CREC042000 - Losses: completion period and later periods

Section 1179BF CTA 2009 

The Part 14A rules restrict the use of losses of the separate production trade in pre-completion periods. That restriction applies until the accounting period in which the film, TV programme or video game is completed or abandoned. In that completion period, and any later period(s), losses can be used more flexibly.


Losses arising in the completion period and later periods 

If a production company makes a loss in the completion period or any later period, the company is not restricted to carrying it forward for use against profits of the same trade. Instead, the company has a range of ways to use the loss. It can: 

  • set the loss against total taxable profits of the production company in the current or previous period (section 37 CTA 2010), 

  • surrender the loss as group relief (Part 5 CTA 2010), or 

  • carry the loss forward for use against total profits in a later period (section 45A CTA 2010).


Losses brought forward from pre-completion periods 

Where losses have been brought forward from pre-completion periods into the completion period, or any later, post-completion period, they first reduce any profit from the separate production trade that is made in the completion or post-completion period. Any surplus (once the profit is reduced to nil) is then treated as a loss of the completion or post-completion period for the purposes of section 37 and Part 5 loss relief. 

Such losses can therefore be:  

  • offset against total taxable profits of the production company in the current or previous period, or 

  • surrendered to other companies in the group as group relief. 

Any loss remaining can be carried forward again and used in later periods in the same ways as above. 


Losses for transitional productions 

Section 269ZD CTA 2010 restricted the losses that could be used under section 37 and Part 5 CTA 2010 by virtue of the loss rules of Film Tax Relief, the television tax reliefs and Video Games Tax Relief. In other words, separate production trade losses used by a company under section 37 and Part 5, at a time when the company was claiming one of the tax reliefs, were restricted by section 269ZD. 

No such restriction applies for losses relieved under section 37 or Part 5 CTA 2010 when that relief is available by virtue of the loss rules for Audio-Visual and Video Games Expenditure Credit (AVEC and VGEC). 

When a company switches from claiming one of the tax reliefs on a production to claiming AVEC or VGEC, it may have carried forward losses that were made under the tax relief rules but are eventually relieved under the AVEC/VGEC rules. If so, those losses are not restricted by section 269ZD CTA 2010. 

Please see CREC092100 for how to treat losses which arise in notional periods. 


2017 reform of Corporation Tax loss relief 

Losses which arise in the completion period or a later period, and losses treated as incurred in the completion period or later period, may be affected by the 1 April 2017 loss reforms. The reforms introduced a restriction limiting the total amount of relief available for carried-forward losses. Guidance is available in CTM04800.