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HMRC internal manual

Film Production Company Manual

From
HM Revenue & Customs
Updated
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Film Production Companies: Losses: Introduction

CTA2009/S1208, S1209 and S1210 ICTA88/s393, s393A and s403

The profits or losses of a film production activity carried on by a film production company (FPC) and calculated by following the rules in CTA09/ Part 15 Chapter 2 are profits or losses of a separate trade. Film Tax Relief (FTR) - CTA09/Part15 Chapter 3 - can create or augment a loss of a film production activity.

Losses of a trade are normally available:

  • to carry forward against profits of the same trade, set sideways against other profits of the same company or carry back against profits of the same company; and
  • for surrender as group relief.

This normal entitlement to relief for losses of a trade is modified for losses of a trade of film production carried on by an FPC. The modifications:

  • restrict the use of losses for periods preceding that in which the film is completed
  • deem losses brought forward to the period in which the film is completed or later period (to the extent that they are not attributable to FTR) to be losses of the period to which they are brought forward, and
  • provide for a more generous relief for terminal losses.

Guidance on the loss relief rules applying to FPCs’ film production activities

FPC30020 Film losses: Pre-completion periods
   
FPC30030 Film losses: Completion and later periods
FPC30040 Film losses: Terminal Losses

Worked examples illustrating the practical effect of the rules

FPC30050 Film Losses: Example: Film ineligible for FTR
   
FPC30060 Film Losses: Example: Film eligible for FTR
FPC30070 Film Losses: Example: Terminal losses applied to new film
FPC30080 Film Losses: Example: Terminal losses surrendered