Corporation Tax Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 14 — Remediation of contaminated land
Chapter 6 — Supplementary
547

(5)
In the following sections, which apply for the purpose of determining whether
a sub-contractor’s expenditure meets the requirements of subsection (3)(c) and
(d)—
(a)
section 1170 (staffing costs), and
(b)
section 1177 (subsidised expenditure),
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references to a company are to be read as references to the sub-contractor.
(6)
Any apportionment of expenditure of the company or the sub-contractor
necessary for the purposes of this section is to be made on a just and reasonable
basis.
1176
“Qualifying expenditure on sub-contracted land remediation”: other cases
10
(1)
This section applies if—
(a)
a company makes a sub-contractor payment, and
(b)
the company and the sub-contractor are not connected persons.
(2)
The amount of the sub-contractor payment which is “qualifying expenditure
on sub-contracted land remediation” is the entire payment.
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1177
“Subsidised expenditure”
(1)
For the purposes of this Part a company’s expenditure is treated as subsidised
to the extent that—
(a)
a grant or subsidy is obtained in respect of the expenditure, or
(b)
it is otherwise met directly or indirectly by a person other than the
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company.
(2)
For the purposes of this a grant, subsidy or payment that is not allocated to
particular expenditure is to be allocated to expenditure of the recipient on a just
and reasonable basis.
1178
Persons having a “relevant connection” to a company
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For the purposes of this Part a person has a “relevant connection” to a company
in a case where the company’s land is in a contaminated state wholly or partly
as a result of any thing done, or omitted to be done, by the person if—
(a)
the person is or was connected to the company when any such thing is
or was done, or omitted to be done, by the person,
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(b)
the person is or was connected to the company at the time when the
land in question is or was acquired by the company, or
(c)
the person is or was connected to the company at any time when
relevant land remediation is or was undertaken (whether by the
company itself or on its behalf).
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1179
Other definitions
In this Part —
“controlled waters”—
(a)
in relation to England and Wales, has the same meaning as in
Part 3 of the Water Resources Act 1991 (c. 57),
40
(b)
in relation to Scotland, has the same meaning as in section 30A
of the Control of Pollution Act 1974 (c. 40), and

Corporation Tax Bill
Part 15 — Film production
Chapter 1 — Introduction
548

(c)
in relation to Northern Ireland, means water in waterways and
underground strata (as defined in Article 2(2) of the Water
(Northern Ireland) Order 1999 (S.I. 1999/662 (N.I. 6)),
“harm” means—
(a)
harm to the health of living organisms,
5
(b)
interference with the ecological systems of which any living
organisms form part,
(c)
offence to the senses of human beings, or
(d)
damage to property,
“land” means any estate, interest or rights in or over land,
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“pollution of controlled waters” means the entry into controlled waters
of—
(a)
any poisonous, noxious or polluting matter, or
(b)
any solid waste matter,
“substance” means any natural or artificial substance, whether in solid or
15
liquid form or in the form of a gas or vapour, and
“UK property business loss” has the same meaning as in section 392A of
ICTA.
Part 15
Film production
20
Chapter 1
Introduction
Introductory
1180
Overview of Part
(1)
This Part is about film production.
25
(2)
Sections 1181 to 1187 contain definitions and other provisions about
interpretation that apply for the purposes of this Part.

See, in particular, section 1182 which explains how a company comes to be
treated as the film production company in relation to a film.
(3)
Chapter 2 is about the taxation of the activities of a film production company
30
and includes—
(a)
provision for the company’s activities in relation to its film to be treated
as a separate trade, and
(b)
provision about the calculation of the profits and losses of that trade.
(4)
Chapter 3 is about relief (called “film tax relief”) which can be given to a film
35
production company—
(a)
by way of additional deductions to be made in calculating the profits or
losses of the company’s separate trade, or
(b)
by way of a payment (a “film tax credit”) to be made on the company’s
surrender of losses from that trade.
40

Corporation Tax Bill
Part 15 — Film production
Chapter 1 — Introduction
549

(5)
Chapter 4 is about the relief which can be given for losses made by a film
production company in its separate trade including provision for certain such
losses to be transferred to other separate trades.
(6)
Chapter 5 provides—
(a)
for relief under Chapters 3 and 4 to be given on a provisional basis, and
5
(b)
for such relief to be withdrawn if it turns out that conditions that must
be met for such relief to be given are not actually met.
Interpretation
1181
“Film” etc
(1)
This section applies for the purposes of this Part.
10
(2)
“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.
(3)
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,
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(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
documentaries with a common theme,

in which case the films are treated as a single film.
(4)
References to a film include the film soundtrack.
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(5)
A film is completed when it is first in a form in which it can reasonably be
regarded as ready for copies of it to be made and distributed for presentation
to the general public.
1182
“Film production company”
(1)
For the purposes of this Part “film production company” is to be read in
25
accordance with this section.
(2)
There cannot be more than one film production company in relation to a film.
(3)
A company that (otherwise than in partnership)—
(a)
is responsible—
(i)
for pre-production, principal photography and post-
30
production of the film, and
(ii)
for delivery of the completed film,
(b)
is actively engaged in production planning and decision-making
during pre-production, principal photography and post-production,
and
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(c)
directly negotiates, contracts and pays for rights, goods and services in
relation to the film,

is the film production company in relation to the film.
(4)
In relation to a qualifying co-production, a company that (otherwise than in
partnership)—
40
(a)
is a co-producer, and

Corporation Tax Bill
Part 15 — Film production
Chapter 1 — Introduction
550

(b)
makes an effective creative, technical and artistic contribution to the
film,

is the film production company in relation to the film.
(5)
If there is more than one company meeting the description in subsection (3) or
(4), the company that is most directly engaged in the activities referred to in
5
that subsection is the film production company in relation to the film.
(6)
If there is no company meeting the description in subsection (3) or (4), there is
no film production company in relation to the film.
(7)
A company may elect to be regarded as a company which does not meet the
description in subsection (3) or (4).
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(8)
The election—
(a)
must be made by the company by being included in its company tax
return for an accounting period (and may be included in the return
originally made or by amendment), and
(b)
may be withdrawn by the company only by amending its company tax
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return for that accounting period.
(9)
The election has effect in relation to films which commence principal
photography in that or any subsequent accounting period.
1183
“Film-making activities” etc
(1)
In this Part “film-making activities”, in relation to a film, means the activities
20
involved in development, pre-production, principal photography and post-
production of the film.
(2)
If all or any of the images in a film are generated by computer, references in this
Part to principal photography are to be read as references to, or as including,
the generation of those images.
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(3)
The Treasury may by regulations—
(a)
amend subsections (1) and (2),
(b)
provide that specified activities are or are not to be regarded as film-
making activities or as film-making activities of a particular
description, and
30
(c)
provide that, in relation to a specified description of film, references to
film-making activities of a particular description are to be read as
references to such activities as may be specified.

“Specified” means specified in the regulations.
1184
“Production expenditure”, “core expenditure” and “limited-budget film”
35
(1)
In this Part, in relation to a film—
“production expenditure” means expenditure on film-making activities in
connection with the film, and
“core expenditure” means production expenditure on pre-production,
principal photography and post-production.
40
(2)
For the purposes of this Part a “limited-budget film” is a film whose core
expenditure is £20 million or less.
(3)
In determining if a film is a limited-budget film, any core expenditure that—

Corporation Tax Bill
Part 15 — Film production
Chapter 2 — Taxation of activities of film production company
551

(a)
is incurred by a person under or as a result of a transaction entered into
directly or indirectly between that person and a connected person, and
(b)
might have been expected to have been of a greater amount (“the arm’s
length amount”) if the transaction had been between independent
persons dealing at arm’s length,
5

is treated as having been of an amount equal to the arm’s length amount.
1185
“UK expenditure” etc
(1)
In this Part “UK expenditure”, in relation to a film, means expenditure on
goods or services that are used or consumed in the United Kingdom.
(2)
Any apportionment of expenditure as between UK expenditure and non-UK
10
expenditure for the purposes of this Part is to be made on a just and reasonable
basis.
(3)
The Treasury may by regulations amend subsection (1).
1186
“Qualifying co-production” and “co-producer”
In this Part—
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(a)
“qualifying co-production” means a film that falls to be treated as a
national film in the United Kingdom as a result of an agreement
between Her Majesty’s Government in the United Kingdom and any
other government, international organisation or authority, and
(b)
“co-producer” means a person who is a co-producer for the purposes of
20
the agreement mentioned in paragraph (a).
1187
“Company tax return”
In this Part “company tax return” has the same meaning as in Schedule 18 to
FA 1998 (see paragraph 3(1)).
Chapter 2
25
Taxation of activities of film production company
Separate film trade
1188
Activities of film production company treated as a separate trade
(1)
This Chapter applies for corporation tax purposes to a company that is the film
production company in relation to a film.
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(2)
The company’s activities in relation to the film are treated as a trade separate
from any other activities of the company (including any activities in relation to
any other film).
(3)
In this Chapter the separate trade is called “the separate film trade”.
(4)
The company is treated as beginning to carry on the separate film trade—
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(a)
when pre-production begins, or
(b)
if earlier, when any income from the film is received by the company.