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HMRC internal manual

Theatre Tax Relief

Taxation: separate theatrical trade: commencement

S1217H (4) Corporation Tax Act 2009 (CTA 2009)

Where a company is a Theatrical Production Company (TPC) (TTR10110) for the purposes of Part 15C CTA 2009, a qualifying theatrical production (TTR10100) is treated as a separate theatrical trade if Theatre Tax Relief (TTR) is claimed in respect of that production.  This isolates each theatrical production on an individual basis for the purposes of calculating profits and losses.

The point at which this trade starts is determined by special rules but, once set up, the normal rules apply for when a trade ceases.

The normal rules for deciding when a trade commences do not apply when deciding when a separate theatrical trade commences.  Special rules apply instead.

The TPC is treated as commencing a new theatrical trade on the earliest of:

  • commencement of the production phase, or
  • receipt of income for the production.

Commencement triggered by production expenditure

In many cases, the separate theatrical trade will commence when the production begins the production phase (TTR10130).

This means that as soon as the TPC begins to incur production expenditure on a theatrical production, a separate theatrical trade relating only to that production begins.  Income and expenditure relating to the production is then accounted for in relation to that trade using the TTR rules.

See TTR20120 for how development costs can be brought into the production trade.

Commencement triggered by receipt of income

In some cases, the separate theatrical trade will commence before the production phase starts if the TPC receives income relating to the theatrical production (TTR20210). For example, the commencement of the separate theatrical trade may be triggered when a TPC receives a grant to help fund development activity of a production or from advance sales of tickets.

This ensures that all theatrical production income is taxable as trading income.  This income will be offset by pre-trading expenditure brought into account on the commencement of the separate theatrical trade.  However, it may produce taxable profits if insufficient expenditure has been incurred by the end of the accounting period.

The fact that the TPC has commenced a separate theatrical trade does not necessarily mean that the production phase has commenced.