188ÌåÓý

AVEC and VGEC provide support to production companies. A production company is the company that actually makesÌýthe film, TV programmeÌýor video game. This may sound like a statement of the obvious, but it embodies the purpose of the credits, which are aimed at production activity - i.e.Ìýat the film, programmeÌýor game’s manufacturing process, rather than its creative gestation.Ìý

A companyÌýshould assess whether itÌýis a qualifying production companyÌýin relation to a productionÌýat the end of each accounting period. Where the assessment depends on future events, it should be based on the reasonable expectations of the company at the time of the assessment.

Film production companies and television production companiesÌý

To be the film production company (FPC) in relation to a film or the television production companyÌý(TPC) in relation to a TV programme, a company must be responsible for:Ìý

The company must also:ÌýÌý

The legislation is in section 1179DP of CTA 2009.

Video game development companiesÌý

A production company producing a video game is known as a video game development company (VGDC). References in this manual to production companies include development companies.Ìý

To be the VGDC in relation to a video game, a company must be responsible for:Ìý

The company must also:ÌýÌý

The legislation is in section 1179FI of CTA 2009.

Interpretation of the requirementsÌý

A production company does not need direct responsibility for all aspects of the activities listed above.ÌýThird parties are not prohibited from undertaking some of these activities on behalf of the production company as subcontractors.Ìý

It is common industry practice to subcontract third parties to deliver certain elements of a production. This may be activities such as post-production or sound editing. Where this is the case, the contracting company is not prevented from being the production company for tax purposes.Ìý

The production company must still retainÌýoverall responsibility for the subcontracted activities and have active involvement. A production company cannot simply commission the entire film, programmeÌýor game and only hold the creative copyright.ÌýSimilarly, if a company subcontracts out all the work and is only used as the vehicle through which contracts are run, with no input from the company itself into the production, then it will not be a production company.Ìý

The subcontractors will not qualify as a production company as they are only delivering an element of a production and do not have the responsibilities outlined above.Ìý

The production company need not (and generally willÌýnot) be the only party that negotiates, directly contractsÌýand pays for things, nor does it need toÌýpay for all the rights, goodsÌýand services. Subcontractors may undertake some of these activities on itsÌýbehalf.ÌýHowever, the production company must still have some involvementÌýin these activitiesÌýâ€� it must direct the overall project and cannot simply pass all responsibility on to its subcontractors.Ìý

Production companies must be able to provide evidence to HMRC which shows that the company is actively inveÌýolvedÌýin the production and decision-making processes. A contractual assignment that identifiesÌýthe claimant company as the production company is not sufficient to show the claimant company’s involvement in production. Some form of extrinsic evidence is requiredÌýto demonstrateÌýa production company’s involvement and control of the production.ÌýÌý

For example, for a film, evidence could include email correspondence, receipts or documents that show the production company engagÌýd the key cast and crew, booked travelÌýand made other logisticsÌýarrangements for the film production, or took decisions concerning the location or catering for the film.Ìý

If no company meets theÌýrequirements for a qualifying production, then there is no production company. Therefore, no expenditure credits can be claimed for the production.Ìý

A productionÌýcompany might also have additionalÌýresponsibilities. TheseÌýmight includeÌýdevelopment, marketingÌýand distribution. There is no requirement that it must have these responsibilities in orderÌýtoÌýbe eligible for the relief.

No more than one production company per productionÌý

There can be no more than one production company for any production.ÌýOnce a qualifying company has made an election to apply the separate production trade rules to a production (CREC031100), no other company can be the qualifying company for that production.Ìý

In some cases, it is possible that more than one company will meet the requirements for qualifying as the production company. In such circumstances,Ìýthe production company isÌýthe company which is moreÌýdirectly engagedÌýthan any otherÌýcompany in the matters required to be a production company.Ìý