188ÌåÓý

UK expenditure is expenditure on goods and services which are used or consumed in the UK (CREC054000).

Co-productionsÌý

In the case of a co-production (CREC010300), the requirement that at least 10% of the core expenditure on the film or TV programmeÌýmust be UK expenditure is applied by reference to expenditure incurred by all the co-producers, not just to the core expenditure incurred by the UK production company.Ìý

This means that any core expenditure incurred by an overseas co-producerÌýwhich is also UK expenditureÌýcounts when applying the 10% minimum threshold. So, for example, where the UK expenditure incurred by a UK production company is only 7% of the total core expenditure, the 10% threshold can be met if an overseas co-producer incurs 3% or more core expenditure which is also UK expenditure.Ìý

ExampleÌý

A TV programmeÌýis made as a co-production under the terms of the UK-France bilateral treaty, thereby qualifying as a British programme.Ìý

Total core expenditure on the programmeÌýis £10m, of which £2m is UK expenditure. The UK co-producer incurs £0.5m of this UK expenditure, the remaining £1.5m being incurred by the French co-producer.Ìý

Because 20% of the total core expenditure on the programmeÌýis UK expenditure, itÌýwill meet the minimumÌýUK expenditure threshold and,Ìýprovided the other tests are met, the UK production company will be entitled to AVECÌýbased on the £0.5³¾ UK core expenditure it has incurred.

Pre-completionÌýperiodsÌý

Whether a film, TV programmeÌýor video game meets the 10% UK expenditure condition cannot be determinedÌýuntil after the end of the accounting period in which the production is completed or abandoned (the â€�completionÌýperiodâ€�).Ìý

However,Ìýtax returns for any earlier periods (â€�pre-completionÌýperiodsâ€�) can include claims to expenditure credits based on an expectation that the condition will be met. The tax return for a pre-completion period mustÌýincludeÌýa statement ofÌý

whichÌýindicatesÌýthatÌýthe second amount is at least 10% of the first and the UK expenditure condition will therefore be metÌýon completion of the production.Ìý

If the statement indicatesÌýthat the 10% minimum will not be met on completion of the production, the production is treated as not having met the UK expenditure condition in the currentÌýperiod or any earlier period(s). Claims for earlierÌýperiods made in expectation of meeting the condition will be revisited, and credit amounts appropriately revised, if this is the case.

The completion periodÌý

The tax return for the completionÌýperiod mustÌýinclude a final statement of the core expenditureÌýincurredÌýon the production and the core expenditure incurredÌýthat is UK expenditure.Ìý

The final statement should include all core expenditure on the productionÌýby the production company/co-producers. It should also include any deferred payments of UK core expenditureÌýthat areÌýexpected to be paid out in the future (whether by the production company or others), as long asÌýthey can be estimated with reasonable certainty.Ìý

If less than 10% of core expenditure is UK expenditure, the production is treated as not having met the UK expenditure condition in the completion period or any earlier period(s). Claims for pre-completion periods made in expectation of meeting the condition will be revisited, and credit amounts appropriately revised, if this is the case.

Later accounting periodsÌý