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Section 5 is required for claims to the Audio-Visual Expenditure Credit (AVEC) or the Video Games Expenditure Credit (VGEC). If the company is making a claim for any of the other audio-visual tax reliefs, or any of the cultural tax reliefs, then they will also need to complete section 4 and/or section 6.

Section 5 contains three parts:

• individual production details and per production expenditure reporting
• upload pages for expenditure breakdowns and tax calculations
• expenditure credit redemption â€� discharges and surrenders

CREC081300 covers the details that companies need to provide for each production. This page covers the expenditure totals that need to be reported for each production, and the upload pages. CREC081500 covers expenditure credit redemption.

Expenditure totals

Once the basic production details for a production have been provided (CREC081300), the user must provide some expenditure figures for the production. The form asks for the following, for each production:

• Relevant global expenditure for the accounting period

This should be the amount of relevant global expenditure incurred in the accounting period the company is currently claiming for. Relevant global expenditure is core expenditure that is not excluded expenditure. It includes both UK and non-UK expenditure.

Core expenditure is:

• Expenditure on the pre-production, principal photography, or post-production of a film or programme (s1179DS CTA 2009).
• Expenditure on designing, producing or testing a video game, but not designing the initial concept, nor debugging nor carrying out maintenance in connection with a completed video game (s1179FK).

Excluded expenditure includes:

• Expenditure in respect of which the company could claim a Research and Development (R&D) relief or credit (s1179DT and s1179FL)
• Amounts that have not been paid within 4 months of the end of the accounting period (s1179DT and s1179FL)
• Connected party profit (unless the transaction is at arm’s length) (s1179DU and s1179FM)

This amount for each individual production is on the HMRC template in box CP3.

See CREC051000 for more information about relevant global expenditure.

• Total relevant global expenditure to date

This is the amount of relevant global expenditure incurred in all accounting periods up to and including the period the company is currently claiming for. This amount must therefore be equal to or more than the relevant global expenditure for the current claim period. If the user is completing the form for the first accounting period of the separate production trade, this amount should equal relevant global expenditure for the accounting period, which was entered on the previous page.

If a company is claiming for an independent film (CREC021100), it should include in this total any relevant global expenditure that is excluded by the £15 million cap that applies to independent films. The form will automatically apply the cap on the following page.

This amount for each individual production is on the HMRC template in box QE5.

See CREC051000 for more information about relevant global expenditure and CREC061100 for more information about the £15 million cap for independent films.

• Total UK relevant global expenditure to date

This is the amount of total relevant global expenditure to date that is also UK expenditure. UK expenditure is expenditure on goods and services that are used or consumed in the UK.

This amount for each individual production is on the HMRC template in box QE4.

See CREC051000 for more information about relevant global expenditure and CREC054000 for more information about UK expenditure.

• Qualifying expenditure for previous periods

The form will ask if the company has claimed an expenditure credit or made an additional deduction for the same production in a previous accounting period. Additional deductions are made under Film Tax Relief, the television tax reliefs and Video Games Tax Relief.

If the answer is yes, the company must enter the amount of ‘qualifying expenditure to date� for the most recent accounting period in which an additional deduction was made or an expenditure credit was claimed. In most cases, this will be the period before the current claim period.

If the most recent period was one when an additional deduction was made, ‘qualifying expenditure to date� for that period is the combined value of additional deductions made for all periods up to and including that period.

If the most recent period was one when an expenditure credit was claimed, ‘qualifying expenditure to date� for that period is the amount given by step 3 of the expenditure credit calculation for that period. See s1179CA(1) and CREC060100.

This amount for each individual production is on the HMRC template in box QE8.

• Qualifying expenditure for the period

The form calculates qualifying expenditure for the period based on total relevant global expenditure, UK relevant global expenditure and any qualifying expenditure in previous periods. The form explains how the calculation works and asks the user to confirm the result.

This amount for each individual production is on the HMRC template in box QE9.

• Amount of expenditure credit for the period

This is the amount of credit to which the company is entitled for the production for the current claim period. It is the amount given by Step 5 of the expenditure credit calculation for the current claim period (s1179CA). It is determined by multiplying the qualifying expenditure for the period (Step 4) by the applicable credit rate. It is not the amount payable to the company, nor the amount of credit remaining after carrying out the credit redemption steps in s1179CC. It is the amount which should be added to the company’s taxable income.

The rates of expenditure credits are:

• AVEC â€� Independent films: 53%
• AVEC â€� Children’s TV programmes, Animated films and TV programmes: 39%
• AVEC â€� All other films, high-end TV programmes: 34%
• VGEC â€� 34%

If the applicant is using the HMRC template, this is the amount in box EC2.

The company should not include any additional credit for visual effects costs (CREC061400) in this amount. The form asks for the amount of additional credit separately.

Additional visual effects (VFX) credit information

If the production being entered is a high-end TV production or a film (excluding animated and independent films) that is complete or abandoned, the form will ask if the production company intends to claim any additional credit for VFX costs. If the company does intend to claim additional credit, it must provide information about its claim and each vendor it has worked with on the production.

• Amount of additional credit

This is the amount of additional credit the company is claiming for the accounting period covered by the form. Companies should not include additional credit they have claimed in previous periods, if any. The form will then ask the user to confirm the total expenditure credit for the period � this is the sum of additional credit plus the ‘regular� credit the user entered earlier.

• How many vendors were involved in the VFX for the production?

This is the number of vendors that have provided relevant VFX work in relation to the production, including companies, individual freelancers and partnerships. The company should include in this total all vendors they worked with directly or through a non-vendor middleman. There is no need to include any subcontractors hired by VFX vendors themselves.

If a production company has hired several VFX staff directly as individuals, they can be grouped together as a single ‘vendor�.

Not all VFX-related work meets the definition of ‘relevant VFX work�. Therefore, some VFX vendors may not need to be included. For detailed guidance, see CREC061420.

Information required per vendor

The form will ask a series of questions about each vendor in turn, up to a maximum of 10 vendors. If more than 10 vendors have worked on a production, the company must provide the same information for each remaining vendor in a document, which they will be prompted to attach to the form.

• Vendor company number and name

The user must provide the name of the VFX vendor and the vendor’s company registration number, if applicable. The number is only required if the vendor is a company.

• VFX costs incurred with the vendor

This is the amount of relevant VFX expenditure that the production company incurred with the vendor. Relevant VFX expenditure is the cost of relevant VFX work that is carried out in the UK. Not all VFX-related work meets this definition, so the cost may need to be apportioned depending on the kind of services the vendor has provided and the location of their work. For detailed guidance, see CREC061420.

• Number of people engaged in VFX work for the vendor

This is the maximum number of people that were carrying out relevant VFX work on the production for the vendor at any one time. This includes any subcontractors and freelancers engaged by the vendor to help them deliver the work.

The number of VFX artists and other staff engaged on a production typically begins small during pre-production, then increases during principal photography and reaches a peak during post-production as the delivery/distribution date approaches. Users should enter the peak figure.

The exact number of people is not required � the form asks for the user to select the correct range, eg. 11 to 50 or 201 to 500 people.

• Description of the VFX services provided

The company should provide a brief description of the VFX work carried out by the vendor. The form includes guidance of the sort of information that it would be useful to provide.

The vendor may have provided some services that are not relevant VFX work. This is not an issue as long as the cost of those services is not included in relevant VFX expenditure.

Expenditure totals table

After the user has entered the details for each production the company is claiming for and confirmed their answers, the form will show a table based on the expenditure totals entered or calculated for each production, with the combined totals for all productions in the bottom row. Users should check the figures and calculations carefully and go back and correct their answers if necessary.

Calculations upload

After the user has provided production details and expenditure details for each of a company’s productions, there is a separate subsection of section 5 where tax calculations and expenditure breakdowns for all productions should be provided.

This is an opportunity for companies to upload the remaining mandatory supporting evidence:

• a computation showing how the amount of credit has been calculated for each production
• a breakdown of production expenditure for each production, showing the distinction between core/non-core expenditure, UK/non-UK expenditure, and any excluded expenditure
• a calculation of any additional credit for VFX costs

HMRC has produced templates which companies can complete and submit to help them with this requirement. These templates can be downloaded through the form itself, or obtained by emailing [email protected] or the BFI.

The form asks the user to upload all the expenditure breakdowns and tax calculations for each type of production in one go. For example, a company with an animated film and two independent films would upload the animated film documents on one page, and the independent film documents on the next page.

Multiple documents can be uploaded per page, if required.