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HMRC internal manual

Television Production Company Manual

Losses: terminal losses

S1216DC Corporation Tax Act 2009 (CTA 2009)

The rules in Part 15A CTA 2009 modify the normal rules for relieving corporate trading losses. The losses incurred by a television programme trade of a Television Production Company (TPC) can only be surrendered for payable tax credit, where applicable, or used against future profits of the same trade prior to completion of the programme.

When a separate programme trade ceases, a TPC may pass losses on to another trade that qualifies for Television Tax Relief (TTR). The trade must be carried on at the time of cessation and can be:

  • another trade carried on by the same company, or
  • another trade carried on by a different TPC in the same group.

A company is in the same group for these purposes if it is in the same group for group relief purposes. See CTM80150.

The trade that the losses are transferred to does not need to be a programme trade of the same type. It must still qualify for TTR and so, if it is not a drama or documentary trade, it may be an animation.

The losses are treated as losses brought forward to be set against profits of the TTR-qualifying trade for the accounting period that commences after the cessation.

For example, company A claims terminal loss relief under the rules in Part 15A CTA 2009. It ceases on 31 October 2014. It surrenders losses to company B which is in the same group and has a TTR trade. Company B has a chargeable accounting period ended 30 April 2015. The losses transferred will be treated as brought forward by company B in the period commencing 1 May 2015.

This is in contrast to the normal rules on terminal losses which must be offset against profits of the same trade arising in the three previous years.

The new loss provisions from 1 April 2017 will still allow companies to utilise  terminal losses in a similar manner whether they are brought forward under s45 or S45A of CTA 2010