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HMRC internal manual

Theatre Tax Relief

Overview and general definitions: meaning of 'Theatrical Production Company'

S1217FC Corporation Tax Act 2009

Theatre Tax Relief (TTR) is available to Theatrical Production Companies (TPCs) conducting a separate theatrical trade (TTR20010+).  There can only be one TPC for each relevant theatrical production.

The TPC is the company that produces, runs and closes the production.  The legislation sets out when a company can be regarded as the TPC.

The company must:

  • be responsible for producing, running and closing the production
  • be actively engaged in decision-making during the production, running and closing phases
  • make an effective creative, technical and artistic contribution to the production, and
  • directly negotiate, contract and pay for rights, goods and services in relation to the production.

The producing, running and closing phases are considered in more detail at TTR10130.

A TPC does not need to have direct responsibility for every aspect of all of these activities.  Third parties are not prohibited from undertaking some of these activities on behalf of the TPC as subcontractors.

However, the TPC must still retain overall responsibility for the subcontracted activities and have active involvement.  A company that commissions an entire production from a third party and simply holds the creative copyright for it is not a TPC for the purposes of TTR.

The subcontractors will not qualify as TPCs as they are only delivering an element of a production and do not have the responsibilities outlined above.

If no company meets the TPC requirements for a qualifying production, then there is no TPC.  In such circumstances, no TTR may be claimed for the production.

Only one TPC per production

There can be no more than one TPC for any production.

In some cases it is possible that more than one company will meet the requirements for qualifying as a TPC.  In such circumstances, the company that is most directly engaged in the activities described above will be treated as the TPC.

The phrase ‘most directly engaged’ is not defined in the legislation.  This can only be decided on the facts of each case.

If there is no company which meets the requirement of this definition, then there will be no TPC in relation to that production.

Companies in partnership & unofficial (non-treaty) co-productions

Although the definition of a TPC excludes those making productions in partnership, a company is not automatically prevented from being a TPC because it is a member of a partnership.

A company is only prevented from being a TPC with respect to the production it is making in partnership.  This ensures that the tests are applied to a single company.

The fact that several parties are making a production as co-producers does not necessarily mean that a partnership exists.  Theatrical producers may work collaboratively on a co-production but they do not necessarily do so as legal partners.

Whether or not a partnership exists or not depends on the definition given in the Partnership Act 1890 and is subject to a significant amount of case law.  It will be necessary to consider all the facts in each particular case.

Broadly, a partnership exists where there is a relationship which carries on a business in common with a view to profit.  There is no requirement for a formal partnership agreement and it is possible for parties to enter into a partnership without deliberately intending to do so (BIM72000+ of the Business Income Manual).

However, sometimes businesses working in association on a single project may not constitute a partnership.  These associations are sometimes referred to as a ‘JANE’ which stands for ‘Joint Arrangement No Entity’.

Where there is a JANE, only one company will be regarded as the TPC and it will be the company most directly engaged in the production activities.