Corporation Tax Act 2009

• (1) Where a certificate is granted in relation to a film under Schedule 1 to the Films Act 1985, if—

• (a) the application for the certificate specifies that it is an application for a low-budget certificate, and

• (b) the Secretary of State is satisfied that the budget condition and the creative connection condition are met,

the certificate must (in addition to certifying that the film is or will be a British film) certify the film as a low-budget film.

• (2) The budget condition is a condition, to be set out in regulations, requiring specified expenditure incurred, or currently or previously anticipated to be incurred, in relation to the film not to exceed a specified amount.

• (3) The creative connection condition is—

• (a) in the case of an interim certificate, that the film, if completed in accordance with the proposals set out in the application, will satisfy subsection (4);

• (b) in the case of a final certificate, that the film satisfies subsection (4).

• (4) A film satisfies this subsection if—

• (a) the director or scriptwriter of the film, or any other person working on the film in a specified role, is a British citizen or is ordinarily resident in the United Kingdom, or

• (b) the film is a qualifying co-production.

• (5) Regulations may—

• (a) provide for the budget condition to be different in relation to interim certification and final certification;

• (b) modify the test in subsection (4)(a) in relation to films that have more than one director or scriptwriter or person working in a role specified under that provision;

• (c) prescribe the particulars and evidence necessary for satisfying the Secretary of State that the budget condition or the creative connection condition is met.

• (6) The reference in paragraph 9(1) of Schedule 1 to the Films Act 1985 (right to apply to court) to a decision under paragraph 3 of that Schedule includes a decision under subsection (1).

• (7) A low-budget certificate may not be granted in relation to a film if another certificate under Schedule 1 to the Films Act 1985 or a certificate under section 1179DM has effect in relation to the film; and vice versa.

• (8) A low-budget certificate may be surrendered by the production company; and a surrendered certificate ceases to have effect in respect of all accounting periods.

• (9) A film is a “certified low-budget film” in relation to an accounting period if the production company’s company tax return for the period is accompanied by a low-budget certificate which has effect on that day the return is submitted.

• (10) In this section—

• “low-budget certificate” means a certificate granted in accordance with subsection (1);

• “regulations” means regulations made by the Secretary of State with the approval of the Treasury;

• “specified” means specified in regulations.

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Exceptions to section 409

Cases involving host contract

Relevant non-lending relationships: introduction

504A

• (1) This section applies to arrangements if under them—

• (a) a person (“the customer”) has a beneficial interest in an asset,

• (b) the customer disposes of some or all of their beneficial interest in the asset to another person (“the financier”),

• (c) either—

• (i) the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 504(7)), or

• (ii) the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 504(1A)),

• (d) the customer is to make payments to the financier amounting in aggregate to the consideration paid for the financier acquiring a beneficial interest as mentioned in paragraph (b) (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),

• (e) the customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,

• (f) the customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),

• (g) the customer has the exclusive right to occupy or otherwise to use the asset, and

• (h) the customer is exclusively entitled to any income, profit or gain arising from or attributable to the asset (including, in particular, an increase in its value).

• (2) This section also applies to arrangements which supersede arrangements to which section 504 or subsection (1) of this section applies if under them—

• (a) a person (“the financier”) acquires so much of the beneficial interest in an asset mentioned in section 504(1)(a) or subsection (1)(b) of this section as has not yet been acquired as mentioned in section 504(1)(d) or subsection (1)(e) of this section,

• (b) either—

• (i) the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 504(7)), or

• (ii) the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 504(1A)),

• (c) the customer mentioned in section 504(1) or subsection (1) of this section is to make payments to the financier amounting in aggregate to so much of the payments mentioned in section 504(1)(c) or subsection (1)(d) of this section as are yet to be paid (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),

• (d) that customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,

• (e) that customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),

• (f) the customer has the exclusive right to occupy or otherwise to use the asset, and

• (g) the customer is exclusively entitled to any income, profit or gain arising from or attributable to that asset (including, in particular, an increase in its value).

• (3) For the purposes of subsections (1)(a) and (b) and (2)(a) it does not matter if—

• (a) another person who is not the customer or the financier also has a beneficial interest in the asset, or

• (b) the financier also has a legal interest in it.

• (4) Subsection (1)(g) or (2)(f) does not prevent the customer from granting an interest or right in relation to the asset if the conditions in subsection (5) are met.

• (5) The conditions are that—

• (a) the grant is not to—

• (i) the financier,

• (ii) a person controlled by the financier, or

• (iii) a person controlled by a person who also controls the financier, and

• (b) the grant is not required by the financier or arrangements to which the financier is a party.

• (6) Subsection (1)(h) or (2)(g) does not prevent the financier from—

• (a) having responsibility for any reduction in the asset’s value, or

• (b) having a share in a loss arising out of any such reduction.

• (7) This section is subject to section 508 (provision not at arm’s length: exclusion of arrangements from sections 503 and 504, this section and sections 505 to 507).

515A

• (1) This section applies in respect of diminishing shared ownership arrangements to which section 504A applies.

• (2) If, under the arrangements, the customer disposes of an asset as mentioned in section 504A(1)(b), any gain accruing to the customer on the disposal of the asset is to be treated as not having accrued for the purposes of the Corporation Tax Acts.

• (3) If, under the arrangements, the customer—

• (a) disposes of an asset as mentioned in section 504A(1)(b),

• (b) acquires the asset as mentioned in section 504A(1)(d) and (e) or (2)(c) and (d),

• (c) and subsequently disposes of the asset,

the disposal of the asset mentioned in paragraph (a) and the acquisition of the asset mentioned in paragraph (b) (together with any intervening disposals or acquisitions of the asset) are to be treated as not having occurred for the purpose of computing, for the purposes of the Corporation Tax Acts, the amount of the gain accruing to the customer on the subsequent disposal of the asset.

• (4) In subsections (2) and (3),”the customer” has the same meaning as in section 504A.

• (5) If, under arrangements to which section 504A(2) applies (“successor arrangements”), the financier under the diminishing shared ownership arrangements that the successor arrangements supersede transfers their interest in a lease forming part of those arrangements to the financier under the successor arrangements, the transfer is not to be treated as involving a disposal or acquisition of the interest for the purposes of the Corporation Tax Acts.

Application of Part 5 to certain shares as rights under creditor relationship

Excepted shares

Unallowable purpose

Shares becoming or ceasing to be shares to which section 521B applies

Abortive expenditure on realisation

Introduction to Chapter

Pre-FA 2019 relevant asset: the first case

When the partial restrictions apply: acquisition from individual or firm

1179EC

• (1) This section applies in relation to a qualifying film or qualifying television programme.

• (2) The production company is entitled to claim an additional amount of audiovisual expenditure credit for an accounting period (“the claim period”) that is the completion period (see section 1179DY) or a subsequent accounting period if—

• (a) the company has incurred relevant visual effects expenditure on the film or programme in that period or an earlier accounting period, and

• (b) where a claim has been made for Chapter 3 credit (whether for the claim period or earlier), the relevant percentage for the purposes of all such claims was the percentage given by subsection (2) or (5) of section 1179DV.

• (3) The additional amount is equal to—

• (a) 39% of the total amount of the relevant visual effects expenditure incurred on the film or programme in the claim period and in previous periods, less

• (b) the sum of—

• (i) where Chapter 3 credits have been claimed by the production company, the adjusted VFX portion of those credits, and

• (ii) any additional amounts of audiovisual expenditure credit previously claimed under this section.

• (4) Take the following steps to determine the adjusted VFX portion of previously claimed Chapter 3 credits—

• Step 1 (identify the total UK expenditure in the AVEC period)Determine the total amount of the company’s relevant global expenditure (see section 1179CA(2)) that—is UK expenditure (see section 1179AB), andwas incurred for accounting periods falling within the company’s AVEC period.

• Step 2 (identify the amount of visual effects expenditure)Determine how much of the result of Step 1 is relevant visual effects expenditure.

• Step 3 (determine the extent to which the 80% cap applied)Determine the amount (if any) of the excess to be deducted at Step 3 in section 1179CA(1) for the most recent accounting period for which a claim for Chapter 3 credit was made (which may be the claim period).If that amount is nil go to Step 4, otherwise go to Step 5.

• Step 4 (where the 80% cap did not apply, calculate the adjusted VFX portion)If this Step applies, the adjusted VFX portion is the amount given by multiplying—the sum of Chapter 3 credits claimed by the production company, bythe amount given by dividing the result of Step 2 by the result of Step 1.

• Step 5 (treat the 80% cap as affecting the VFX portion first)Subtract the result of Step 3 from the result of Step 2.If the result is nil or less, the adjusted VFX portion is nil. If not, go to Step 6.

• Step 6 (calculate the adjusted VFX portion, taking account of the 80% cap)If this Step applies, the adjusted VFX portion is the amount given by multiplying the result of Step 5 by 0.34.

• (5) The Treasury may by regulations replace—

• (a) the percentage for the time being specified in subsection (3)(a), or

• (b) the number for the time being specified in Step 6 in subsection (4) as the number by which the result of Step 5 in that subsection is multiplied.

• (6) Sections 1179C and 1179CB to 1179CI (treatment of expenditure credits) apply to the additional amount as they apply to an expenditure credit under Chapter 3.

• (7) In this section—

• a company’s “AVEC period” means the period beginning with the commencement of the first accounting period for which this Part applies further to the election by the company under section 1179B(1) and ending with the end of the claim period;

• “Chapter 3 credit” means an audiovisual expenditure credit in respect of the film or television programme determined under section 1179CA;

• “relevant visual effects expenditure” means UK expenditure that—is incurred in respect of relevant visual effects work carried out in the United Kingdom, andcounts as relevant production expenditure for the purposes of section 1179CA(2) (see section 1179DR);

• “relevant visual effects work” means work consisting of the use of computer technology to create or alter images for inclusion in the film or programme.

Abbreviated references to Acts

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