CREC032000 - Taxation: pre-completion and completion periods
Sections 1179DY and 1179FQ Corporation Tax Act (CTA) 2009听
A pre-completion period is defined as any accounting period which is before the completion period for a production. A production can have multiple pre-completion periods.听
The completion period for a production is the accounting period in which:听
the film, TV programme听or video game is completed, or听
the film, TV programme听or video game is abandoned.听
A production company should indicate听whether a production听has been completed听or abandoned in its tax return for the completion period. The additional听information form that must be completed before submitting听a claim听(CREC081000) asks听for the status of each production at the end of the accounting period of the claim: ongoing, complete听or abandoned.听
This page covers the definition of 鈥榗ompleted鈥� and what happens when a production is completed. Please see CREC033000 for the meaning of abandonment and what happens when a production is abandoned.听
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When a production is completed听鈥� films and TV programmes听
A film is completed when it can reasonably be听regarded as being听ready for copies of it to be distributed for public presentation, e.g.听at the cinema.听
In the case of a film intended for theatrical release in the commercial cinema, this will normally be when it is ready to be delivered to a distributor, even if, exceptionally, it is later sent back to the producer for changes. (While a film may be exhibited听earlier at a film festival, this may not be a completed version which would be released to the distributor. Indeed,听the purpose of exhibition at a festival may be to sell the film, raising money so that it can be completed.)听
A TV programme听is completed when it is first ready to be broadcast to the public.听
Similar to听films, this is normally听when it is delivered to a broadcaster, even if it is later sent back to the producer for changes.听
A film or TV programme听will not fail to be completed simply because it is not eventually released at the cinema or broadcast. The condition is that it must be ready for release or broadcast, and not that it is actually released听or broadcast. Situations may arise, for example, in which release/broadcast is delayed for a period after completion or a suitable distribution/broadcast deal cannot be found. Neither of these circumstances should prevent the film or programme听from being regarded as completed.听
When a production is completed 鈥� video games听
A video game is completed when it is first ready for听copies of it to be made available听to the general public. In the case of a video game intended for supply, this will normally be when it is ready to be delivered to the supplier. This is the case even if it is later sent back to the producer for changes.听
A video game will not fail to be completed simply because it is not eventually supplied for sale. The condition is that it must be ready for supply. Situations may arise, for example, in which supply is delayed for a period after completion or a suitable supply deal cannot be found. Neither of these circumstances should prevent the video game from being regarded as completed.听
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BFI certificates听
Only films, TV programmes and video games that have been certified as a British film, TV programme听or video game are eligible for AVEC and VGEC. A production company must provide a cultural certificate to HMRC alongside its claim for a production, otherwise听the claim is not听valid.听
Whether a production has been completed affects the type of certificate a company must provide with its claim.听
For claims relating to accounting periods before the production听is completed (known as pre-completion periods), the production company must provide an interim certificate for each production.听
For claims relating to the completion period 鈥� the accounting period in which the production is completed 鈥� and any later periods, the company must provide a final certificate. If听the company fails to听provide a final certificate,听it must amend its tax return(s) to withdraw any interim claims to relief.听Credit听previously given in reliance on an interim certificate听must be repaid, or听will be clawed back.听
Please see CREC028000 for more details.听
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Loss rules听
Special rules apply to losses arising from the separate production trade for a film, TV programme听or video game.听
In pre-completion periods, losses attributable to a separate production trade are only available to carry forward for relief against future profits of the same production trade. Once the production has been completed, only then can losses be used against other profits of the company or surrendered through group relief.听
Whether a production has been completed therefore affects the treatment of losses arising in the separate production trade.听
Please see CREC042000 for more details.听
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UK minimum expenditure听
At least 10% of the total core expenditure incurred on a production听must be UK expenditure, in order for听the production听to be eligible for AVEC or VGEC.听
UK expenditure is expenditure on goods and services that are used or consumed in the United Kingdom (see CREC054000).听
Credit may be given on an interim basis during pre-completion periods, provided that the production company expects to meet the minimum expenditure condition in the completion period. The production company must provide a statement with its claim for the completion period, showing the amount of core expenditure and core expenditure听that is also UK expenditure, so that the condition can be tested.听
Whether a production has been completed therefore affects whether a company needs to provide a final statement of expenditure.听
Please see CREC029000 for more details.听