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Corporation Tax Act 2009

Type Public General Act

Publication 2009-03-26

Last updated 2025-04-01

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(2) An election has effect in relation to the orchestral concerts specified in it, and must also specify which of those concerts (if any) are not to be qualifying orchestral concerts (see section 1217RA(3)).

(3) An election—

(a) may have effect in relation to concerts in two or more accounting periods, and

(b) is irrevocable.

(4) If the separate orchestral trade relates to a concert series, the company is treated as beginning to carry on that trade—

(a) at the beginning of the pre-performance stage of the first concert in the series, or

(b) if earlier, at the time of the first receipt by the company of any income from the production of the concert series.

Profits and losses of separate orchestral trade

1217QB

(1) This section applies for the purpose of calculating the profits or losses of the separate orchestral trade.

(2) For the first period of account during which the separate orchestral trade is carried on, the following are brought into account—

(a) as a debit, the costs of the production of the concert or concert series incurred to date;

(b) as a credit, the proportion of the estimated total income from that production treated as earned at the end of that period.

(3) For subsequent periods of account the following are brought into account—

(a) as a debit, the difference between the amount (“C”) of the costs of the production of the concert or concert series incurred to date and the amount corresponding to C for the previous period, and

(b) as a credit, the difference between the proportion (“PI”) of the estimated total income from that production treated as earned at the end of that period and the amount corresponding to PI for the previous period.

(4) The proportion of the estimated total income treated as earned at the end of a period of account is—

$$C T × I$where—C is the total to date of costs incurred;T is the estimated total cost of the production of the concert or concert series;I is the estimated total income from the production of the concert or concert series.$

Activities involved in developing, producing, running or closing a production

1217QC

(1) References in this Chapter to income from a production of a concert or concert series are to any receipts by the company in connection with the production or exploitation of the concert or concert series.

(2) This includes—

(a) receipts from the sale of tickets or of rights in the concert or concert series;

(b) royalties or other payments for use of the concert or concert series;

(d) receipts by the company by way of a profit share agreement.

(3) Receipts that (apart from this subsection) would be regarded as being of a capital nature are treated as being of a revenue nature.

1217QD

(1) References in this Chapter to the costs of a production of a concert or concert series are to expenditure incurred by the company on—

(a) activities involved in developing and putting on the concert or concert series, or

(b) activities with a view to exploiting the concert or concert series.

(2) This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.

(3) Expenditure which, apart from this subsection, would be regarded as being of a capital nature only because it is incurred on the creation of an asset (the concert or concert series) is treated as being of a revenue nature. (As to other capital expenditure, see section 53 and subsection (2).)

1217QE

(1) For the purposes of this Chapter, the costs that have been incurred on a production of a concert or concert series at a given time do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay.

(2) Where an obligation to pay an amount is linked to income being earned from the production of the concert or concert series, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1217QB.

1217QF

(1) This section applies if, before the company begins to carry on the separate orchestral trade, it incurs expenditure on activities falling within section 1217QD(1)(a).

(2) The expenditure may be treated as expenditure of the separate orchestral trade and as if incurred immediately after the company begins to carry on that trade.

(3) If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.

(4) Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

1217QG

Estimates for the purposes of section 1217QB must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.

CHAPTER 3 — Orchestra tax relief

Introduction

1217R

(1) Relief under this Chapter (“orchestra tax relief”) is given by way of—

(a) additional deductions (see sections 1217RD to 1217RF), and

(b) orchestra tax credits (see sections 1217RG to 1217RJ).

(2) See Schedule 18 to FA 1998 (in particular, Part 9D) for provision about the procedure for making claims for orchestra tax relief.

Companies qualifying for orchestra tax relief

1217RA

(1) Subsection (2) applies in the case of an orchestral concert which is not included in a concert series in relation to which an election has been made under section 1217Q(4).

(2) A company qualifies for orchestra tax relief in relation to the production of a concert if—

(a) the concert is a qualifying orchestral concert,

(b) the company is the production company in relation to the concert,

(i) before the paying public, or

(ii) for educational purposes, and

(d) the UK expenditure condition is met in relation to the concert (see section 1217RB).

(3) In this Part “qualifying orchestral concert” means an orchestral concert—

(a) in which the instrumentalists number at least 12, and

(b) in which none of the musical instruments to be played, or a minority of those instruments, is electronically or directly amplified.

(4) A company qualifies for orchestra tax relief in relation to the production of a concert series if—

(a) the concert series is a qualifying orchestral concert series,

(b) the company is the production company in relation to every concert in the series,

(i) before the paying public, or

(ii) for educational purposes,

(d) the UK expenditure condition is met in relation to the series, and

(e) the company has made an election under section 1217Q(4) in relation to the series.

(5) In this section “qualifying orchestral concert series” means two or more orchestral concerts, all or a high proportion of which are qualifying orchestral concerts.

(6) For the purposes of this section a concert is “live” if it is to an audience before whom the musicians are actually present.

(6A) A concert performed before the public is not regarded as being performed before the paying public unless—

(a) it is separately ticketed, and

(b) it is intended that a significant proportion of the earnings from the concert should be obtained by such ticketing.

(6B) For the purposes of subsection (6A), the fact that a ticket covers things reasonably incidental to the concert (such as, for example, a programme or food to be consumed during the course of the performance) does not prevent the concert from being separately ticketed, provided that the price paid can reasonably be apportioned between the concert and those other things.

(6C) A concert is only regarded as performed for educational purposes if it is performed entirely or mainly for the purpose of educating the audience.

(7) A concert is not regarded as performed for educational purposes if the production company is, or is associated with, a person who—

(a) has responsibility for the beneficiaries, or

(b) is otherwise connected with the beneficiaries (for instance, by being their employer).

(8) For the purposes of subsection (7), a production company is associated with a person (“P”) if—

(a) P controls the production company, or

(b) P is a company which is controlled by the production company or by a person who also controls the production company.

(9) In this section—

“the beneficiaries” means persons for whose benefit the concert will or may be performed;

“control” has the same meaning as in Part 10 of CTA 2010 (see section 450 of that Act).

(10) There is further related provision in section 1217RL (tax avoidance arrangements).

1217RB

(1) The “UK expenditure condition” is that at least 10% of the core expenditure on the production of the concert or concert series incurred by the company is UK expenditure.

(2) In this Part “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom.

(3) Any apportionment of expenditure as between expenditure that is and is not UK expenditure for the purposes of this Part is to be made on a just and reasonable basis.

(4) The Treasury may by regulations—

(a) amend the percentage specified in subsection (1);

(b) amend subsection (2).

(5) See also sections 1217T and 1217TA (which are about the giving of relief provisionally on the basis that the UK expenditure condition will be met).

1217RC

(1) In this Part “core expenditure”, in relation to the production of a concert or concert series, means expenditure on the activities involved in producing the concert or concert series.

(2) The reference in subsection (1) to “expenditure on the activities involved in producing the concert or concert series” includes expenditure on travel to and from a venue which is not a usual venue for concerts produced by the company.

(3) But that reference does not include—

(a) expenditure on any matters not directly involved with putting on the concert or concerts (for instance, financing, marketing, legal services, storage, or the provision of incidental goods or services to members of the audience),

(b) speculative expenditure on activities not involved with putting on the concert or concerts, and

(c) expenditure on the actual performance or performances (for instance, payments to musicians for their performances in the concert or concert series).

(4) For the purposes of subsection (3)(a), expenditure by an educational body on teaching or training participants in a concert or concerts is expenditure on a matter not directly involved with putting on the concert or concerts, except to the extent that the teaching or training takes place as part of a rehearsal for the concert or concerts.

(5) In this section, “educational body” includes a body mentioned in section 71.

Additional deduction

1217RD

(1) A company which qualifies for orchestra tax relief in relation to the production of a concert or concert series may claim an additional deduction in relation to the production.

(2) A claim under subsection (1) is made with respect to an accounting period.

(3) Where a company has made a claim, the company is entitled to make an additional deduction, in accordance with section 1217RE, in calculating the profit or loss of the separate orchestral trade for the accounting period concerned.

(4) Where the company tax return in which a claim is made is for an accounting period later than that in which the company begins to carry on the separate orchestral trade, the company must make any amendments of company tax returns for earlier periods that may be necessary.

(5) Any amendment or assessment necessary to give effect to subsection (4) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

1217RE

(1) The amount of an additional deduction to which a company is entitled as a result of a claim under section 1217RD is calculated as follows.

(2) For the first period of account during which the separate orchestral trade is carried on, the amount of the additional deduction is E, where E is—

(a) so much of the qualifying expenditure incurred to date as is UK expenditure, or

(b) if less, 80% of the total amount of qualifying expenditure incurred to date.

(3) For any period of account after the first, the amount of the additional deduction is—

$$E − P$where E is—so much of the qualifying expenditure incurred to date as is UK expenditure, orif less, 80% of the total amount of qualifying expenditure incurred to date, andP is the total amount of the additional deductions given for previous periods.$

(4) The Treasury may by regulations amend the percentage specified in subsection (2) or (3).

1217RF

(1) In this Chapter “qualifying expenditure”, in relation to the production of a concert or concert series, means core expenditure (see section 1217RC) on the production that—

(a) falls to be taken into account under sections 1217QB to 1217QG in calculating the profit or loss of the separate orchestral trade for tax purposes, ...

(b) is not expenditure which is otherwise relievable, and

(2) For the purposes of this section expenditure is otherwise relievable if it is expenditure in respect of which the company would be able to claim—

(za) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(zb) relief under Part 13 (relief for expenditure on research and development),

(a) film tax relief under Chapter 3 of Part 15,

(b) television tax relief under Chapter 3 of Part 15A,

(d) an additional deduction under Part 15C (theatrical productions), or

(e) a theatre tax credit under Part 15C.

(3) Expenditure is excluded to the extent that it represents connected party profit, unless subsection (5) applies.

(4) For the purposes of subsection (3), expenditure represents connected party profit—

(a) if it is a payment to a person (“C”) in exchange for something supplied, transferred or done by that person,

(b) if the company is connected with C, and

(c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying, transferring or doing that thing.

(5) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length.

(6) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded).

(7) Subsections (8) and (9) apply if—

(a) the supply by C to the company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and

(b) either—

(i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or

(ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable).

(8) The reference to C in subsection (4)(c) is to be read as a reference to the supplier in the first transaction in the sequence.

(9) The reference to the transaction in subsection (5) is to be read as including each transaction in the sequence.

(10) In this section, “payment” includes any transfer of value.

Orchestra tax credits

1217RG

(1) A company which qualifies for orchestra tax relief in relation to the production of a concert or concert series may claim an orchestra tax credit in relation to the production for an accounting period in which the company has a surrenderable loss.

(2) Section 1217RH sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period.

(3) A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period.

(4) The amount of the orchestra tax credit to which a company making a claim is entitled for the accounting period is 45% of the amount of the loss surrendered.

(5) The company's available loss for the accounting period (see section 1217RH(2)) is reduced by the amount surrendered.

1217RH

(1) The company's surrenderable loss in the accounting period is—

(a) the company's available loss for the period in the separate orchestral trade (see subsections (2) and (3)), or

(b) if less, the available qualifying expenditure for the period (see subsections (4) and (5)).

(2) The company's available loss for an accounting period is—

$$L + RUL$where—L is the amount of the company's loss for the period in the separate orchestral trade, andRUL is the amount of any relevant unused loss of the company (see subsection (3)).$

(3) The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been—

(a) surrendered under section 1217RG, or

(b) carried forward under section 45 or 45B of CTA 2010 and set against profits of the separate orchestral trade.

(4) For the first period of account during which the separate orchestral trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1217RE(2).

(5) For any period of account after the first, the available qualifying expenditure is—

$$E − S$where—E is the amount that is E for that period for the purposes of section 1217RE(3), andS is the total amount previously surrendered under section 1217RG.$

(6) If a period of account of the separate orchestral trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.

Total R&D aid

1217RI

(1) If a company—

(a) is entitled to an orchestra tax credit for an accounting period, and

(b) makes a claim,

the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) must pay the amount of the credit to the company.

(2) An amount payable in respect of—

(a) an orchestra tax credit, or

(b) interest on an orchestra tax credit under section 826 of ICTA,

may be applied in discharging any liability of the company to pay corporation tax.

To the extent that it is so applied the Commissioners' liability under subsection (1) is discharged.

(3) If the company's company tax return for the accounting period is enquired into by the Commissioners, no payment in respect of an orchestra tax credit for that period need be made before the Commissioners' enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).

In those circumstances the Commissioners may make a payment on a provisional basis of such amount as they consider appropriate.

(4) No payment need be made in respect of an orchestra tax credit for an accounting period before the company has paid to the Commissioners any amount that it is required to pay for payment periods ending in that accounting period—

(a) under PAYE regulations,

(b) under section 966 of ITA 2007 (visiting performers), or

(c) in respect of Class 1 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(4A) For the purposes of subsection (4), a “payment period” is—

(a) in relation to PAYE regulations or Class 1 national insurance contributions, a period—

(i) which ends on the fifth day of a month, and

(ii) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs;

(b) in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act.

(5) A payment in respect of an orchestra tax credit is not income of the company for any tax purpose.

1217RJ

In accordance with Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market (as that Regulation had effect immediately before IP completion day), the total amount of orchestra tax credits payable under section 1217RI in the case of any undertaking is not to exceed 50 million euros per year.

1217RK

(1) In determining for the purposes of this Chapter the amount of costs incurred on a production of a concert or concert series at the end of a period of account, ignore any amount that has not been paid 4 months after the end of that period.

(2) This is without prejudice to the operation of section 1217QE (when costs are taken to be incurred).

Anti-avoidance etc

1217RL

(1) A company does not qualify for orchestra tax relief in relation to the production of a concert or concert series if there are any tax avoidance arrangements relating to the production.

(2) Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage.

(3) In this section—

“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;

“tax advantage” has the meaning given by section 1139 of CTA 2010.

1217RM

(1) A transaction is to be ignored for the purpose of determining orchestra tax relief so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons.

(2) In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1217RL.

CHAPTER 4 — Losses of separate orchestral trade

1217S

(1) Sections 1217SA to 1217SC apply to a company which is treated under section 1217Q(2) or (5) as carrying on a separate trade in relation to the production of a concert or concert series.

(2) In those sections—

(a) “the completion period” means the accounting period in which the company ceases to carry on the separate orchestral trade;

(b) “loss relief” includes any means by which a loss might be used to reduce the amount in respect of which a company, or any other person, is chargeable to tax.

1217SA

(1) This section applies if a loss is made by the company in the separate orchestral trade in an accounting period preceding the completion period.

(2) The loss is not available for loss relief, except to the extent that the loss may be carried forward under section 45 or 45B of CTA 2010 to be deducted from profits of the separate orchestral trade in a subsequent period.

(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and deducted from profits of the separate orchestral trade in a subsequent period, the deduction is to be ignored for the purposes of section 269ZB of CTA 2010 (restriction on deductions from trading profits).

1217SB

(1) Subsection (2) applies if a loss made in the separate orchestral trade is carried forward under section 45 or 45B of CTA 2010 to the completion period.

(2) So much (if any) of the loss as is not attributable to orchestra tax relief (see subsection (4)) may be treated for the purposes of section 37 and Part 5 of CTA 2010 as if it were a loss made in the completion period.

(3) If a loss is made in the separate orchestral trade in the completion period, the amount of the loss that may be—

(a) deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or

(b) surrendered as group relief under Part 5 of that Act,

is restricted to the amount (if any) that is not attributable to orchestra tax relief (see subsection (4)).

(4) The amount of a loss in any period that is attributable to orchestra tax relief is found by—

(a) calculating what the amount of the loss would have been if there had been no additional deduction under Chapter 3 in that or any earlier period, and

(b) deducting that amount from the total amount of the loss.

(5) This section does not apply to loss surrendered, or treated as carried forward, under section 1217SC (terminal losses).

1217SC

(1) This section applies if—

(a) the company ceases to carry on the separate orchestral trade, and

(b) if the company had not ceased to carry on that trade, it could have carried forward an amount under section 45 or 45B of CTA 2010 to be set against profits of that trade in a later period (“the terminal loss”).

Below in this section the company is referred to as “company A” and the separate orchestral trade is referred to as “trade 1”.

(2) If company A—

(a) is treated under section 1217Q(2) or (5) as carrying on a separate trade in relation to the production of another concert or concert series (“trade 2”), and

(b) is carrying on trade 2 when it ceases to carry on trade 1,

company A may (on making a claim) make an election under subsection (3).

(3) The election is to have the terminal loss (or a part of it) treated—

(a) in a case where the loss could have been carried forward under section 45 of CTA 2010 had trade 1 not ceased, as if it were a loss carried forward under that section to be set against the profits of trade 2 of the first accounting period beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward under section 45B of CTA 2010 had trade 1 not ceased, as if it were a loss made in trade 2 which has been carried forward under that section to the first accounting period beginning after the cessation.

(4) Subsection (5) applies if—

(a) another company (“company B”) is treated under section 1217Q(2) or (5) as carrying on a separate trade (“company B's trade”) in relation to the production of another concert or concert series,

(b) company B is carrying on that trade when company A ceases to carry on trade 1, and

(5) Company A may surrender the loss (or a part of it) to company B.

(6) On the making of a claim by company B the amount surrendered is treated—

(a) in a case where the amount could have been carried forward under section 45 of CTA 2010 had trade 1 not ceased, as if it were a loss carried forward by company B under that section to be set against the profits of company B's trade of the first accounting period beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward under section 45B of CTA 2010 had trade 1 not ceased, as if it were a loss made in company B's trade which has been carried forward under that section to the first accounting period beginning after the cessation.

(7) The Treasury may by regulations make administrative provision in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6).

(8) “Administrative provision” means provision corresponding, subject to such adaptations or other modifications as appear to the Treasury to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief).

(9) A deduction under section 45 or 45B of CTA 2010 which is made in reliance on this section is to be ignored for the purposes of section 269ZB of that Act (restriction on deductions from trading profits).

CHAPTER 5 — Provisional entitlement to relief

1217T

(1) In relation to a company and the production of a concert or concert series, “interim accounting period” means any accounting period that—

(a) is one in which the company carries on a separate orchestral trade, and

(b) precedes the accounting period in which it ceases to do so.

(2) A company is not entitled to orchestra tax relief for an interim accounting period unless—

(a) its company tax return for the period states the amount of planned core expenditure on the production of the concert or concert series that is UK expenditure (see section 1217RB(2)), and

(b) that amount is such as to indicate that the UK expenditure condition (see section 1217RB) will be met in relation to the production.

If those requirements are met, the company is provisionally treated in relation to that period as if the UK expenditure condition were met.

1217TA

(1) If a statement is made under section 1217T(2) but it subsequently appears that the UK expenditure condition will not be met on the company's ceasing to carry on the separate orchestral trade, the company—

(a) is not entitled to orchestra tax relief for any period for which its entitlement depended on such a statement, and

(b) must amend accordingly its company tax return for any such period.

(2) When a company ceases to carry on the separate orchestral trade, the company's company tax return for the period in which that cessation occurs must—

(a) state that the company has ceased to carry on the separate orchestral trade, and

(b) be accompanied by a final statement of the amount of the core expenditure on the production of the concert or concert series that is UK expenditure.

(3) If that statement shows that the UK expenditure condition is not met—

(a) the company is not entitled to orchestra tax relief or to relief under section 1217SC (transfer of terminal losses) for any period, and

(b) must amend accordingly its company tax return for any period for which such relief was claimed.

(4) Any amendment or assessment necessary to give effect to this section may be made despite any limitation on the time within which an amendment or assessment may normally be made.

CHAPTER 6 — Interpretation

1217U

In this Part—

“company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1) of that Schedule);

“core expenditure” has the meaning given by section 1217RC;

“costs”, in relation to a concert or concert series, has the meaning given by section 1217QD;

“income”, in relation to a concert or concert series, has the meaning given by section 1217QC;

“orchestra tax relief” is to be read in accordance with Chapter 3 (see in particular section 1217R(1));

“orchestral concert” has the meaning given by section 1217PA;

“production company” has the meaning given by section 1217PB;

“qualifying expenditure” has the meaning given by section 1217RF;

“qualifying orchestral concert” has the meaning given by section 1217RA(3);

“qualifying orchestral concert series” has the meaning given by section 1217RA(5);

the “separate orchestral trade” is to be read in accordance with section 1217Q;

“UK expenditure” has the meaning given by section 1217RB(2);

“UK expenditure condition” has the meaning given by section 1217RB(1).

Meaning of “unallowable purpose”

Repeals and revocations

Payment in respect of orchestra tax credit

Transitional provisions and savings

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Worker's services provided through intermediary to public authority or medium or large client

141A

(1) This section applies for the purposes of calculating the trading profits of a person where—

(a) the person is the intermediary in a chain identified under section 61N of ITEPA 2003 (see section 61N(1)(b)),

(b) a deemed direct payment is treated as made under subsection (3) of that section, and

(c) the person receives a payment which can reasonably be taken to be in respect of the same services as those in respect of which the underlying chain payment is made.

(2) The payment mentioned in subsection (1)(c) is not required to be brought into account in calculating the profits of the trade.

(3) In this section “underlying chain payment” means the payment whose amount is used at Step 1 of section 61Q(1) of ITEPA 2003 as the starting point for calculating the amount of the deemed direct payment mentioned in subsection (1)(b).

Chapter 16A — Non-trading deficits: post 1 April 2017 deficits

463A

(1) This Chapter applies if—

(a) for any accounting period beginning on or after 1 April 2017 a company has a non-trading deficit from its loan relationships under section 301(6), and

(b) at the end of that accounting period the company is not a charity.

(2) In this Chapter “the deficit” and “the deficit period” mean that deficit and that period respectively.

(3) Sections 463B and 463C deal with claims to set off the deficit against profits of the deficit period or earlier periods.

(4) Sections 463D to 463F deal with the consequences of such claims.

(5) Sections 463G to 463I provide for so much of the deficit as is not—

(a) set off against profits under section 463B, or

(b) surrendered as group relief under Part 5 of CTA 2010,

to be carried forward to later accounting periods.

463B

(1) The company may make a claim for the whole or part of the deficit—

(a) to be set off against any profits of the company (of whatever description) for the deficit period, or

(b) to be carried back to be set off against profits for earlier accounting periods.

(2) No claim may be made under subsection (1) in respect of so much of the deficit as is surrendered as group relief under Part 5 of CTA 2010.

(3) For time limits and other provisions applicable to claims under subsection (1), see section 463C.

(4) For what happens when a claim is made under subsection (1)(a), see section 463D.

(5) For what happens when a claim is made under subsection (1)(b), and the profits available for relief when such a claim is made, see sections 463E and 463F.

463C

(1) A claim under section 463B(1) must be made within—

(a) the period of 2 years after the deficit period ends, or

(b) such further period as an officer of Revenue and Customs allows.

(2) Different claims may be made in respect of different parts of a non-trading deficit for any deficit period.

(3) But no claim may be made in respect of any part of a deficit to which another such claim relates.

463D

(1) This section applies if a claim is made under section 463B(1)(a) for the whole or part of the deficit to be set off against profits for the deficit period.

(2) The amount of the deficit to which the claim relates must be set off against the profits of the company for the deficit period which are identified in the claim.

(3) Those profits are reduced accordingly.

(4) Relief under this section must be given before relief is given against profits for the deficit period—

(a) under section 37 or 62(1) to (3) of CTA 2010 (deduction of losses from total profits for the same or earlier accounting periods), or

(b) as a result of a claim under section 463B(1)(b) (carry-back) in respect of a deficit for a later period.

(5) No relief may be given under this section against ring fence profits of the company within the meaning of Part 8 of CTA 2010 (oil activities) or contractor's ring fence profits of the company within the meaning of Part 8ZA of that Act (oil contractors).

463E

(1) This section applies if a claim is made under section 463B(1)(b) for the whole or part of the deficit to be carried back to be set off against profits for accounting periods before the deficit period.

(2) The claim has effect only if it relates to an amount no greater than the lesser of—

(a) so much of the deficit as is not an amount in relation to which a claim is made under section 463B(1)(a), and

(b) the total amount of the profits available for relief under this section.

(3) Section 463F explains which profits are so available.

(4) The amount to which the claim relates is set off against those profits by treating them as reduced accordingly.

(5) If those profits are profits for more than one accounting period, the relief is applied by setting off the amount to which the claim relates against profits for a later period before setting off any remainder of that amount against profits for an earlier period.

463F

(1) The profits available for relief under section 463E are the amounts which (apart from the relief) would be charged under this Part as profits for accounting periods ending within the permitted period after giving every prior relief.

(2) In this section—

“the permitted period” means the period of 12 months immediately before the deficit period, and

“prior relief” means a relief which subsection (5) provides must be given before relief under section 463E.

(3) If an accounting period ending within the permitted period begins before it, only a part of the amount which (apart from the relief) would be chargeable under this Part for the period, after giving every prior relief, is available for relief under section 463E.

(4) That part is so much as is proportionate to the part of the accounting period in the permitted period.

(5) The reliefs which must be given before relief under section 463E are—

(a) relief as a result of a claim under section 459(1)(a) or section 463B(1)(a) (claim for deficit to be set off against total profits for the deficit period),

(b) relief in respect of a loss or deficit incurred or treated as incurred in an accounting period before the deficit period,

(c) relief under Part 6 of CTA 2010 (charitable donations relief in respect of payments made wholly and exclusively for the purposes of a trade),

(d) relief under section 37 of CTA 2010 (losses deducted from total profits of the same or an earlier accounting period), and

(e) if the company is a company with investment business for the purposes of Part 16 (companies with investment business)—

(i) any deduction in respect of management expenses under section 1219 (expenses of management of a company's investment business),

(ii) relief under Part 6 of CTA 2010 in respect of payments made wholly and exclusively for the purposes of its business, and

(iii) any allowance under Part 2 of CAA 2001 (plant and machinery allowances).

463G

(1) This section applies if conditions A to D are met.

(2) Condition A is that—

(a) any amount of the deficit (“the unrelieved amount”) is not—

(i) set off against profits on a claim under section 463B(1), or

(ii) surrendered as group relief under Part 5 of CTA 2010.

(3) Condition B is that it is not the case—

(a) that the company ceased to be a company with investment business in the deficit period, or

(b) (if the company was a company with investment business immediately before the beginning of the deficit period) that its investment business became small or negligible in the deficit period.

(4) Condition C is that (if the company is a Solvency 2 insurance company) it is not the case that the whole of the deficit is a shock loss.

(5) Condition D is that (if the company is a general insurance company) the first accounting period after the deficit period is not an excluded accounting period.

(6) The unrelieved amount is carried forward to the first accounting period after the deficit period.

(7) The company may make a claim for the whole or part of the unrelieved amount to be set off against the company's total profits for the first accounting period after the deficit period.

(8) If a claim is made under subsection (7)—

(a) the unrelieved amount, or the part of it to which the claim relates, must be set off against the company's total profits for the first accounting period after the deficit period, and

(b) those profits are reduced accordingly.

(9) No claim may be made under subsection (7) in respect of so much of the unrelieved amount as is surrendered under Part 5A of CTA 2010 (group relief for carried-forward losses).

(10) A claim under subsection (7) must be made within—

(a) the period of two years after the end of the first accounting period after the deficit period, or

(b) such further period as an officer of Revenue and Customs allows.

(11) No relief may be given under this section against ring fence profits of the company within the meaning of Part 8 of CTA 2010 (oil activities) or contractor's ring fence profits of the company within the meaning of Part 8ZA of that Act (oil contractors).

(12) If —

(a) the company is a Solvency 2 insurance company, and

(b) the deficit is partly (but not wholly) a shock loss,

subsections (6) to (9) have effect as if references to the unrelieved amount were to the eligible amount (see subsection (13)).

(13) In this section “the eligible amount” means so much of the unrelieved amount as is not a shock loss; and for the purpose of determining how much of the unrelieved amount is, or is not, a shock loss, it is to be assumed that in setting off or surrendering amounts as mentioned in subsection (2)(a)(i) and (ii) the company uses shock losses before other amounts.

(14) In this Chapter—

“company with investment business” has the same meaning as in Part 16 (see section 1218B);

“excluded accounting period” has the meaning given by section 269ZG of CTA 2010;

“general insurance company” is to be interpreted in accordance with section 269ZG of CTA 2010;

“shock loss” has the meaning given by section 269ZK of CTA 2010;

“Solvency 2 insurance company” means an insurance company as defined in section 269ZP(2) of CTA 2010.

(15) In this Chapter references to a company's investment business are to be construed in accordance with section 1219(2).

463H

(1) Subsections (4) to (8) apply if—

(a) section 463G would apply but for the fact that the company's investment business became small or negligible in the accounting period mentioned in subsection (3)(b) of that section,

(b) section 463G would apply but for condition D in that section (no carry-forward to an excluded accounting period of a general insurance company), or

(c) the company is a Solvency 2 insurance company and any amount of the deficit would be eligible to be carried forward under section 463G(6) were that amount not a shock loss (see section 463G(4), (12) and (13)).

(2) Subsections (4) to (8) also apply if—

(a) subsections (6) to (10) of section 463G would apply but for the fact that the company's investment business became small or negligible in the accounting period mentioned in section 463I(1)(c)(ii), or

(b) subsections (6) to (10) of section 463G would apply but for section 463I(1)(d) (no carry-forward under those subsections to an excluded accounting period of a general insurance company).

(3) In this section the “unrelieved amount”—

(a) in a case within paragraph (a) or (b) of subsection (1), is to be interpreted in accordance with section 463G(2);

(b) in a case within paragraph (c) of subsection (1), means the amount mentioned in that paragraph;

(c) in a case within subsection (2), means so much of the deficit mentioned in section 463I(1)(a) as is not set off as mentioned in section 463I(1)(b)(i) or surrendered as mentioned in section 463I(1)(b)(ii).

(4) The unrelieved amount is carried forward to the first accounting period (“period 2”) after—

(a) (in a case within subsection (1)) the deficit period, or

(b) (in a case within subsection (2)) the period mentioned in section 463I(1)(a).

(5) So much of the unrelieved amount as is not the subject of a claim under subsection (7) must be set off against the non-trading profits of the company for period 2.

(6) Those profits are reduced accordingly.

(7) The company may make a claim for relief under subsection (5) not to be given in period 2 for the unrelieved amount or so much of it as is specified in the claim.

(8) A claim under subsection (7) is effective if, and only if, it is made—

(a) within the period of two years after the end of period 2, or

(b) within such further period as an officer of Revenue and Customs may allow.

(9) Subsection (10) applies if any amount is carried forward under subsection (4) to an accounting period (“the carry forward period”) and—

(a) cannot be set off under subsection (5) against non-trading profits of that period, or

(b) is the subject of a claim under subsection (7).

(10) If the company continues to be a company with investment business throughout the carry forward period, subsections (4) to (8) have effect as if—

(a) references to the unrelieved amount were to the amount mentioned in subsection (9), and

(b) references to—

(i) the deficit period, or

(ii) the period mentioned in section 463I(1)(a),

were to the carry forward period.

(11) In this section “non-trading profits”, in relation to a company, means so much of the company's profits as does not consist of trading income for the purposes of section 37 of CTA 2010 (deduction of trading losses from total profits of the same or an earlier period).

463I

(1) This section applies if—

(a) any amount of the deficit is carried forward to an accounting period (“the later period”) of the company under section 463G(6),

(b) any of that amount is not—

(i) set off against the company's total profits for the later period on a claim under section 463G(7), or

(ii) surrendered as group relief for carried-forward losses under Part 5A of CTA 2010,

(i) that the company ceased to be a company with investment business in the later period, or

(ii) (if the company was a company with investment business immediately before the beginning of the later period) that its investment business became small or negligible in the later period, and

(d) it is not the case that the first accounting period after the later period is an excluded accounting period of a general insurance company.

(2) Subsections (6) to (10) of section 463G apply as if—

(a) references to the unrelieved amount were to so much of the amount of the deficit carried forward to the later period as is not set off or surrendered as mentioned in subsection (1)(b), and

(b) references to the deficit period were to the later period.

808E

(1) This Part does not apply to an intangible fixed asset held by a museums and galleries exhibition production company so far as the asset represents expenditure on an exhibition that is treated under Part 15E as expenditure of a separate trade (see particularly sections 1218ZB and 1218ZBE).

(2) In this section—

“exhibition” has the same meaning as in Part 15E (see section 1218ZAA);

“museums and galleries exhibition production company” means a company which, for the purposes of that Part, is the primary production company or a secondary production company for an exhibition (see sections 1218ZAC and 1218ZAD).

Income from the production

Theatre tax credit claimable if company has surrenderable loss

Another deduction to be allowed if all acquired shares are awarded

“Qualifying expenditure”

PART 15E — Museums and galleries exhibition tax relief

CHAPTER 1 — Introduction

Overview

1218ZA

(1) This Part is about the production of museum and gallery exhibitions, and applies for corporation tax purposes.

(2) This Chapter explains what is meant by “exhibition” and “touring exhibition” and how a company comes to be treated as the primary production company or a secondary production company for an exhibition.

(3) Chapter 2 is about the taxation of the activities of a production company and includes—

(a) provision for the company’s activities in relation to its exhibition to be treated as a separate trade, and

(b) provision about the calculation of the profits and losses of that trade.

(4) Chapter 3 is about relief (called “museums and galleries exhibition tax relief”) which may be given to a production company in relation to an exhibition—

(a) by way of additional deductions to be made in calculating the profits or losses of the company’s separate trade, or

(b) by way of a payment (a “museums and galleries exhibition tax credit”) to be made on the company’s surrender of losses from that trade,

and describes the conditions a company must meet to qualify for museums and galleries exhibition tax relief.

(5) Chapter 4 contains provision about the use of losses of the separate trade (including provision about relief for terminal losses).

(6) Chapter 5 provides—

(a) for relief under Chapters 3 and 4 to be given on a provisional basis, and

(b) for such relief to be withdrawn if it turns out that conditions that must be met for such relief to be given are not actually met.

Interpretation

“Exhibition”

1218ZAA

(1) In this Part “exhibition” means a curated public display of an organised collection of objects or works (or of a single object or work) considered to be of scientific, historic, artistic or cultural interest (but see subsections (2) to (3A)).

(2) ... A display is not an exhibition if—

(a) it is organised in connection with a competition of any kind,

(b) its main purpose, or one of its main purposes, is to sell anything displayed or to advertise or promote any goods or services,

(d) anything displayed is for sale, or

(e) anything displayed is alive.

(3) Subsection (2) does not prevent a display being an exhibition if it includes a live performance by a person which is merely incidental to, or forms a merely incidental part of, the collection displayed.

(3A) A display of an object or work is not an exhibition to the extent that the public display of the object or work is subordinate to the use of the object or work (or of anything of which it forms part) for another purpose.

(4) A display is “public” if the general public is admitted to it, whether or not the public is charged for admission.

(4A) “Admitted” means admitted in person to the venue where the objects or works are displayed.

(5) A display does not fall outside subsection (4) just because visitors other than the general public are admitted to it for a single session or a small number of sessions.

“Touring exhibition”

1218ZAB

(1) In this Part an exhibition is a “touring exhibition” if conditions A to E are met.

(2) Condition A is that—

(a) there is a primary production company for the exhibition (see section 1218ZAC), and

(b) the primary production company is within the charge to corporation tax.

(3) Condition B is that the primary production company intends, when planning the exhibition, that conditions C, D and E should be met in relation to it.

(4) Condition C is that the exhibition is held at two or more venues.

(5) Condition D is that at least 25% of the objects or works displayed at the first venue at which the exhibition is held are also displayed at every subsequent venue at which the exhibition is held.

(6) Condition E is that the period between the deinstalling of the exhibition at one venue and the installation of the exhibition at the next venue does not exceed 6 months.

Primary production company

1218ZAC

(1) In this Part a company is the primary production company for an exhibition if the company (acting otherwise than in partnership) meets conditions A and B.

(2) Condition A is that the company—

(a) makes an effective creative, technical or artistic contribution to the exhibition, and

(b) directly negotiates for, contracts for and pays for rights, goods and services in relation to the exhibition.

(3) Condition B is that—

(a) where the exhibition is held at just one venue, the company is responsible for the production of the exhibition at that venue;

(b) where the exhibition is held at two or more venues, the company is responsible for the production of the exhibition at one or more of those venues.

(4) For the purposes of this section and section 1218ZAD, a company is responsible for the production of the exhibition at a venue if—

(a) it is responsible for producing and running the exhibition at the venue,

(b) where the exhibition is at the venue for a limited time, it is responsible for deinstalling and closing the exhibition at the venue, and

(5) If more than one company meets conditions A and B in relation to the production of the exhibition, the company that most directly meets those conditions is the primary production company for the exhibition.

(6) If no company meets conditions A and B in relation to the production of the exhibition, there is no primary production company for the exhibition.

Secondary production company

1218ZAD

(1) If an exhibition is held at two or more venues, there may be one or more secondary production companies for the exhibition.

(2) In this Part a company is the secondary production company for an exhibition at a venue if the company meets conditions C and D.

(3) Condition C is that the company (acting otherwise than in partnership) is responsible for the production of the exhibition at the venue.

(4) Condition D is that the company is not the primary production company.

(5) If more than one company meets conditions C and D in relation to the production of the exhibition at the venue, the company that is most directly responsible for the production of the exhibition at the venue is the secondary production company for the exhibition at the venue.

(6) If no company meets conditions C and D in relation to the production of the exhibition at the venue, there is no secondary production company for the exhibition at the venue.

CHAPTER 2 — Taxation of activities of production company

Separate exhibition trade

1218ZB

(1) Subsection (2) applies to a company in relation to an exhibition if, and only for so long as, the company qualifies for museums and galleries exhibition tax relief in relation to the production of the exhibition (see section 1218ZCA).

(2) The company’s activities in relation to the production of the exhibition are treated as a trade separate from any other activities of the company (including activities in relation to the production of any other exhibition).

(3) In this Part the separate trade mentioned in subsection (2) is called “the separate exhibition trade”.

(4) Subsections (5) and (6) apply where the company is the primary production company for the exhibition.

(5) The company is treated as beginning to carry on the separate exhibition trade—

(a) at the beginning of the production stage of the exhibition at the first venue at which it is held, or

(b) if earlier, at the time of the first receipt by the company of any income from the production of the exhibition.

(6) The company is treated as ceasing to carry on the separate trade when the exhibition closes at the last venue at which it is held.

(7) Subsections (8) and (9) apply where the company is a secondary production company for the exhibition.

(8) The company is treated as beginning to carry on the separate exhibition trade—

(a) at the beginning of the production stage of the exhibition at the first venue for which the company is the secondary production company, or

(b) if earlier, at the time of the first receipt by the company of any income from the production of the exhibition.

(9) The company is treated as ceasing to carry on the separate trade when the exhibition closes at the last venue for which the company is the secondary production company.

Profits and losses of separate exhibition trade

Calculation of profits or losses of separate exhibition trade

1218ZBA

(1) This section applies for the purpose of calculating the profits or losses of the separate exhibition trade.

(2) For the first period of account during which the separate exhibition trade is carried on, the following are brought into account—

(a) as a debit, the costs of the production of the exhibition incurred to date;

(b) as a credit, the proportion of the estimated total income from that production treated as earned at the end of that period.

(3) For subsequent periods of account the following are brought into account—

(a) as a debit, the difference between the amount (“C”) of the costs of the production of the exhibition incurred to date and the amount corresponding to C for the previous period, and

(b) as a credit, the difference between the proportion (“PI”) of the estimated total income from that production treated as earned at the end of that period and the amount corresponding to PI for the previous period.

(4) The proportion of the estimated total income treated as earned at the end of a period of account is—

$$CT×I$where—C is the total to date of costs incurred;T is the estimated total cost of the production of the exhibition;I is the estimated total income from the production of the exhibition.$

Income from the production

1218ZBB

(1) References in this Chapter to income from a production of an exhibition are to any receipts by the company in connection with the production or exploitation of the exhibition.

(2) This includes—

(a) receipts from the sale of tickets or of rights in the exhibition;

(b) royalties or other payments in connection with the exploitation of the exhibition or aspects of it (such as a particular exhibit);

(d) a grant designated as made for the purposes of the exhibition;

(e) receipts by the company by way of a profit share agreement.

Costs of the production

1218ZBC

(1) References in this Chapter to the costs of a production of an exhibition are to expenditure incurred by the company on—

(a) activities involved in developing, producing, running, deinstalling and closing the exhibition, or

(b) activities with a view to exploiting the exhibition.

(2) This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.

When costs are taken to be incurred

1218ZBD

(1) For the purposes of this Chapter, the costs that have been incurred on a production of an exhibition at a given time do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay.

(2) Where an obligation to pay an amount is linked to income being earned from the production of the exhibition, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1218ZBA.

Pre-trading expenditure

1218ZBE

(1) This section applies if, before the company begins to carry on the separate exhibition trade, it incurs expenditure on activities falling within section 1218ZBC(1)(a).

(2) The expenditure may be treated as expenditure of the separate exhibition trade and as if incurred immediately after the company begins to carry on that trade.

(3) If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.

(4) Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

Estimates

1218ZBF

Estimates for the purposes of section 1218ZBA must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.

CHAPTER 3 — Museums and galleries exhibition tax relief

Introduction

Overview of museums and galleries exhibition tax relief

1218ZC

(1) Relief under this Chapter (“museums and galleries exhibition tax relief”) is given by way of—

(a) additional deductions (see sections 1218ZCE to 1218ZCG), and

(b) museums and galleries exhibition tax credits (see sections 1218ZCH to 1218ZCK).

(2) See Schedule 18 to FA 1998 (in particular, Part 9D) for provision about the procedure for making claims for museums and galleries exhibition tax relief.

Companies qualifying for museums and galleries exhibition tax relief

1218ZCA

(1) A company qualifies for museums and galleries exhibition tax relief in relation to the production of an exhibition if conditions A to D are met.

(2) Condition A is that the company is—

(a) the primary production company for the exhibition, or

(b) a secondary production company for the exhibition.

(3) Condition B is that the company is—

(a) a charitable company which maintains a museum or gallery,

(b) wholly owned by a charity which maintains a museum or gallery, or

See section 1218ZCB for the interpretation of paragraphs (b) and (c).

(4) Condition C is that at the beginning of the planning stage, the company intends that the exhibition should be public (within the meaning given by section 1218ZAA).

(5) Condition D is that the UK expenditure condition is met (see section 1218ZCC).

(6) For the purposes of subsection (3) “museum or gallery” includes—

(a) a library or archive, and

(b) a site where a collection of objects or works (or a single object or work) considered to be of scientific, historic, artistic or cultural interest is exhibited outdoors (or partly outdoors).

(6A) For the purposes of subsection (3), the fact that a person is responsible for an exhibition at a venue does not, by itself, mean that the person maintains a museum or gallery.

(7) There is further related provision in section 1218ZCM (tax avoidance arrangements).

Interpretation of section 1218ZCA(3)(b) and (c)

1218ZCB

(1) For the purposes of section 1218ZCA(3)(b) a company is “wholly owned by a charity which maintains a museum or gallery” if condition A or B is met.

(2) Condition A is that—

(a) the company has an ordinary share capital, and

(b) every part of that share capital is owned by—

(i) a charity which maintains a museum or gallery, or

(ii) two charities, each of which maintains a museum or gallery.

(3) Condition B is that—

(a) the company is limited by guarantee,

(b) there are no more than two beneficiaries of the company, and

(i) a charity which maintains a museum or gallery, or

(ii) a company wholly owned by a charity which maintains a museum or gallery.

(4) For the purposes of section 1218ZCA(3)(c) a company is “wholly owned by a local authority” if—

(a) where the company has an ordinary share capital, every part of that share capital is owned by the local authority, or

(b) where the company is limited by guarantee, the local authority is the sole beneficiary of the company.

(5) Ordinary share capital of a company is treated as owned by a charity or a local authority if the charity or local authority (as the case may be)—

(a) directly or indirectly owns that share capital within the meaning of Chapter 3 of Part 24 of CTA 2010, or

(b) would be taken so to own it if references in that Chapter to a body corporate included references to a charity or local authority which is not a body corporate.

(6) A beneficiary of a company is a person who—

(a) is beneficially entitled to participate in the company’s divisible profits, or

(b) will be beneficially entitled to share in any of the company’s net assets available for distribution on its winding up.

(7) In this section “museum or gallery” has the same meaning it has for the purposes of section 1218ZCA.

The UK expenditure condition

1218ZCC

(1) The “UK expenditure condition” is that at least 10% of the core expenditure on the production of the exhibition incurred by the company is UK expenditure.

(2) In this Part “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom.

(3) Any apportionment of expenditure as between expenditure that is and is not UK expenditure for the purposes of this Part is to be made on a just and reasonable basis.

(4) The Treasury may by regulations—

(a) amend the percentage specified in subsection (1);

(b) amend subsection (2).

(5) See also sections 1218ZE and 1218ZEA (which are about the giving of relief provisionally on the basis that the UK expenditure condition will be met).

“Core expenditure”

1218ZCD

(1) Subject to the following provisions of this section, in this Part “core expenditure”, in relation to a company’s production of an exhibition, means expenditure on the activities involved in producing, deinstalling and closing the exhibition at every relevant venue.

(2) For the purposes of subsection (1) a venue is a “relevant venue” in relation to a company if the company’s activities in relation to the exhibition at the venue form part of the company’s separate exhibition trade.

(3) Expenditure on the activities involved in deinstalling and closing the exhibition at a venue is core expenditure only if the period between the opening and closing of the exhibition at the venue is 12 months or less.

(4) Expenditure on the storage of exhibits for an exhibition which is held at just one venue is not core expenditure.

(5) Where a company incurs expenditure on the storage of exhibits for an exhibition which is held at two or more venues, the amount of such expenditure which is core expenditure is limited to the amount of relevant storage expenditure (if any) incurred by the company in respect of a period of 4 months or less.

(6) For the purposes of subsection (5) expenditure in relation to the exhibition is “relevant storage expenditure” if—

(a) the expenditure is incurred in respect of the storage of exhibits between the deinstallation of the exhibition at one venue and the opening of the exhibition at the next venue, and

(b) the exhibits are not stored at a venue at which the exhibition has been held or is to be held.

(7) Expenditure of the following kinds is not core expenditure—

(a) expenditure on any matters not directly involved with putting on the exhibition (for instance, financing, marketing, legal services, promotional events, and the provision of incidental goods or services to visitors),

(b) speculative development expenditure on initial exhibition concepts and feasibility,

(d) expenditure in relation to any live performance,

(e) expenditure on further development of the exhibition during the running stage,

(f) expenditure on purchasing the exhibits, and

(g) expenditure on infrastructure, unless that expenditure is incurred solely for the purposes of the exhibition.

Additional deduction

Claim for additional deduction

1218ZCE

(1) A company which qualifies for museums and galleries exhibition tax relief in relation to the production of an exhibition may claim an additional deduction in relation to the production.

(2) A claim under subsection (1) is made with respect to an accounting period.

(3) Where a company has made a claim, the company is entitled to make an additional deduction, in accordance with section 1218ZCF, in calculating the profit or loss of the separate exhibition trade for the accounting period concerned.

(4) Where the company tax return in which a claim is made is for an accounting period later than that in which the company begins to carry on the separate exhibition trade, the company must make any amendments of company tax returns for earlier periods that may be necessary.

(5) Any amendment or assessment necessary to give effect to subsection (4) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

Amount of additional deduction

1218ZCF

(1) The amount of an additional deduction to which a company is entitled as a result of a claim under section 1218ZCE is calculated as follows.

(2) For the first period of account during which the separate exhibition trade is carried on, the amount of the additional deduction is E, where E is—

(a) so much of the qualifying expenditure incurred to date as is UK expenditure, or

(b) if less, 80% of the total amount of qualifying expenditure incurred to date.

(3) For any period of account after the first, the amount of the additional deduction is—

$$E−P$where E is—so much of the qualifying expenditure incurred to date as is UK expenditure, orif less, 80% of the total amount of qualifying expenditure incurred to date, andP is the total amount of the additional deductions given for previous periods.$

(4) The Treasury may by regulations amend the percentage specified in subsection (2) or (3).

(5) If a period of account of the separate exhibition trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.

“Qualifying expenditure”

1218ZCG

(1) In this Chapter “qualifying expenditure”, in relation to the production of an exhibition, means core expenditure (see section 1218ZCD) on the production that—

(a) falls to be taken into account under sections 1218ZBA to 1218ZBF in calculating the profit or loss of the separate exhibition trade for tax purposes, and

(b) is not expenditure which is otherwise relievable,

(ba) is not excluded by subsection (2A), ...

(2) For the purposes of this section expenditure is “otherwise relievable” if it is expenditure in respect of which the company would be able to claim—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) relief under Part 13 (... relief for expenditure on research and development),

(d) television tax relief under Chapter 3 of Part 15A,

(e) video games tax relief under Chapter 3 of Part 15B,

(f) an additional deduction under Part 15C (theatrical productions),

(g) a theatre tax credit under Part 15C, or

(h) orchestra tax relief under Chapter 3 of Part 15D.

(2A) Expenditure is excluded to the extent that it represents connected party profit, unless subsection (2C) applies.

(2B) For the purposes of subsection (2A), expenditure represents connected party profit—

(a) if it is a payment to a person (“C”) in exchange for something supplied, transferred or done by that person,

(b) if the company is connected with C, and

(c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying, transferring or doing that thing.

(2C) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length.

(2D) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded).

(2E) Subsections (2F) and (2G) apply if—

(a) the supply by C to the company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and

(b) either—

(i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or

(ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable).

(2F) The reference to C in subsection (2B)(c) is to be read as a reference to the supplier in the first transaction in the sequence.

(2G) The reference to the transaction in subsection (2C) is to be read as including each transaction in the sequence.

(2H) In this section, “payment” includes any transfer of value.

(3) The Treasury may by regulations amend paragraph (c) of subsection (1) so as to substitute a later date for the date for the time being specified in that paragraph.

Museums and galleries exhibition tax credits

Museums and galleries exhibition tax credit claimable if company has surrenderable loss

1218ZCH

(1) A company which qualifies for museums and galleries exhibition tax relief in relation to the production of an exhibition may claim a museums and galleries exhibition tax credit in relation to the production for an accounting period in which the company has a surrenderable loss.

(2) Section 1218ZCI sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period.

(3) A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period.

(4) Subject to section 1218ZCK, the amount of the museums and galleries exhibition tax credit to which a company making a claim is entitled for the accounting period is—

(a) 45% of the amount of the loss surrendered if the exhibition is a touring exhibition (see section 1218ZAB), or

(b) 40% of the amount of the loss surrendered if the exhibition is not a touring exhibition.

(5) The company’s available loss for the accounting period (see section 1218ZCI(2)) is reduced by the amount surrendered.

Amount of surrenderable loss

1218ZCI

(1) The company’s surrenderable loss in the accounting period is—

(a) the company’s available loss for the period in the separate exhibition trade (see subsections (2) and (3)), or

(b) if less, the available qualifying expenditure for the period (see subsections (4) and (5)).

(2) The company’s available loss for an accounting period is—

$$L+RUL$where—L is the amount of the company’s loss for the period in the separate exhibition trade, andRUL is the amount of any relevant unused loss of the company (see subsection (3)).$

(3) The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been—

(a) surrendered under section 1218ZCH, or

(b) carried forward under section 45 or 45B of CTA 2010 and set against profits of the separate exhibition trade.

(4) For the first period of account during which the separate exhibition trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1218ZCF(2).

(5) For any period of account after the first, the available qualifying expenditure is—

$$E−S$where—E is the amount that is E for that period for the purposes of section 1218ZCF(3), andS is the total amount previously surrendered under section 1218ZCH.$

(6) If a period of account of the separate exhibition trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.

Payment in respect of museums and galleries exhibition tax credit

1218ZCJ

(1) If a company—

(a) is entitled to a museums and galleries exhibition tax credit for an accounting period, and

(b) makes a claim,

the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) must pay the amount of the credit to the company.

(2) An amount payable in respect of—

(a) a museums and galleries exhibition tax credit, or

(b) interest on a museums and galleries exhibition tax credit under section 826 of ICTA,

may be applied in discharging any liability of the company to pay corporation tax.

To the extent that it is so applied the Commissioners’ liability under subsection (1) is discharged.

(3) If the company’s company tax return for the accounting period is enquired into by the Commissioners, no payment in respect of a museums and galleries exhibition tax credit for that period need be made before the Commissioners’ enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).

In those circumstances the Commissioners may make a payment on a provisional basis of such amount as they consider appropriate.

(4) No payment need be made in respect of a museums and galleries exhibition tax credit for an accounting period before the company has paid to the Commissioners any amount that it is required to pay for payment periods ending in that accounting period—

(a) under PAYE regulations, or

(b) in respect of Class 1 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(4A) For the purposes of subsection (4), a “payment period” is—

(a) in relation to PAYE regulations or Class 1 national insurance contributions, a period—

(i) which ends on the fifth day of a month, and

(ii) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs;

(b) in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act.

(5) A payment in respect of a museums and galleries exhibition tax credit is not income of the company for any tax purpose.

Maximum museums and galleries exhibition tax credits payable

1218ZCK

(1) Subsections (2) and (3) prescribe the maximum amount of museums and galleries exhibition tax credits which may be paid to a company under section 1218ZCJ in respect of the company’s separate exhibition trade.

(2) Where the separate exhibition trade relates to the production of a touring exhibition, the maximum amount which may be paid to the company is £100,000.

(3) Where the separate exhibition trade relates to the production of an exhibition which is not a touring exhibition, the maximum amount which may be paid to the company is £80,000.

(4) In accordance with Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market, the total amount of museums and galleries exhibition tax credits payable under section 1218ZCJ in the case of any undertaking is not to exceed 75 million euros per year.

1218ZCL

(1) In determining for the purposes of this Chapter the amount of costs incurred on a production of an exhibition at the end of a period of account, ignore any amount that has not been paid 4 months after the end of that period.

(2) This is without prejudice to the operation of section 1218ZBD (when costs are taken to be incurred).

Anti-avoidance etc

Tax avoidance arrangements

1218ZCM

(1) A company does not qualify for museums and galleries exhibition tax relief in relation to the production of an exhibition if there are any tax avoidance arrangements relating to the production.

(2) Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage.

(3) In this section—

“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;

“tax advantage” has the meaning given by section 1139 of CTA 2010.

1218ZCN

(1) A transaction is to be ignored for the purpose of determining museums and galleries exhibition tax relief so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons.

(2) In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1218ZCM.

CHAPTER 4 — Losses of separate exhibition trade

Application of sections 1218ZDA to 1218ZDC

1218ZD

(1) Sections 1218ZDA to 1218ZDC apply to a company which is treated under section 1218ZB(2) as carrying on a separate trade in relation to the production of an exhibition.

(2) In those sections “the completion period” means the accounting period in which the company ceases to carry on the separate exhibition trade.

Restriction on use of losses before completion period

1218ZDA

(1) This section applies if a loss is made by the company in the separate exhibition trade in an accounting period preceding the completion period.

(2) The loss is not available for loss relief, except to the extent that the loss may be carried forward under section 45 or 45B of CTA 2010 to be deducted from profits of the separate exhibition trade in a subsequent period.

(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and deducted from profits of the separate exhibition trade in a subsequent period, the deduction is to be ignored for the purposes of section 269ZB of CTA 2010 (restriction on deductions from trading profits).

(4) In this section “loss relief” includes any means by which a loss might be used to reduce the amount in respect of which a company, or any other person, is chargeable to tax.

Use of losses in the completion period

1218ZDB

(1) Subsection (2) applies if a loss made in the separate exhibition trade is carried forward under section 45 or 45B of CTA 2010 to the completion period.

(2) So much (if any) of the loss as is not attributable to museums and galleries exhibition tax relief (see subsection (4)) may be treated for the purposes of section 37 and Part 5 of CTA 2010 as if it were a loss made in the completion period.

(3) If a loss is made in the separate exhibition trade in the completion period, the amount of the loss that may be—

(a) deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or

(b) surrendered as group relief under Part 5 of that Act,

is restricted to the amount (if any) that is not attributable to museums and galleries exhibition tax relief (see subsection (4)).

(4) The amount of a loss in any period that is attributable to museums and galleries exhibition tax relief is found by—

(a) calculating what the amount of the loss would have been if there had been no additional deduction under Chapter 3 in that or any earlier period, and

(b) deducting that amount from the total amount of the loss.

(5) This section does not apply to a loss surrendered, or treated as carried forward, under section 1218ZDC (terminal losses).

Terminal losses

1218ZDC

(1) This section applies if—

(a) the company ceases to carry on the separate exhibition trade, and

(b) if the company had not ceased to carry on that trade, it could have carried forward an amount under section 45 or 45B of CTA 2010 to be set against profits of that trade in a later period (“the terminal loss”).

Below in this section the company is referred to as “company A” and the separate exhibition trade is referred to as “trade 1”.

(2) If company A—

(a) is treated under section 1218ZB(2) as carrying on a separate trade in relation to the production of another exhibition (“trade 2”), and

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