Chapter APC30030
| Published date | 13 April 2016 |
| Record Number | APC30030 |
| Court | HM Revenue & Customs |
The rules in Part 15A CTA 2009 modify the normal rules for relieving corporate trading losses. The losses incurred by an animation trade of a Television Production Company (TPC) are restricted to being surrendered for payable tax credit, where applicable, or used against future profits of the same trade prior to completion of the programme.
Losses of the completion or later periodThe restriction to the use of losses applies until the accounting period in which the programme is completed.
Losses are then treated differently depending on whether they are:
- losses not attributable to Television Tax Relief (TTR), or
- losses attributable to TTR.
This divides the losses into two distinct elements.
Losses brought forward are treated as losses of the current periodWhere pre-completion losses not attributable to TTR have been brought forward into the completion period, or any later period, they are treated as having been incurred in that current period.
Losses brought forward also need to be separated into the two elements of losses which are attributable and non-attributable to TTR.
Losses not attributable to TTR‘Losses not attributable to TTR’ includes all the expenditure of the animation trade not including the enhancement for TTR. This means non-enhanceable expenditure and enhanceable core expenditure not including the enhancement.
The losses not attributable to TTR are calculated by removing the element of losses attributable to TTR.
This element of the loss in the completion, or later, period can be:
- offset against total taxable profits of the TPC in the current or previous period
- surrendered to other companies in the group, or
- carried forward for use against profits of the same trade.
Losses attributable to TTR cannot be relieved in this way.
Losses brought forward that are attributable to TTRThe ‘losses attributable to TTR’ are the losses that have arisen from the enhancement element in addition to the enhanceable expenditure. Losses attributable to TTR do not include non-enhanceable expenditure.
The losses attributable to TTR are given by deducting from the loss for the period what the losses for the period would be in the absence of TTR.
Where there would have been a profit for...
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