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HMRC internal manual

Film Production Company Manual

Taxation: separate trade - introduction

CTA2009/Part 15 Chapter 2 S1188 to S1194

Where a company is a film production company (FPC) (FPC10110) for the purposes of the film tax regime introduced by FA06 (legislation now in CTA 2009), the production of each film is treated as a separate trade. This means that profits and losses should be calculated separately for each film, and the rules applying to a trade should be applied to each film.

In producing their statutory accounts, film production companies (FPCs) may account for their costs and income in a number of ways depending on their operating model and the way they think best represents their activities to their shareholders. 

CTA2009/Part 15 Chapter 2 therefore sets out a consistent approach to calculating taxable profits of FPCs.

This approach is important when considering relief for any losses. There are special provisions which restrict the ways in which losses arising from a trade of producing a film can be used and this will vary depending on whether or not the film has been completed and the trade has ceased (FPC20110).

The CTA2009/Part 15 Chapter 2 basis, like the treatment it replaces (F2A92/S40A and F2A92/S40B), applies a revenue treatment to income and to certain types of expenditure that would otherwise be treated as capital expenditure (FPC20200).

The definition of a film can link a number of parts of a self-contained work and treat them as a single film (FPC10100). (See FPC20130 for further detail of how this applies in relation to television programmes.)