Qualifying television programmes: relevant programmes
S1216AC Corporation Tax Act 2009 (CTA 2009)
Any Television Production Company (TPC) must apply the rules in Part 15A CTA 2009 to compute the taxable profits or losses pertaining to its activities in relation to a programme.
There are five conditions for a television programme to be considered a ‘relevant programme’. These are that:
- the programme is a drama, documentary or animation,
- the programme is not an excluded programme,
- the slot length of the programme is greater than 30 minutes, and
- the average core expenditure per hour of slot length is not less than £1m.
- from 1 April 2015 a programme which is a children’s programme
Where the programme is an ‘animation’, the last three conditions do not apply. Television Tax Relief (TTR) specifically for animations is dealt with in the APC manual. This includes the situation where a programme contains animation but is not exclusively an animation. See APC40050. Where the programme is a “children’s programme” conditions three and four do not apply.
A ‘drama’ is a programme that:
- consists wholly or mainly of a depiction of events,
- events are depicted wholly or mainly by one or more persons performing, and
- the whole or majority of the performances involves the playing of a role, whether by speech, acting, singing or dancing.
Dramas may be based on fictional events, or non-fictional events.
The term ‘documentary’ is not defined in the legislation and so it is given its common meaning. A documentary is a non-fictional programme that attempts to document actual events in a factual and objective manner.
Where a programme is a ‘docu-drama’ it is possible that a programme may be both a documentary and a drama. A programme need only fall into one of these categories to meet the criterion so care is only needed over this question where it may appear to be neither a drama nor a documentary.
This might be the case where the programme does not contain sufficient dramatic scenes to constitute a drama, but the content of the programme does not attempt to be objective or factual.
It is unlikely that a programme will not constitute a drama or documentary unless it contains elements of non-drama. These will typically be excluded programmes in their own right as detailed below. It may therefore be beneficial to consider whether they constitute an excluded programme first.
The legislation requires that a programme is not an excluded programme. These are listed in the legislation (S1216AD CTA 2009) as:
- advertisements or other promotional material
- news or current affairs programmes or discussion programmes
- any quiz show, game show, panel show, variety show, chat show or similar entertainment
- a programme that consists of or includes a competition or contest or announces the results of a competition or contest
- a children’s programme may consist of or include a competition or contest as long as the total prizes do not exceed £1,000
- any broadcast of live events or of theatrical or artistic performance given otherwise than for the purpose of being filmed
- any programme produced for training purposes
These categories include many types of programme which might be argued as being documentary or drama but which are not intended recipients of TTR.
For example, a routine production at the theatre which is simply recorded for broadcast is not intended to benefit from TTR because it is not primarily a television production. Likewise, records of sporting events might be considered to be documentary in some circumstances but are also not intended to benefit from TTR.
For documentaries concerned with the performing arts and sports, it might be that elements of theatrical production or live events are used to document events or illustrate individuals’ actions. However, it will be a question of fact how footage is used, whether as documentation or otherwise.
The third condition that a television programme must meet is that the slot length which the programme is commissioned to fill must be greater than 30 minutes.
This means that programmes that are of a typical half an hour slot length will not qualify. High-end television productions predominantly last longer than this typical slot.
There will typically be no ambiguity over the commissioned slot length. This will be a matter of fact that can be determined by the contract and the actual slot length when the programme is broadcast.
The slot length is determined by the commissioning broadcaster and it does include time allocated to advertising. The length of the programme will therefore be shorter than the allocated slot time.
There is, however, no set minimum amount of time for actual time. There are restrictions in the UK, the EU and most countries on the maximum permissible length of time that can be devoted to advertising.
The core expenditure for the programme must be no less than £1m per hour, pro rata to slot length. It is not necessary that this is UK expenditure.
Core expenditure consists of:
- principal photography, and
Where a programme takes more than one period to complete, the core expenditure requirement will need to be estimated. However, it is anticipated that a production with core expenditure over £1 million will have adequate budgets and forecasts to be able to estimate this with reasonable certainty.
In order to apply for an interim certificate from the BFI (TPC40030), a TPC must provide assurance that the programme meets the above criteria, including the minimum core expenditure against the slot length. This will need to be done on the basis of the estimated budget for the entire project.
For TPCs this may create a significant amount of uncertainty as to whether the programme is eligible for TTR. This will especially be the case where the estimated core expenditure for the programme is close to £1 million per hour of slot length.
The previous certification of an earlier series is no guarantee that a subsequent series will qualify as the Cultural Test will need to be met for each separately commissioned series.