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[F1PART 15DU.K.Orchestra tax relief

Textual Amendments

F1Pt. 15D inserted (with effect in accordance with Sch. 8 para. 17(1)(a) of the amending Act) by Finance Act 2016 (c. 24), Sch. 8 para. 1

Modifications etc. (not altering text)

C1Pt. 15D modified (with application in accordance with s. 19(1)(4) of the amending Act) by Finance Act 2022 (c. 3), s. 19(1)(4)

CHAPTER 3U.K.Orchestra tax relief

IntroductionU.K.

1217ROverview of orchestra tax reliefU.K.

(1)Relief under this Chapter (“orchestra tax relief”) is given by way of—

(a)additional deductions (see sections 1217RD to 1217RF), and

(b)orchestra tax credits (see sections 1217RG to 1217RJ).

(2)See Schedule 18 to FA 1998 (in particular, Part 9D) for provision about the procedure for making claims for orchestra tax relief.

Companies qualifying for orchestra tax reliefU.K.

1217RACompanies qualifying for orchestra tax reliefU.K.

(1)Subsection (2) applies in the case of an orchestral concert which is not included in a concert series in relation to which an election has been made under section 1217Q(4).

(2)A company qualifies for orchestra tax relief in relation to the production of a concert if—

(a)the concert is a qualifying orchestral concert,

(b)the company is the production company in relation to the concert,

(c)the company intends that the concert should be performed live—

(i)before the paying public, or

(ii)for educational purposes, and

(d)the [F2[F3UK] expenditure condition] is met in relation to the concert (see section 1217RB).

(3)In this Part “qualifying orchestral concert” means an orchestral concert—

(a)in which the instrumentalists number at least 12, and

(b)in which none of the musical instruments to be played, or a minority of those instruments, is electronically or directly amplified.

(4)A company qualifies for orchestra tax relief in relation to the production of a concert series if—

(a)the concert series is a qualifying orchestral concert series,

(b)the company is the production company in relation to every concert in the series,

(c)the company intends that all or a high proportion of the concerts in the series should be performed live—

(i)before the paying public, or

(ii)for educational purposes,

(d)the [F4[F5UK] expenditure condition] is met in relation to the series, and

(e)the company has made an election under section 1217Q(4) in relation to the series.

(5)In this section “qualifying orchestral concert series” means two or more orchestral concerts, all or a high proportion of which are qualifying orchestral concerts.

(6)For the purposes of this section a concert is “live” if it is to an audience before whom the musicians are actually present.

[F6(6A)A concert performed before the public is not regarded as being performed before the paying public unless—

(a)it is separately ticketed, and

(b)it is intended that a significant proportion of the earnings from the concert should be obtained by such ticketing.

(6B)For the purposes of subsection (6A), the fact that a ticket covers things reasonably incidental to the concert (such as, for example, a programme or food to be consumed during the course of the performance) does not prevent the concert from being separately ticketed, provided that the price paid can reasonably be apportioned between the concert and those other things.

(6C)A concert is only regarded as performed for educational purposes if it is performed entirely or mainly for the purpose of educating the audience.]

(7)A concert is not regarded as performed for educational purposes if the production company is, or is associated with, a person who—

(a)has responsibility for the beneficiaries, or

(b)is otherwise connected with the beneficiaries (for instance, by being their employer).

(8)For the purposes of subsection (7), a production company is associated with a person (“P”) if—

(a)P controls the production company, or

(b)P is a company which is controlled by the production company or by a person who also controls the production company.

(9)In this section—

(10)There is further related provision in section 1217RL (tax avoidance arrangements).

Textual Amendments

F6S. 1217RA(6A)-(6C) inserted (1.4.2022 in relation to a concert or series of concerts only where the production process starts on or after that date) by Finance Act 2022 (c. 3), s. 20(3)(5)

1217RBThe [F7UK] expenditure conditionU.K.

(1)The “[F8UK] expenditure condition” is that at least [F910%] of the core expenditure on the production of the concert or concert series incurred by the company is [F8UK] expenditure.

[F10(2)In this Part “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom.]

(3)Any apportionment of expenditure as between [F11expenditure that is and is not UK expenditure] for the purposes of this Part is to be made on a just and reasonable basis.

(4)The Treasury may by regulations—

(a)amend the percentage specified in subsection (1);

(b)amend subsection (2).

(5)See also sections 1217T and 1217TA (which are about the giving of relief provisionally on the basis that the [F12UK] expenditure condition will be met).

Textual Amendments

1217RC“Core expenditure”U.K.

(1)In this Part “core expenditure”, in relation to the production of a concert or concert series, means expenditure on the activities involved in producing the concert or concert series.

(2)The reference in subsection (1) to “expenditure on the activities involved in producing the concert or concert series” includes expenditure on travel to and from a venue which is not a usual venue for concerts produced by the company.

(3)But that reference does not include—

(a)expenditure on any matters not directly involved with putting on the concert or concerts (for instance, financing, marketing, legal services[F13, storage, or the provision of incidental goods or services to members of the audience]),

(b)speculative expenditure on activities not involved with putting on the concert or concerts, and

(c)expenditure on the actual performance or performances (for instance, payments to musicians for their performances in the concert or concert series).

[F14(4)For the purposes of subsection (3)(a), expenditure by an educational body on teaching or training participants in a concert or concerts is expenditure on a matter not directly involved with putting on the concert or concerts, except to the extent that the teaching or training takes place as part of a rehearsal for the concert or concerts.

(5)In this section, “educational body” includes a body mentioned in section 71.]

Textual Amendments

F13Words in s. 1217RC(3)(a) substituted (with effect in accordance with Sch. 4 para. 3(2) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 3(1)

F14S. 1217RC(4)(5) inserted (1.4.2022 in relation to a concert or series of concerts only where the production process starts on or after that date) by Finance Act 2022 (c. 3), s. 20(4)(5)

Additional deductionU.K.

1217RDClaim for additional deductionU.K.

(1)A company which qualifies for orchestra tax relief in relation to the production of a concert or concert series may claim an additional deduction in relation to the production.

(2)A claim under subsection (1) is made with respect to an accounting period.

(3)Where a company has made a claim, the company is entitled to make an additional deduction, in accordance with section 1217RE, in calculating the profit or loss of the separate orchestral trade for the accounting period concerned.

(4)Where the company tax return in which a claim is made is for an accounting period later than that in which the company begins to carry on the separate orchestral trade, the company must make any amendments of company tax returns for earlier periods that may be necessary.

(5)Any amendment or assessment necessary to give effect to subsection (4) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

1217REAmount of additional deductionU.K.

(1)The amount of an additional deduction to which a company is entitled as a result of a claim under section 1217RD is calculated as follows.

(2)For the first period of account during which the separate orchestral trade is carried on, the amount of the additional deduction is E, where E is—

(a)so much of the qualifying expenditure incurred to date as is [F15[F16UK] expenditure], or

(b)if less, 80% of the total amount of qualifying expenditure incurred to date.

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

where E is—

a

so much of the qualifying expenditure incurred to date as is [F15[F17UK] expenditure], or

b

if less, 80% of the total amount of qualifying expenditure incurred to date, and

P is the total amount of the additional deductions given for previous periods.

(4)The Treasury may by regulations amend the percentage specified in subsection (2) or (3).

Textual Amendments

F16Word in s. 1217RE(2) substituted (with effect in accordance with Sch. 4 para. 12(2) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 6(1) (with Sch. 4 para. 12)

F17Word in s. 1217RE(3) substituted (with effect in accordance with Sch. 4 para. 12(2) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 6(1) (with Sch. 4 para. 12)

1217RF“Qualifying expenditure”U.K.

(1)In this Chapter “qualifying expenditure”, in relation to the production of a concert or concert series, means core expenditure (see section 1217RC) on the production that—

(a)falls to be taken into account under sections 1217QB to 1217QG in calculating the profit or loss of the separate orchestral trade for tax purposes, F18...

(b)is not expenditure which is otherwise relievable[F19, and

(c)is not excluded by subsection (3).]

(2)For the purposes of this section expenditure is otherwise relievable if it is expenditure in respect of which [F20the company would be able to claim]—

F21(za). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F22(zb)relief under Part 13 (relief for expenditure on research and development),]

(a)film tax relief under Chapter 3 of Part 15,

(b)television tax relief under Chapter 3 of Part 15A,

(c)video games tax relief under Chapter 3 of Part 15B,

(d)an additional deduction under Part 15C (theatrical productions), or

(e)a theatre tax credit under Part 15C.

[F23(3)Expenditure is excluded to the extent that it represents connected party profit, unless subsection (5) applies.

(4)For the purposes of subsection (3), expenditure represents connected party profit—

(a)if it is a payment to a person (“C”) in exchange for something supplied, transferred or done by that person,

(b)if the company is connected with C, and

(c)if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying, transferring or doing that thing.

(5)This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length.

(6)A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded).

(7)Subsections (8) and (9) apply if—

(a)the supply by C to the company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and

(b)either—

(i)each transacting party in the sequence is connected to at least one other transacting party in the sequence, or

(ii)each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable).

(8)The reference to C in subsection (4)(c) is to be read as a reference to the supplier in the first transaction in the sequence.

(9)The reference to the transaction in subsection (5) is to be read as including each transaction in the sequence.

(10)In this section, “payment” includes any transfer of value.]

Textual Amendments

F18Word in s. 1217RF(1)(a) omitted (with effect in accordance with Sch. 4 para. 7(4) of the amending Act) by virtue of Finance Act 2024 (c. 3), Sch. 4 para. 7(2)(a)

F19S. 1217RF(1)(c) and word inserted (with effect in accordance with Sch. 4 para. 7(4) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 7(2)(b)

F20Words in s. 1217RF(2) substituted (with effect in accordance with Sch. 4 para. 8(2) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 8(1)(a)

F21S. 1217RF(2)(za) omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 12(7), 16; S.I. 2024/286, reg. 2

F22S. 1217RF(2)(za)(zb) inserted (with effect in accordance with Sch. 4 para. 8(2) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 8(1)(b)

F23S. 1217RF(3)-(10) inserted (with effect in accordance with Sch. 4 para. 7(4) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 7(3)

Orchestra tax creditsU.K.

1217RGOrchestra tax credit claimable if company has surrenderable lossU.K.

(1)A company which qualifies for orchestra tax relief in relation to the production of a concert or concert series may claim an orchestra tax credit in relation to the production for an accounting period in which the company has a surrenderable loss.

(2)Section 1217RH sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period.

(3)A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period.

(4)The amount of the orchestra tax credit to which a company making a claim is entitled for the accounting period is 25% of the amount of the loss surrendered.

(5)The company's available loss for the accounting period (see section 1217RH(2)) is reduced by the amount surrendered.

Modifications etc. (not altering text)

C2S. 1217RG(4) modified (temp.) (with application in accordance with s. 19(1)-(3) of the amending Act) by Finance Act 2022 (c. 3), s. 19(1)-(3) (as amended (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 14(1)(b)(2)(b))

1217RHAmount of surrenderable lossU.K.

(1)The company's surrenderable loss in the accounting period is—

(a)the company's available loss for the period in the separate orchestral trade (see subsections (2) and (3)), or

(b)if less, the available qualifying expenditure for the period (see subsections (4) and (5)).

(2)The company's available loss for an accounting period is—

where—

L is the amount of the company's loss for the period in the separate orchestral trade, and

RUL is the amount of any relevant unused loss of the company (see subsection (3)).

(3)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 1217RG, or

(b)carried forward under section 45 [F24or 45B] of CTA 2010 and set against profits of the separate orchestral trade.

(4)For the first period of account during which the separate orchestral trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1217RE(2).

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

where—

E is the amount that is E for that period for the purposes of section 1217RE(3), and

S is the total amount previously surrendered under section 1217RG.

(6)If a period of account of the separate orchestral 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.

Textual Amendments

F24Words in s. 1217RH(3)(b) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 143

1217RIPayment in respect of orchestra tax creditU.K.

(1)If a company—

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

(b)makes a claim,

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

(2)An amount payable in respect of—

(a)an orchestra tax credit, or

(b)interest on an orchestra 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 an orchestra 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 an orchestra 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 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

[F25(4A)For the purposes of subsection (4), a “payment period” is—

(a)in relation to PAYE regulations or Class 1 national insurance contributions, a period—

(i)which ends on the fifth day of a month, and

(ii)for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs;

(b)in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act.]

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

Textual Amendments

1217RJLimit on State aidU.K.

In accordance with Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market [F26(as that Regulation had effect immediately before IP completion day)], the total amount of orchestra tax credits payable under section 1217RI in the case of any undertaking is not to exceed 50 million euros per year.

Textual Amendments

1217RKNo 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 production of a concert or concert series 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 1217QE (when costs are taken to be incurred).

[F27Companies in insolvencyU.K.

Textual Amendments

F27S. 1217RKA and cross-heading inserted (with effect in accordance with Sch. 4 para. 10(2) of the amending Act) by Finance Act 2024 (c. 3), Sch. 4 para. 10(1)

1217RKANo claim if company in administration or liquidationU.K.

(1)A company may not make a claim under section 1217RD or section 1217RG at a time when it is in administration or liquidation.

(2)For the purposes of this section, a company is in administration if—

(a)it is in administration under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or

(b)a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company.

(3)For the purposes of this section, a company is in liquidation if—

(a)it is in liquidation within the meaning of section 247 of that Act or Article 6 of that Order, or

(b)a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company.]

Anti-avoidance etcU.K.

1217RLTax avoidance arrangementsU.K.

(1)A company does not qualify for orchestra tax relief in relation to the production of a concert or concert series if there are any tax avoidance arrangements relating to the production.

(2)Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage.

(3)In this section—

1217RMTransactions not entered into for genuine commercial reasonsU.K.

(1)A transaction is to be ignored for the purpose of determining orchestra tax relief so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons.

(2)In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1217RL.]