Corporation Tax Act 2009

Chapter 3U.K.Film tax relief

IntroductoryU.K.

1195Availability and overview of film tax reliefU.K.

(1)This Chapter applies for corporation tax purposes to a company that is the film production company in relation to a film.

(2)Relief under this Chapter (“film tax relief”) is available to the company if the conditions specified in the following sections are met in relation to the film—

F1(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F2(aa)section 1196A (intended release or broadcast),]

(b)section 1197 (British film), and

(c)section 1198 (UK expenditure).

(3)Film tax relief is given by way of—

(a)additional deductions (see sections 1199 and 1200), and

(b)film tax credits (see sections 1201 to 1203).

[F3(3A)But film tax relief is not available in respect of any expenditure if—

(a)the company is entitled to an R&D expenditure credit under Chapter 6A of Part 3 in respect of the expenditure, F4...

(b)the company has obtained relief under Part 13 (additional relief for expenditure on research and development) in respect of the expenditure [F5, or

(c)relief is available to the company under Chapter 3 of Part 15A (television tax relief) in respect of the expenditure.]]

(4)Sections 1204 to 1207 contain provision about unpaid costs, artificially inflated claims and confidentiality of information.

(5)In this Chapter “the separate film trade” means the company's separate trade in relation to the film (see section 1188).

(6)See Schedule 18 to FA 1998 (in particular, Part 9D) for information about the procedure for making claims for film tax relief.

Conditions of reliefU.K.

F61196Intended theatrical releaseU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F71196AIntended release or broadcastU.K.

(1)The film must—

(a)be intended for theatrical release, or

(b)be a television programme intended for broadcast to the general public that meets conditions A to D in section 1216AB (meaning of “relevant programme”).

(2)For this purpose—

(a)“theatrical release” means exhibition to the paying public at the commercial cinema,

(b)a film is not regarded as intended for theatrical release unless it is intended that a significant proportion of the earnings from the film should be obtained by such exhibition, and

(c)“television programme” has the same meaning as in Part 15A (see section 1216AA).

(3)Whether the condition in subsection (1) is met is determined for each accounting period of the company during which film-making activities are carried on in relation to the film, in accordance with the following rules.

(4)If the condition in subsection (1) is met at the end of an accounting period, it is treated as having been met throughout that period (subject to subsection (5)(b)).

(5)If the condition in subsection (1) is not met at the end of an accounting period—

(a)it is treated as having been not met throughout that period, and

(b)it cannot be met in any subsequent accounting period.

This does not affect any entitlement of the company to relief in an earlier accounting period for which the condition in subsection (1) was met.]

1197British filmU.K.

The film must be certified by the Secretary of State as a British film under Schedule 1 to the Films Act 1985 (c. 21).

1198UK expenditureU.K.

(1)At least [F810%] of the core expenditure on the film incurred—

(a)in the case of a British film other than a qualifying co-production, by the company, and

(b)in the case of a qualifying co-production, by the co-producers,

must be UK expenditure.

(2)The Treasury may by regulations amend the percentage specified in subsection (1).

Additional deductionsU.K.

1199Additional deduction for qualifying expenditureU.K.

(1)If film tax relief is available to the company, it may (on making a claim) make an additional deduction in respect of qualifying expenditure on the film.

(2)The deduction is made in calculating the profit or loss of the separate film trade.

(3)In this Chapter “qualifying expenditure” means core expenditure on the film that falls to be taken into account under Chapter 2 in calculating the profit or loss of the separate film trade for tax purposes.

(4)The Treasury may by regulations—

(a)amend subsection (3), and

(b)provide that expenditure of a specified description is or is not to be regarded as qualifying expenditure.

1200Amount of additional deductionU.K.

(1)For the first period of account during which the separate film trade is carried on, the amount of the additional deduction is given by—

(2)For any period of account after the first, the amount of the additional deduction is given by—

[F9(3)The rate of enhancement is 100%.]

(4)The Treasury may by regulations amend the percentage specified in subsection (1) or (2).

Film tax creditsU.K.

1201Film tax credit claimable if company has surrenderable lossU.K.

(1)If film tax relief is available to the company, it may claim a film tax credit for an accounting period in which it has a surrenderable loss.

(2)The company's surrenderable loss in [F10an accounting period] is—

(a)[F11the company's available loss] for the period in the separate film trade, or

(b)if less, the available qualifying expenditure for the period.

[F12(2A)The company's available loss for an accounting period is given by—

(2B)The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been—

(a)surrendered under section 1202(1), or

(b)carried forward under section 45 [F13or 45B] of CTA 2010 and set against profits of the separate film trade.]

(3)For the first period of account during which the separate film trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1200(1).

(4)For any period of account after the first, the available qualifying expenditure is given by—

[F15(5)If a period of account of the separate film trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.]

1202Surrendering of loss and amount of film tax creditU.K.

(1)The company may surrender the whole or part of its surrenderable loss in an accounting period.

(2)If the company surrenders the whole or part of that loss, the amount of the film tax credit to which it is entitled for the accounting period is given by—

F17(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)The company's [F18available loss] for the accounting period is reduced by the amount surrendered.

1203Payment in respect of film tax creditU.K.

(1)If the company—

(a)is entitled to a film tax credit for an accounting period, and

(b)makes a claim,

the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) must pay to the company the amount of the credit.

(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.

To the extent that it is so applied the Commissioners' liability under subsection (1) is discharged.

(3)If 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 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 consider appropriate.

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

(a)under PAYE regulations,

(b)under section 966 of ITA 2007 (visiting performers), or

(c)in respect of Class 1 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 Ireland) Act 1992 (c. 7).

(5)A payment in respect of a film tax credit is not income of the company for any tax purpose.

MiscellaneousU.K.

1204No account to be taken of amount if unpaidU.K.

(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.

(2)This is without prejudice to the operation of section 1192.

1205Artificially inflated claims for additional deduction or film tax creditU.K.

(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—

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

(3)“Arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

1206Confidentiality of informationU.K.

(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 the Secretary of State's functions under [F19any of the provisions listed in subsection (1A)].

[F20(1A)The provisions referred to in subsection (1) are—

(a)sections 1216CB to 1216CD (certification of relevant programmes as British),

(b)sections 1217CB to 1217CD (certification of video games as British), and

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

(2)Information so disclosed may be disclosed to the [F21British Film Institute].

[F22(2A)The Treasury may by order amend subsection (2)—

(a)so as to substitute for the person or body specified in that subsection a different person or body, or

(b)in consequence of a change in the name of the person or body so specified.]

(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 [F23any of the provisions listed in subsection (1A)],

(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 (whether criminal or civil) connected with the operation of [F24any of Parts 15 to 15B of this Act or Schedule 1 to the Films Act 1985],

(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.

1207Wrongful disclosureU.K.

(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)),

(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—

(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 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.

[F25(3A)In the application of this section in England and Wales, the reference in subsection (3)(b) to 12 months is to be read as a reference to the general limit in a magistrates’ court (or to 6 months in relation to an offence committed before 2 May 2022).]

(4)A prosecution for an offence under subsection (1) may be brought in England and Wales [F26only by or 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

(b)with the consent of the Director of Public Prosecutions for Northern Ireland.

(6)In the application of this section—

F27(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)in Northern Ireland,

the reference in subsection (3)(b) to 12 months is to be read as a reference to 6 months.