Finance Act 2024 (c. 3)

Schedules

Schedule 5 Museum and gallery exhibitions

Part 1 Amendments of Part 15E of CTA 2009

Introduction

1 Part 15E of CTA 2009 (museum and gallery exhibition tax relief) is amended as follows.

Museum and gallery exhibitions not to be wholly remote

2 (1) In section 1218ZAA (meaning of “exhibition”), after subsection (4) insert—

“(4A) “Admitted” means admitted in person to the venue where the objects or works are displayed.”

(2) That amendment has effect in relation to an exhibition only where the production phase begins on or after 1 April 2024.

Meaning of “core expenditure”

3 (1) In section 1218ZCD(7) (expenditure that is not “core expenditure” on museum or gallery exhibition), in paragraph (a), for “and promotional events” substitute “, promotional events, and the provision of incidental goods or services to visitors”.

(2) That amendment has effect in relation to expenditure incurred on or after 1 April 2024.

UK expenditure threshold to replace European expenditure threshold

4 (1) In section 1218ZCC (European expenditure condition)—

(a) in the heading, for “European” substitute “UK”;

(b) in subsection (1)—

(i) for “European” (in both places it occurs) substitute “UK”;

(ii) for “25%” substitute “10%”;

(c) for subsection (2) substitute—

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

(d) in subsection (3), for “European and non-European expenditure” substitute “expenditure that is and is not UK expenditure”;

(e) in subsection (5), for “European” substitute “UK”.

(2) In each of the following provisions, for “European” (in each place it occurs) substitute “UK”—

(a) section 1218ZCA(5) (need to meet European expenditure condition to qualify for relief);

(b) section 1218ZE(2) (provisional satisfaction of European expenditure condition);

(c) section 1218ZEA(1), (2) and (3) (European expenditure condition provisionally satisfied not later satisfied).

(3) In section 1218ZFA (defined terms)—

(a) omit the definitions of “European expenditure” and “European expenditure condition”;

(b) at the end insert—

• ““UK expenditure” has the meaning given by section 1218ZCC(2);

• “UK expenditure condition” has the meaning given by section 1218ZCC(1).”

(4) In Schedule 4 (index of defined expressions)—

(a) omit the entries for “European expenditure (in Part 15E)” and “European expenditure condition (in Part 15E)”;

(b) at the appropriate places insert—

“UK expenditure (in Part 15E)

section 1218ZCC(2)”;

“UK expenditure condition (in Part 15E)

section 1218ZCC(1)”.

(5) For transitional provision in relation to this paragraph, see paragraph 10.

EEA expenditure not to qualify for relief

5 (1) In section 1218ZCF(2) and (3) (amount of relief for museum or gallery exhibition), for “European” substitute “UK”.

(2) For transitional provision in relation to this paragraph, see paragraph 11.

Profit element of non-arm's-length payments to connected parties not to qualify for relief

6 (1) Section 1218ZCG (expenditure that qualifies for museums and galleries exhibition tax relief) is amended as follows.

(2) In subsection (1), after paragraph (b) (but before the following “and”) insert—

“(ba) is not excluded by subsection (2A),”.

(3) After subsection (2) insert—

“(2A) Expenditure is excluded to the extent that it represents connected party profit, unless subsection (2C) applies.

(2B) For the purposes of subsection (2A), 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.

(2C) 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.

(2D) 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).

(2E) Subsections (2F) and (2G) 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).

(2F) The reference to C in subsection (2B)(c) is to be read as a reference to the supplier in the first transaction in the sequence.

(2G) The reference to the transaction in subsection (2C) is to be read as including each transaction in the sequence.

(2H) In this section, “payment” includes any transfer of value.”

(4) Those amendments have effect in relation to expenditure incurred on or after 1 April 2024.

Amendment of exclusion for R&D relief and other creative sector reliefs

7 (1) In section 1218ZCG(2) (exclusion of expenditure eligible for R&D relief or other creative sector relief), in the words before paragraph (a), for the words from “(assuming” to the end substitute “the company would be able to claim”.

(2) That amendment has effect in relation to expenditure incurred on or after 1 April 2024.

Restriction where tax liabilities outstanding: meaning of “payment period”

8 In section 1218ZCJ (payment in respect of museums and galleries exhibition tax credit), after subsection (4) insert—

“(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.”

Relief not to be available for companies in insolvency

9 (1) After section 1218ZCL insert—

“Companies in insolvency

1218ZCLA No claim if company in administration or liquidation

(1) A company may not make a claim under section 1218ZCE or section 1218ZCH 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.”

(2) That amendment has effect in relation to claims made on or after 1 April 2024.