 and 17 of this Schedule, and

(b) references to the amendments made by Schedules 1 and 2 to
CT(NI)A 2015 included the amendments made by paragraph 18 of
this Schedule.

SCHEDULE 7 Section 25 Trading profits taxable at the Northern Ireland rate

Part 1 Amendments relating to SMEs

5Amendments of CTA 2010

1 CTA 2010 is amended as follows.

2 (1) Section 357H (introduction) is amended as follows.

(2) In subsection (5)—

(a) after “that is an SME” insert “and is a Northern Ireland employer”;

(b) 10for “that is not an SME” substitute “that—

(a) is an SME that is not a Northern Ireland employer and
has made the requisite election, or

(b) is not an SME.””

3 (1) Section 357KA (meaning of “Northern Ireland company”) is amended as
15follows.

(2) In subsection (1)(b), for “the SME condition” substitute “the SME (Northern
Ireland employer) condition, the SME (election) condition”.

(3) In subsection (2), for “SME condition” substitute “SME (Northern Ireland
employer) condition”.

(4) 20After subsection (2) insert—

“(2A) The “SME (election) condition” is that—

(a) the company is an SME in relation to the period,

(b) the company is not a Northern Ireland employer in relation
to the period,

(c) 25the company has a NIRE in the period,

(d) the company is not a disqualified close company in relation
to the period, and

(e) an election by the company for the purposes of this
subsection has effect in relation to the period.””

(5) 30In subsection (4), after the definition of “Northern Ireland employer”
insert—

• ““disqualified close company”, see section 357KEA;”.”

(6) After subsection (3) insert—

“(3A) An election for the purposes of subsection (2A)—

(a) 35must be made by notice to an officer of Revenue and
Customs,

(b) must specify the accounting period in relation to which it is
to have effect (“the specified accounting period”),

(c) must be made before the end of the period of 12 months
40beginning with the end of the specified accounting period,
and

(d) if made in accordance with paragraphs (a) to (c) has effect in
relation to the specified accounting period.””

4 (1) Section 357KE (Northern Ireland workforce conditions) is amended as
follows.

(2) 5In subsection (2)—

(a) omit the “and” at the end of paragraph (b), and

(b) at the end of paragraph (c) insert “, and

“(d) in the case of a close company, or of a company which would
be a close company if it were UK resident, individuals who
10are participators in the company.””

(3) After subsection (7) insert—

“(7A) In this section “participator” has the same meaning as in sections
1064 to 1067 (see sections 1068 and 1069).

(7B) In determining for the purposes of this section the amount of
15working time that is spent in any place by a participator in the
company, time spent by the participator in that place is to be
included where—

(a) the time is spent by the participator in providing services to
a person other than the company (“the third party”), and

(b) 20condition A or B is met.

(7C) Condition A is that the provision of the services results in a payment
being made (whether directly or indirectly) to the company by—

(a) the third party, or

(b) a person connected with the third party.

(7D) 25Condition B is that—

(a) the company holds a right that it acquired (whether directly
or indirectly) from the participator, and

(b) any payment in connection with that right is made (whether
directly or indirectly) to the company by—

(i) 30the third party, or

(ii) a person connected with the third party.

(7E) Section 1122 (connected persons) applies for the purposes of this
section.””

5 After section 357KE insert—

35““Meaning of “disqualified close company”

357KEA “Disqualified close company”

(1) A company is a “disqualified close company” in relation to a period
if—

(a) the company is a close company, or would be a close
40company if it were UK resident, at any time in the period, and

(b) conditions A and B are met.

(2) Condition A is that the company has a NIRE in the period as a result
of tax-avoidance arrangements.