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HMRC internal manual

Film Production Company Manual

Claims: abandonment

CTA2009/Part 15 Chapter 5/S1212 to 1216

If production of a film ceases before completion, the abandonment effectively takes the place of completion as far as the requirements of film tax relief (FTR) are concerned.

The film production company (FPC) can still claim relief for qualifying production expenditure incurred before the film was abandoned, and the abandonment does not, of itself, affect entitlement to any FTR given in previous periods.

As with a completed film, this entitlement still depends, however, on whether the film satisfies the qualifying conditions:

  • the FPC may present an interim certificate for the final period (since it will not be able to procure a final certificate) (FPC40030). If the film is still a British film then entitlement to any FTR already given stands;
  • the film must still satisfy the 25% or10% (whichever applies) minimum UK core expenditure condition (FPC40040) though now with respect to the actual, rather than planned, level of expenditure. If the bulk of the core UK expenditure was planned to fall later in production, after the point at which the film was abandoned (for example if it was planned to carry out post production in the UK and abandonment happened during principal photography) this condition may not be satisfied; and,
  • the film is treated as being limited-budget (this only applies to films where principal photography was completed prior to 1 April 2015) (FPC10160) if, based on the amount of work completed and the expenditure actually incurred, it would have been limited-budget had it been completed. How this is assessed will depend upon circumstances and any reasonable method should be accepted.

The ‘theatrical release’ condition (FPC40020) does not specifically address abandonment. Strictly, once production of a film is abandoned, it cannot any longer be intended for theatrical - or any other - release. However, in such circumstances, a film will be deemed to meet the condition if it would have met it immediately before abandonment.