Finance (No.2) Bill

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 3 — Consequential amendments
176

      (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 (4)(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
177

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.

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 4 — Provisional entitlement to relief
178

Penalty
83X   (3)
The company is liable to a penalty where it—
(a)
fraudulently or negligently makes a claim for a film tax
credit that is incorrect, or
(b)
discovers that a claim for a film tax credit made by it
5
(neither fraudulently nor negligently) is incorrect and does
not remedy the error without unreasonable delay.
      (4)
The penalty is an amount not exceeding the excess film tax credit
claimed, that is, the difference between—
(a)
the amount (if any) of the film tax credit to which the
10
company is entitled for the accounting period to which the
claim relates, and
(b)
the amount of the film tax credit claimed by the company
for that period.”.
Part 4
15
Provisional entitlement to relief
Introduction
30    (1)
In this Part of this Schedule—
“the company” means the film production company;
“the final accounting period” means the accounting period of the
20
company in which—
(a)
the film is completed, or
(b)
where the company does not complete the film, it abandons
film-making activities in relation to it;
“interim accounting period” means any earlier accounting period of the
25
company during which film-making activities are carried on in
relation to the film;
“interim certificate” and “final certificate” refer to certificates under
Schedule 1 to the Films Act 1985 (c. 21) (certification of films as
British films for purposes of film tax relief);
30
“relief” means—
(a)
film tax relief, or
(b)
relief under section 45 (transfer of terminal losses from one
qualifying film to another).
      (2)
The company tax return of the company for the final accounting period must
35
state that the film has been completed or, as the case may be, that the
company has abandoned film-making activities in relation to it.
Certification as a British film
31    (1)
The company is not entitled to relief for an interim accounting period unless
its company tax return for the period is accompanied by an interim
40
certificate.
      (2)
If an interim certificate ceases to be in force (otherwise than on being
superseded by a final certificate) or is revoked, the company—

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 4 — Provisional entitlement to relief
179

(a)
is not entitled to relief for any period for which its entitlement
depended on the certificate, and
(b)
must amend accordingly its company tax return for any such period.
      (3)
If the film is completed by the company—
(a)
its company tax return for the final accounting period must be
5
accompanied by a final certificate;
(b)
if that requirement is met, the final certificate has effect for the final
accounting period and for any interim accounting period;
(c)
if that requirement is not met, the company—
(i)
is not entitled to relief for any period, and
10
(ii)
must amend accordingly its company tax return for any
period for which relief was claimed.
      (4)
If the company abandons film-making activities in relation to the film—
(a)
its company tax return for the final accounting period may be
accompanied by an interim certificate; and
15
(b)
the abandonment of film-making activities does not affect any
entitlement to relief in that or any previous accounting period.
      (5)
If a final certificate is revoked, the company—
(a)
is not entitled to relief for any period, and
(b)
must amend accordingly its company tax return for any period for
20
which relief was claimed.
The UK expenditure condition
32    (1)
The company is not entitled to relief for an interim accounting period
unless—
(a)
its company tax return for the period states the amount of planned
25
core expenditure on the film that is UK expenditure, and
(b)
that amount is such as to indicate that the condition in section 41 (the
UK expenditure condition) will be met on completion of the film.

If those requirements are met, the company is provisionally treated in
relation to that period as if that condition was met.
30
      (2)
If such a statement is made but it subsequently appears that condition will
not be met on completion of the film, the company—
(a)
is not entitled to 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 period.
35
      (3)
When the film is completed or, as the case may be, the company abandons
film-making activities in relation to it—
(a)
the company tax return for the final accounting period must—
(i)
state that the film has been completed or, as the case may be,
the company has abandoned film-making activities in
40
relation to it, and
(ii)
be accompanied by a final statement of the amount of core
expenditure on the film that is UK expenditure; and
(b)
if the return shows that the condition in section 41 is not met, the
company—
45
(i)
is not entitled to relief for any period, and

Finance (No.2) Bill
Schedule 5 — Film tax relief: further provisions
Part 4 — Provisional entitlement to relief
180

(ii)
must amend accordingly its company tax return for any
period for which relief was claimed.
Whether film a limited-budget film
33    (1)
The company is not entitled to film tax relief for an interim accounting
period on the basis that the film is a limited-budget film unless—
5
(a)
its company tax return for the period states the amount of planned
core expenditure on the film, and
(b)
that amount is such as to indicate that the condition in section 34(2)
(definition of “limited-budget film”) will be met on completion of the
film.
10

In that case, the film is provisionally treated in relation to that period as if
that condition was met.
      (2)
If it subsequently appears that the condition will not be met on completion
of the film, the company—
(a)
is not entitled to film tax relief for any period on the basis that the
15
film is a limited-budget film, and
(b)
must amend accordingly its company tax return for any such period
for which relief has been claimed on that basis.
      (3)
When the film is completed or, as the case may be, the company abandons
film-making activities in relation to it—
20
(a)
its company tax return for the final accounting period must—
(i)
state that the film has been completed or, as the case may be,
the company has abandoned film-making activities in
relation to it, and
(ii)
be accompanied by a final statement of the core expenditure
25
on the film; and
(b)
if the return shows that the film is not a limited-budget film, or (as
the case may be) that having regard to the proportion of work on the
film that was completed, it would not have been a limited-budget
film if it had been completed, the company—
30
(i)
is not entitled to film tax relief for any period on the basis that
the film is a limited-budget film, and
(ii)
must amend accordingly its company tax return for any
period for which such relief was claimed on that basis.
Time limit for amendments and assessments
35
34
Any amendment or assessment necessary to give effect to the provisions of
this Part of this Schedule may be made notwithstanding any limitation on
the time within which an amendment or assessment may normally be made.