CREC033000 - Taxation: abandonment

A film, TV programme听or video game is abandoned if the production company ceases all production activities in relation to it before it is completed and听does not intend to recommence production activities at a later date.听

If a company abandons a production, it must notify HMRC of this using the additional听information form accompanying听its claim (see CREC081300). It should also notify the British Film Institute (BFI).听

When a production is abandoned, the abandonment effectively takes the place of completion for the purposes of Part 14A Corporation Tax Act听(CTA) 2009.听

The production company can still claim expenditure credits on qualifying expenditure incurred before the production was abandoned, and the abandonment does not, of itself, affect entitlement to credits given in previous听periods.听

However, as with a completed production, entitlement to credit(s) already given still depends on whether the production satisfies the qualifying conditions:听

  • To meet the British certification condition (CREC028000), the production company may present an interim BFI cultural certificate for the final period (since it will not be able to obtain a final听certificate). If the production is still a British production,听then any relief already given stands.听

  • The production must still satisfy the 10% minimum听UK core expenditure condition (CREC029000), though now with respect to the actual, rather than planned, level of expenditure. This condition may not be satisfied if the bulk of the core UK expenditure was planned to fall later in production, after the point at which the production was abandoned (for example, if it was planned to carry out post-production for a film in the UK and abandonment happened during principal photography).听

  • The theatrical release condition听(CREC021000),听intended broadcast condition (CREC022000) and intended supply condition (CREC027000) do not specifically address abandonment.听Strictly, once听a production is abandoned, it cannot any longer be intended for theatrical release, broadcast听or supply. However, in such circumstances, a production will be deemed听to meet the relevant condition if it would have met it immediately听before abandonment.听

For the purposes of the special loss rules relating to separate production trades, the accounting period in which the production is abandoned counts as the completion period. Please see CREC040100 for more details.听