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HMRC internal manual

Film Production Company Manual

Taxation: separate trade - pre-trading expenditure


Where a company is a film production company (FPC) (FPC10110) for the purposes of the film tax regime , the production of each film is treated as a separate trade. This isolates films on an individual basis for the purpose of calculating profits and losses.

For a film that enters pre-production, there will often be expenditure on the film that has been incurred prior to the commencement of the trade - see FPC20100.

Where a company is set up especially to produce the film, the preliminary work will be bought by the FPC or its value will be transferred in after the trade has commenced.

Where the preliminary work is instead done by the FPC prior to the commencement of the trade, this pre-trading expenditure can be transferred to the trade. This expenditure is treated as having been incurred by the trade of producing the film on the day the trade commences.

This pre-trading expenditure, while proper to the film being produced, may have been incurred some time before the trade commences, and the expenditure may already have been reflected in the company’s accounts and tax computations. Where this is the case, the company must amend its previous return; the normal time limits for amending returns and assessments are overridden to allow it to do so.