Corporation Tax Act 2009

[F1 The separate theatrical trade U.K.

Textual Amendments

F1 Pt. 15C inserted (17.7.2014 for specified purposes and with effect in accordance with Sch. 4 para. 16 of the amending Act, 22.8.2014 in so far as not already in force) by Finance Act 2014 (c. 26), Sch. 4 paras. 1, 16; S.I. 2014/2228, art. 2

1217I Introduction to sections 1217IA to 1217IF U.K.

Where a company is treated under section 1217H(3)(a) as carrying on a separate trade (“the separate theatrical trade”), the profits or losses of the trade are calculated for corporation tax purposes in accordance with sections 1217IA to 1217IF.

1217IA Calculation of profits or losses of separate theatrical trade U.K.

(1) For the first period of account during which the separate theatrical trade is carried on, the following are brought into account—

(a) as a debit, the costs of the theatrical production incurred (and represented in work done) to date;

(b) as a credit, the proportion of the estimated total income from the production treated as earned at the end of that period.

(2) For subsequent periods of account the following are brought into account—

(a) as a debit, the difference between the amount (“C”) of the costs of the theatrical production incurred (and represented in work done) to date and the amount corresponding to C for the previous period, and

(b) as a credit, the difference between the proportion (“PI”) of the estimated total income from the production treated as earned at the end of that period and the amount corresponding to PI for the previous period.

(3) The proportion of the estimated total income treated as earned at the end of a period of account is—

where—

C is the total to date of costs incurred (and represented in work done);

T is the estimated total cost of the theatrical production;

I is the estimated total income from the theatrical production.

1217IB Income from the production U.K.

(1) References in this Part to income from a theatrical production are to any receipts by the company in connection with the making or exploitation of the production.

(2) This includes—

(a) receipts from the sale of tickets or of rights in the theatrical production;

(b) royalties or other payments for use of aspects of the theatrical production (for example, characters or music);

(c) payments for rights to produce merchandise;

(d) receipts by the company by way of a profit share agreement.

(3) Receipts that (apart from this subsection) would be regarded as being of a capital nature are treated as being of a revenue nature.

1217IC Costs of the production U.K.

(1) References in this Part to the costs of a theatrical production are to expenditure incurred by the company on—

(a) the activities involved in developing, producing, running and closing the production, or

(b) activities with a view to exploiting the production.

(2) This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.

(3) Expenditure which, apart from this subsection, would be regarded as being of a capital nature only because it is incurred on the creation of an asset (i.e. the theatrical production) is treated as being of a revenue nature. [F2 (As to other capital expenditure, see section 53 and subsection (2).)]

Textual Amendments

F2 Words in s. 1217IC(3) inserted (22.2.2024) by Finance Act 2024 (c. 3), Sch. 3 para. 4

1217ID When costs are taken to be incurred U.K.

(1) For the purposes of this Part, the costs that have been incurred on a theatrical production at a given time—

(a) are those costs of the production that are represented in the state of completion of the work in progress, but

(b) do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay.

(2) In accordance with subsection (1)(a)—

(a) payments in advance of work to be done are ignored until the work has been carried out;

(b) deferred payments are recognised to the extent that the goods or services in question are represented in the state of completion of the work in progress (but this is subject to subsection (1)(b)).

(3) Where an obligation to pay an amount is linked to income being earned from the theatrical production, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1217IA.

(4) In determining for the purposes of this Part the amount of costs incurred on a theatrical production at the end of a period of account, any amount that has not been paid 4 months after the end of that period is to be ignored.

1217IE Pre-trading expenditure U.K.

(1) This section applies if, before the company begins to carry on the separate theatrical trade, it incurs expenditure on activities falling within section 1217IC(1)(a).

(2) The expenditure may be treated as expenditure of the separate theatrical trade and as if incurred immediately after the company begins to carry on that trade.

(3) If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.

(4) Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

1217IF Estimates U.K.

Estimates for the purposes of section 1217IA must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.]