House of Commons portcullis
House of Commons
Session 2008 - 09
Internet Publications
Other Bills before Parliament

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

15

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.

30

(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,

35

(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

25

(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.

25

(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.

25

(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).

30

(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.

30

(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.

40

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.

15

(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 total profits for an accounting period of a company with

investment business a deduction is allowed for expenses of management of the

company’s investment business which are referable to that period.

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2009
Revised 6 February 2009