Corporation Tax Bill

House of Commons

Session 2008 - 09
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Corporation Tax Bill

Corporation Tax Bill
Part 15 — Film production
Chapter 3 — Film tax relief
558

Miscellaneous
1204
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 film at the end of a period of account, ignore any amount that has not been
paid 4 months after the end of that period.
5
(2)
This is without prejudice to the operation of section 1192.
1205
Artificially inflated claims for additional deduction or film tax credit
(1)
So far as a transaction is attributable to arrangements entered into wholly or
mainly for a disqualifying purpose, it is to be ignored in determining for any
period—
10
(a)
any additional deduction which a company may make under this
Chapter, and
(b)
any film tax credit to be given to a company.
(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
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obtain—
(a)
an additional deduction under this Chapter 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
20
greater amount than that to which it would otherwise be entitled.
(3)
“Arrangements” includes any scheme, agreement or understanding, whether
or not legally enforceable.
1206
Confidentiality of information
(1)
Section 18(1) of the Commissioners for Revenue and Customs Act 2005 (c. 11)
25
(restriction on disclosure by Revenue and Customs officials) does not prevent
disclosure to the Secretary of State for the purposes of the Secretary of State’s
functions 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.
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(3)
A person to whom information is disclosed under subsection (1) or (2) may not
otherwise disclose it except—
(a)
for the purposes of the Secretary of State’s functions under Schedule 1
to the Films Act 1985,
(b)
if the disclosure is authorised by an enactment,
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(c)
in pursuance of an order of a court,
(d)
for the purposes of a criminal investigation or legal proceedings
(whether criminal or civil) connected with the operation of that
Schedule or this Part,
(e)
with the consent of the Commissioners for Her Majesty’s Revenue and
40
Customs, or
(f)
with the consent of each person to whom the information relates.

Corporation Tax Bill
Part 15 — Film production
Chapter 4 — Film losses
559

1207
Wrongful disclosure
(1)
A person (“X”) commits an offence if—
(a)
X discloses revenue and customs information relating to a person (as
defined in section 19(2) of the Commissioners for Revenue and
Customs Act 2005 (c. 11)),
5
(b)
the identity of the person to whom the information relates is specified
in the disclosure or can be deduced from it, and
(c)
the disclosure contravenes section 1206(3) above.
(2)
If a person (“Y”) is charged with an offence under subsection (1), it is a defence
for Y to prove that Y reasonably believed—
10
(a)
that the disclosure was lawful, or
(b)
that the information had already and lawfully been made available to
the public.
(3)
A person guilty of an offence under subsection (1) is liable—
(a)
on conviction on indictment, to imprisonment for a term not exceeding
15
two years or a fine or both, or
(b)
on summary conviction, to imprisonment for a term not exceeding 12
months or a fine not exceeding the statutory maximum or both.
(4)
A prosecution for an offence under subsection (1) may be brought in England
Wales only—
20
(a)
by the Director of Revenue and Customs Prosecutions, or
(b)
with the consent of the Director of Public Prosecutions.
(5)
A prosecution for an offence under subsection (1) may be brought in Northern
Ireland only—
(a)
by the Commissioners for Her Majesty’s Revenue and Customs, or
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(b)
with the consent of the Director of Public Prosecutions for Northern
Ireland.
(6)
In the application of this section—
(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
30
(b)
in Northern Ireland,

the reference in subsection (3)(b) to 12 months is to be read as a reference to 6
months.
Chapter 4
Film losses
35
1208
Application of sections 1209 and 1210
(1)
Sections 1209 and 1210 apply to a company that is the film production
company in relation to a film.
(2)
In those sections—
“the completion period” means the accounting period of the company—
40
(a)
in which the film is completed, or
(b)
if the company does not complete the film, in which it abandons
film-making activities in relation to the film,

Corporation Tax Bill
Part 15 — Film production
Chapter 4 — Film losses
560

“loss relief” includes any means by which a loss might be used to reduce
the amount in respect of which the company, or any other person, is
chargeable to tax,
“pre-completion period” means an accounting period of the company
before the completion period, and
5
“the separate film trade” means the company’s separate trade in relation
to the film (see section 1188).
1209
Restriction on use of losses while film in production
(1)
This section applies if in a pre-completion period a loss is made in the separate
film trade.
10
(2)
The loss is not available for loss relief except to the extent that it may be carried
forward under section 393(1) of ICTA to be set against profits of the separate
film trade in a subsequent period.
1210
Use of losses in later periods
(1)
This section applies to the following accounting periods of the company
15
(“relevant later periods”)—
(a)
the completion period, and
(b)
any subsequent accounting period during which the separate film trade
continues.
(2)
Subsection (3) applies if a loss made in the separate film trade is carried
20
forward under section 393(1) of ICTA from a pre-completion period to a
relevant later period.
(3)
So much (if any) of the loss as is not attributable to film tax relief (see subsection
(6)) may be treated for the purposes of loss relief as if it were a loss made in the
period to which it is carried forward.
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(4)
Subsection (5) applies if in a relevant later period a loss is made in the separate
film trade.
(5)
The amount of the loss that may be—
(a)
set against other profits of the same or an earlier period under section
393A of ICTA, or
30
(b)
surrendered as group relief under section 403 of that Act,

is restricted to the amount (if any) that is not attributable to film tax relief (see
subsection (6)).
(6)
The amount of a loss in any period that is attributable to film tax relief is
calculated by deducting from the total amount of the loss the amount there
35
would have been if there had been no additional deduction under Chapter 3 in
that or any earlier period.
(7)
This section does not apply to a loss to the extent that it is carried forward or
surrendered under section 1211.
1211
Terminal losses
40
(1)
This section applies if—
(a)
a company (“company A”) is the film production company in relation
to a qualifying film,

Corporation Tax Bill
Part 15 — Film production
Chapter 5 — Provisional entitlement to relief
561

(b)
company A ceases to carry on its separate trade in relation to that film
(“trade X”) (see section 1188), and
(c)
if company A had not ceased to carry on trade X, it could have carried
forward an amount under section 393(1) of ICTA to be set against
profits of trade X in a later period (“the terminal loss”).
5
(2)
If on cessation of trade X company A—
(a)
is the film production company in relation to another qualifying film,
and
(b)
is carrying on its separate trade in relation to that film (“trade Y”),

it may (on making a claim) make an election under subsection (3).
10
(3)
The election is to have the terminal loss (or a part of it) treated as if it were a
loss brought forward under section 393(1) of ICTA to be set against the profits
of trade Y of the first accounting period beginning after the cessation and so on.
(4)
Subsection (5) applies if on cessation of trade X—
(a)
there is another company (“company B”) that is the film production
15
company in relation to a qualifying film,
(b)
company B is carrying on its separate trade in relation to that film
(“trade Z”), and
(c)
company B is in the same group as company A for the purposes of
Chapter 4 of Part 10 of ICTA (group relief).
20
(5)
Company A may surrender the terminal loss (or a part of it) to company B.
(6)
On the making of a claim by company B the amount surrendered is treated as
if it were a loss brought forward by company B under section 393(1) of ICTA
to be set against the profits of trade Z of the first accounting period beginning
after the cessation and so on.
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(7)
The Treasury may, in relation to the surrender of a loss under subsection (5)
and the resulting claim under subsection (6), make provision by regulations
corresponding, subject to such adaptations or other modifications as appear to
them to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998
(company tax returns: claims for group relief).
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(8)
“Qualifying film” means a film in relation to which the conditions for film tax
relief are met (see section 1195(2)).
Chapter 5
Provisional entitlement to relief
1212
Introduction
35
(1)
In this Chapter—
“the company” means the film production company in relation to a film,
“the completion period” means the accounting period of the company—
(a)
in which the film is completed, or
(b)
if the company does not complete the film, in which it abandons
40
film-making activities in relation to it,
“interim accounting period” means any earlier accounting period of the
company during which film-making activities are carried on in relation
to the film,

Corporation Tax Bill
Part 15 — Film production
Chapter 5 — Provisional entitlement to relief
562

“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),
“the separate film trade” means the company’s separate trade in relation
to the film (see section 1188), and
5
“special film relief” means—
(a)
film tax relief, or
(b)
relief under section 1211 (transfer of terminal losses from one
qualifying film to another).
(2)
The company’s company tax return for the completion period must state that
10
the film has been completed or that the company has abandoned film-making
activities in relation to it (as the case may be).
1213
Certification as a British film
(1)
The company is not entitled to special film relief for an interim accounting
period unless its company tax return for the period is accompanied by an
15
interim 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—
(a)
is not entitled to special film relief for any period for which its
entitlement depended on the certificate, and
20
(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 completion period must be accompanied
by a final certificate,
(b)
if that requirement is met, the final certificate has effect for the
25
completion period and for any interim accounting period, and
(c)
if that requirement is not met, the company—
(i)
is not entitled to special film relief for any period, and
(ii)
must amend accordingly its company tax return for any period
for which such relief was claimed.
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(4)
If the company abandons film-making activities in relation to the film—
(a)
its company tax return for the completion period may be accompanied
by an interim certificate, and
(b)
the abandonment of film-making activities does not affect any
entitlement to special film relief in that or any previous accounting
35
period.
(5)
If a final certificate is revoked, the company—
(a)
is not entitled to special film relief for any period, and
(b)
must amend accordingly its company tax return for any period for
which such relief was claimed.
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1214
The UK expenditure condition
(1)
The company is not entitled to special film relief for an interim accounting
period unless—
(a)
its company tax return for the period states the amount of planned core
expenditure on the film that is UK expenditure, and
45

Corporation Tax Bill
Part 15 — Film production
Chapter 5 — Provisional entitlement to relief
563

(b)
that amount is such as to indicate that the condition in section 1198 (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.
(2)
If such a statement is made but it subsequently appears that the condition will
5
not be met on completion of the film, the company—
(a)
is not entitled to special film 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.
(3)
When the film is completed or the company abandons film-making activities
10
in relation to it (as the case may be), the company’s company tax return for the
completion period must be accompanied by a final statement of the amount of
the core expenditure on the film that is UK expenditure.
(4)
If that statement shows that the condition in section 1198 is not met, the
company—
15
(a)
is not entitled to special film relief for any period, and
(b)
must amend accordingly its company tax return for any period for
which such relief was claimed.
1215
Film tax relief on basis that film is limited-budget film
(1)
The company is not entitled to film tax relief for an interim accounting period
20
on the basis that the film is a limited-budget film unless—
(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 1184(2)
(definition of “limited-budget film”) will be met on completion of the
25
film.

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—
30
(a)
is not entitled to film tax relief for any period on the basis that the film
is a limited-budget film, and
(b)
must amend accordingly its company tax return for any such period for
which such relief has been claimed on that basis.
(3)
When the film is completed or the company abandons film-making activities
35
in relation to it (as the case may be), the company’s company tax return for the
completion period must be accompanied by a final statement of the core
expenditure on the film.
(4)
Subsection (5) applies if that statement shows—
(a)
that the film is not a limited-budget film, or (as the case may be)
40
(b)
that, having regard to the proportion of work on the film that was
completed, the film would not have been a limited-budget film had it
been completed.
(5)
The company—
(a)
is not entitled to film tax relief for any period on the basis that the film
45
is a limited-budget film, and

Corporation Tax Bill
Part 16 — Companies with investment business
Chapter 2 — Management expenses
564

(b)
must amend accordingly its company tax return for any period for
which such relief was claimed on that basis.
1216
Time limit for amendments and assessments
Any amendment or assessment necessary to give effect to the provisions of this
Chapter may be made despite any limitation on the time within which an
5
amendment or assessment may normally be made.
Part 16
Companies with investment business
Chapter 1
Introduction
10
1217
Overview of Part
(1)
This Part contains special rules for companies with investment business.
(2)
Chapters 2 and 3 provide relief for certain expenses of a company with
investment business that are not relieved elsewhere.
(3)
Chapter 4 contains some restrictions on the relief.
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(4)
There are provisions imposing liability to corporation tax in—
(a)
section 1229 (claw back of relief), and
(b)
Chapter 5 (companies with investment business: receipts).
1218
“Company with investment business” and “investment business”
(1)
In this Part “company with investment business” means a company whose
20
business consists wholly or partly of making investments.
(2)
But a credit union is not a company with investment business for the purposes
of this Part.
(3)
References in this Part to a company’s investment business are to be construed
in accordance with section 1219(2).
25

But this subsection does not affect the interpretation of the expression
“company with investment business”.
Chapter 2
Management expenses
Relief for expenses of management
30
1219
Expenses of management of a company’s investment business
(1)
In calculating the corporation tax to which a company with investment
business is liable for an accounting period, expenses of management of the
company’s investment business which are referable to that period are allowed
as a deduction from the company’s total profits.
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