CREC054220 - Eligible expenditure: UK expenditure: film and TV examples: services not directly related to a single territory

In the case of some services, it is not obvious where the services are 鈥榰sed or consumed鈥�.听Generally听these are services:听

  • which do not involve, or are not directly linked听to, principal photography, or听

  • where the location of any physical performance is difficult to determine.听

This includes, in particular, services supplied by the director, screenwriter, composer, production designer and researcher.听

It is also common for some of these services to be used or consumed in more than one way. The only way to determine听whether such services are used or consumed within the UK is by looking at the facts in each case, and where necessary, apportioning听the costs between UK and non-UK expenditure.

Example 1: screenwriter听

A听production company decided to make a film of a book to which it holds the film rights. It enlists a screenwriter to prepare the initial听drafts of a screenplay and to rework them into a script which is used as the basis of filming. The nature of the services provided by a screenwriter is the provision of a script.听

The script is used as follows:

Activity Location
Preparing costings and shooting schedule UK
Rehearsals UK
Principal photography Part UK, part overseas
Post-production Part UK, part overseas

The script is used in the UK to the extent to which those activities take place in the UK.听

To the extent that the script is used or consumed during that part of principal photography which takes place in the UK, then it will be UK expenditure,听since the script is used or consumed is in the UK. Likewise, where it is used as the basis of recording a voiceover during post-production, the expenditure on the script will be UK expenditure to the extent that recording takes place in the UK.听

So, in this case, not all of听the screenwriter鈥檚 fees can be regarded as used or consumed in the UK. The particular circumstances听will determine听whether a proposed method of allocation between UK听and non-UK can be regarded as fair and reasonable. An allocation key based on the extent to which the script is referred to during each stage of the production process may be reasonable.听

The same principle applies听even if the screenwriter is resident听overseas and/or writes the script while not in the UK.听It is the location where the script is used that determines听to what extent the expenditure incurred on it is UK expenditure.听

It follows from this that any expenditure on a script which is supplied in order to听facilitate听rehearsal, principal photography or dubbing of dialogue where those activities take place outside the UK is not expenditure on a service which is听used or consumed within the UK. This is true even where the screenwriter has physically written the script in the UK, and where the expenditure is incurred by a UK-based production company.

Example 2: Voice/dialect coach听

An American actor is to play the leading role in a TV听programme听to be filmed in the UK and set in nineteenth-century London. A voice coach is hired to work with the actor in the United States prior to the commencement of rehearsals and filming.听

The nature of the service is that of coaching the actor. That service is consumed by the actor wherever the actor is. If the actor is in the United States, the expenditure is not UK expenditure. This remains听so even if the coaching is delivered remotely from the UK.听

Likewise, if the actor is located in听the UK when the coaching is given, the point of consumption is in the UK, regardless of the location of the coach.听
听

Flights and other travel听

Expenditure on plane tickets and other travel costs is UK expenditure if part of the journey takes place in the UK. Therefore, the costs will be eligible for relief if the travel is:听

  • wholly within听the UK听

  • From the UK to a destination abroad听

  • To the UK from a destination abroad听

Expenses for travel between destinations outside of the UK will not qualify.听

If a journey is in two legs, only the leg to or from the UK will qualify. For example, if the journey consists of a flight from Birmingham to Paris, a stopover in Paris, then an onwards flight to Rome, only the leg from Birmingham to Paris is UK expenditure.听

If the journey has been paid for as a single trip, the cost should be apportioned on a just and reasonable basis.听

The same principle applies to the cost of transporting goods/items for use in the production.听