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HMRC internal manual

Theatre Tax Relief

Taxation: separate trade: pre-trading expenditure

S1217IE 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.

For a theatre production that enters the production phase, there will often be expenditure that has been incurred prior to the commencement of the theatre production’s separate trade (TTR20100).

Where a company is set up especially to produce the theatrical production, the preliminary work will be bought by the TPC or its value will be transferred in after the trade has commenced.

Where the preliminary work is instead done by the TPC prior to the commencement of the trade, this pre-trading expenditure can be transferred to the trade. This expenditure is treated as having been incurred by the separate theatrical trade on the day the trade commences.

It is possible that this pre-trading expenditure may have been incurred some time before the separate theatrical trade commenced.

If the expenditure has already been reflected in the company’s accounts and tax computations, the company must amend any relevant company tax return accordingly.  This is because the expenditure relates to the separate theatrical trade not to any other trade.  The normal time limits for amending returns and assessments are specifically overridden by the TTR rules to allow the company to do so.