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Finance (No.2) Bill


Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 1 — Entitlement to film tax relief

170

 

Payment in respect of film tax credit

9     (1)  

Where—

(a)   

a company is entitled to a film tax credit for a period, and

(b)   

makes a claim,

           

the Commissioners shall pay to the company the amount of the credit.

5

      (2)  

An amount payable in respect of—

(a)   

a film tax credit, or

(b)   

interest on a film tax credit under section 826 of ICTA,

           

may be applied in discharging any liability of the company to pay

corporation tax.

10

           

To the extent that it is so applied the Commissioners’ liability under sub-

paragraph (1) is discharged.

      (3)  

Where the company’s company tax return for the accounting period is

enquired into by the Commissioners, no payment in respect of a film tax

credit for that period need be made before the Commissioners’ enquiries

15

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 think fit.

      (4)  

No payment need be made in respect of a film tax credit for an accounting

period before the company has paid to the Commissioners any amount that

20

it is required to pay for payment periods ending in that accounting period—

(a)   

under PAYE regulations,

(b)   

under section 555 of ICTA (foreign entertainers), or

(c)   

in respect of Class 1 national insurance contributions.

Payment in respect of film tax credit not income

25

10         

A payment in respect of film tax credit is not income of the company for any

tax purpose.

Trading loss reduced by amount surrendered for film tax credit

11         

The amount of a film production company’s trading loss for an accounting

period is reduced by any amount surrendered for a film tax credit.

30

No account to be taken of amounts if unpaid

12    (1)  

In determining for the purposes of this Part of this Schedule the amount of

costs incurred on a film at the end of a period of account no account is to be

taken of any amount that has not been paid four months after the end of that

period.

35

      (2)  

This is without prejudice to the operation of paragraph 9 of Schedule 4

(general rules as to when costs are taken to be incurred).

Artificially inflated claims for deduction or film tax credit

13    (1)  

To the extent that a transaction is attributable to arrangements entered into

wholly or partly for a disqualifying purpose, it shall be disregarded in

40

determining for any period—

 

 

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 2 — Certification of British films for purposes of film tax relief

171

 

(a)   

any additional deduction to which a company is entitled under this

Part of this Schedule, and

(b)   

any film tax credit to which a company is entitled.

      (2)  

Arrangements are entered into wholly or mainly for a disqualifying purpose

if their main object, or one of their main objects, is to enable a company to

5

obtain—

(a)   

an additional deduction under this Part of this Schedule to which it

would not otherwise be entitled or of a greater amount than that to

which it would otherwise be entitled, or

(b)   

a film tax credit to which it would not otherwise be entitled or of a

10

greater amount than that to which it would otherwise be entitled.

      (3)  

In this paragraph “arrangements” includes any scheme, agreement or

understanding, whether or not legally enforceable.

Interpretation

14         

In this Part of this Schedule—

15

“the Commissioners” means Her Majesty’s Commissioners of Revenue

and Customs;

“national insurance contributions” means contributions under Part 1 of

the Social Security Contributions and Benefits Act 1992 (c. 4) or Part

1 of the Social Security Contributions and Benefits (Northern

20

Ireland) Act 1992 (c. 7); and

“PAYE regulations” means regulations under section 203 of ICTA.

Part 2

Certification of British films for purposes of film tax relief

15         

For section 6 of the Films Act 1985 (c. 21) (certification of master negatives,

25

tapes and discs for purposes of section 72 of FA 1982) substitute)—

“6      

Certification of British films

Schedule 1 to this Act has effect with respect to the certification by

the Secretary of State of a film as a British film for the purposes of

film tax relief.”.

30

16         

For the heading to Schedule 1 to that Act substitute “Certification of British

films for purposes of film tax relief”.

17         

For paragraph 1 of that Schedule substitute—

“Preliminary

1     (1)  

In this Schedule—

35

“film” includes any record, however made, of a sequence of

visual images that is capable of being used as a means of

showing that sequence as a moving picture;

“film production company” has the same meaning as in

Chapter 3 of Part 3 of the Finance Act 2006 (see section 32

40

of that Act).

 

 

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 2 — Certification of British films for purposes of film tax relief

172

 

      (2)  

For the purposes of this Schedule each part of a series of films is

treated as a separate film, unless—

(a)   

the films form a series with not more than 26 parts,

(b)   

the combined playing time is not more than 26 hours, and

(c)   

the series constitutes a self-contained work or is a series of

5

documentaries with a common theme,

           

in which case the films are treated as a single film.

      (3)  

References in this Schedule to a film include the film soundtrack.

      (4)  

For the purposes of this Schedule a film is completed when it is

first in a form in which it can reasonably be regarded as ready for

10

copies of it to be made and distributed for presentation to the

general public.”.

18         

For paragraph 2 of that Schedule substitute—

“Applications for certification

2     (1)  

The film production company may apply to the Secretary of State

15

for the certification of a film as a British film.

      (2)  

The application may be for an interim or final certificate.

      (3)  

An interim certificate is a certificate granted before the film is

completed that the film, if completed in accordance with the

proposals set out in the application, will be a British film.

20

      (4)  

A final certificate is a certificate granted after the film is completed

that the film is a British film.

      (5)  

The applicant must—

(a)   

produce to the Secretary of State such books or other

documents relating to the application, and

25

(b)   

provide the Secretary of State with such other information

with respect to it,

           

as the Secretary of State may require for the purposes of

determining the application.

      (6)  

The Secretary of State may require information provided for the

30

purposes of the application to be accompanied by a statutory

declaration, by the person providing it, as to the truth of the

information.”.

19         

For paragraph 3 of that Schedule substitute—

“Certification and withdrawal of certification

35

3     (1)  

If the Secretary of State is satisfied that the requirements are met

for interim or final certification of a film as a British film, he shall

certify the film accordingly.

      (2)  

If the Secretary of State is not satisfied that those requirements are

met, he shall refuse the application.

40

      (3)  

An interim certificate—

 

 

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 2 — Certification of British films for purposes of film tax relief

173

 

(a)   

may be given subject to conditions, and (unless the

Secretary of State directs otherwise) is of no effect if the

conditions are not met;

(b)   

may be expressed to expire after a specified period, and

(unless the Secretary of State directs otherwise) ceases to

5

have effect at the end of that period; and

(c)   

ceases to have effect when a final certificate is issued.

      (4)  

If it appears to the Secretary of State that a film certified by him

under this Schedule ought not to have been certified, he shall

revoke its certification.

10

           

Unless the Secretary of State directs otherwise, a certificate that is

revoked is treated as never having had effect.”.

20         

In paragraph 4 of that Schedule (British films for purposes of the Schedule),

for sub-paragraphs (1) to (3) substitute—

    “(1)  

A film is a British film for the purposes of this Schedule if it passes

15

the relevant cultural test (see paragraph 4A, 4B or 4C).”.

21    (1)  

Paragraph 5 of that Schedule (excluded films) is amended as follows.

      (2)  

For sub-paragraph (1) substitute—

    “(1)  

A film must not be certified as a British film for the purposes of

this Schedule if parts of the film whose playing time exceeds 10%

20

of the total playing time of the film are derived from a previous

film, unless—

(a)   

the two films have the same film production company or

producer, and

(b)   

the previous film has not been certified under this

25

Schedule.”.

      (3)  

After sub-paragraph (2) insert—

    “(3)  

For the purposes of this paragraph—

(a)   

the film soundtrack shall be left out of account;

(b)   

“producer” means the person by whom the arrangements

30

necessary for the making of the film are undertaken;

(c)   

in relation to certification before the commencement of

that Chapter, references to certification of a film shall be

read as references to certification of the master negative,

tape or disc of the film.”.

35

22         

In paragraph 9 of that Schedule (determination of disputes) for the words

from “any decision of the Secretary of State” to “may” substitute “any

decision of the Secretary of State under paragraph 3 may”.

23         

In paragraph 10 of that Schedule (regulations and orders)—

(a)   

in sub-paragraph (1)(c), for “2(4)” substitute “2(6);

40

(b)   

in sub-paragraph (2), for “4 to 8” substitute “4 to 5”.

Confidentiality of information

24    (1)  

Section 18(1) of the Commissioners for Revenue and Customs Act 2005

(c. 11) (restriction on disclosure by Revenue and Customs officials) does not

prevent disclosure to the Secretary of State for the purposes of his functions

45

 

 

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 2 — Certification of British films for purposes of film tax relief

174

 

under Schedule 1 to the Films Act 1985 (c. 21) (certification of films as British

films for the purposes of film tax relief).

      (2)  

Information so disclosed may be disclosed to the UK Film Council.

      (3)  

A person to whom information is disclosed under sub-paragraph (1) or (2)

may not otherwise disclose it except—

5

(a)   

for the purposes of the Secretary of State’s functions under Schedule

1 to the Films Act 1985 (c. 21),

(b)   

if the disclosure is authorised by an enactment,

(c)   

in pursuance of an order of a court,

(d)   

for the purposes of a criminal investigation or legal proceedings

10

(whether civil or criminal) connected with the operation of that

Schedule or this Chapter,

(e)   

with the consent of the Commissioners for Her Majesty’s Revenue

and Customs, or

(f)   

with the consent of each person to whom the information relates.

15

      (4)  

The references in this paragraph to the functions of the Secretary of State

under Schedule 1 to the Films Act 1985 do not include those functions in so

far as they are exercised in relation to a film that commenced principal

photography before 1st April 2006.

Wrongful disclosure

20

25    (1)  

A person commits an offence if—

(a)   

he discloses information about a person in contravention of

paragraph 24(3), and

(b)   

the person’s identity is specified in the disclosure, or can be deduced

from it.

25

      (2)  

In sub-paragraph (1) “information about a person” means revenue and

customs information relating to a person within the meaning of section 19(1)

of the Commissioners for Revenue and Customs Act 2005 (c. 11) (wrongful

disclosure).

      (3)  

It is a defence for a person charged with an offence under this paragraph to

30

prove that he reasonably believed—

(a)   

that the disclosure was lawful, or

(b)   

that the information had already and lawfully been made available

to the public.

      (4)  

A person guilty of an offence under this paragraph is liable—

35

(a)   

on conviction on indictment, to imprisonment for a term not

exceeding two years or a fine or both, or

(b)   

on summary conviction, to imprisonment for a term not exceeding

twelve months or a fine not exceeding the statutory maximum or

both.

40

      (5)  

A prosecution for an offence under this paragraph may be brought in

England and Wales only—

(a)   

by the Director of Revenue and Customs Prosecutions, or

(b)   

with the consent of the Director of Public Prosecutions.

 

 

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 3 — Consequential amendments

175

 

      (6)  

A prosecution for an offence under this paragraph may be brought in

Northern Ireland only—

(a)   

by the Commissioners for Her Majesty’s Revenue and Customs, or

(b)   

with the consent of the Director of Public Prosecutions for Northern

Ireland.

5

      (7)  

In the application of this paragraph—

(a)   

in England and Wales, in relation to an offence committed before the

commencement of section 282 of the Criminal Justice Act 2003 (c. 44),

or

(b)   

in Scotland or Northern Ireland,

10

           

the reference in sub-paragraph (3)(b) to twelve months shall be read as a

reference to six months.

Part 3

Consequential amendments

Interest

15

26    (1)  

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

      (2)  

In subsection (1) (payments that carry interest) after paragraph (e) insert—

   

“; or

(f)   

a payment of film tax credit falls to be made to a company.”.

      (3)  

After subsection (3B) insert—

20

“(3C)   

In relation to a payment of film tax credit the material date is

whichever is the later of—

(a)   

the filing date for the company’s company tax return for the

accounting period for which the tax credit is payable, and

(b)   

the date on which the company tax return or amended

25

company tax return containing the claim for payment is

delivered to an officer of Revenue and Customs.

   

For this purpose “the filing date”, in relation to a company tax return,

has the same meaning as in Schedule 18 to the Finance Act 1998.”.

      (4)  

In subsection (8A) (recovery of overpaid amounts)—

30

(a)   

in paragraph (a), for “or (e)” substitute “, (e) or (f)”;

(b)   

in paragraph (b)(ii) after “life assurance company tax credit” insert

“or film tax credit”.

      (5)  

In subsection (8B) after “life assurance company tax credit” (twice) insert “or

film tax credit”.

35

Claim to be made in tax return

27         

In Schedule 18 to FA 1998 (company tax returns), in paragraph 10 (other

claims etc to be included in return), after sub-paragraph (3) insert—

    “(4)  

A claim to which Part 9D of this Schedule applies (claims for film

tax relief) can only be made by being included in a company tax

40

return (see paragraph 83T).”.

 

 

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 3 — Consequential amendments

176

 

Recovery of excessive film tax credit

28         

In paragraph 52 of that Schedule (recovery of excessive repayments etc)—

(a)   

in sub-paragraph (2) (excessive repayments etc to which paragraphs

41 to 48 apply), after paragraph (bc) insert—

“(bd)   

film tax credit,”;

5

(b)   

in sub-paragraph (5) (connection of assessment for excessive

payment to an accounting period), after paragraph (ad) insert—

“(ae)   

an amount of film tax credit paid to a company for

an accounting period,”;

(c)   

in the closing words of that sub-paragraph, after “(ad)” insert “, (ae)”.

10

Claims for film tax credits

29         

After Part 9C of that Schedule insert—

“Part 9D

Claims for film tax relief

Introduction

15

83S        

This Part of this Schedule applies to claims for film tax relief.

Claim to be included in company tax return

83T   (1)  

A claim to which this Part of this Schedule applies must be made

by being included in the claimant company’s tax return for the

accounting period for which the claim is made.

20

      (2)  

It may be included in the return originally made or by

amendment.

Content of claim

83U        

A claim to which this Part of this Schedule applies must specify the

amount of the relief claimed, which must be an amount quantified

25

at the time the claim is made.

Amendment or withdrawal of claim

83V        

A claim to which this Part of this Schedule applies may be

amended or withdrawn by the claimant company only by

amending its company tax return.

30

Time limits for claim

83W   (1)  

A claim to which this part of this Schedule applies may be made,

amended or withdrawn at any time up to the first anniversary of

the filing date for the company tax return of the claimant company

for the accounting period for which the claim is made.

35

      (2)  

The claim may be made, amended or withdrawn at a later date if

an officer of Revenue and Customs allows it.

 

 

 
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