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HMRC internal manual

Theatre Tax Relief

Taxation: profit/loss calculation: expenditure: timing

S1217IA, S1216ID Corporation Tax Act 2009

The rules for the timing of expenditure recognition ensure that costs are recognised when they are represented in the state of completion of the production and, in particular that:

  • prepayments (where payments are made in advance of the goods or services being supplied) are not recognised until the work has been done, and
  • deferrals (where work is done or services supplied for promise of payment in the future) are recognised earlier so long as the obligation of future payment is unconditional.

There are additional anti-avoidance rules to prevent companies inflating claims to Theatre Tax Relief (TTR) with payments that remain unpaid for long periods (TTR80020). These apply for the purposes of TTR only. They do not affect the amount of expenditure for the trade, simply when an additional deduction is allowed.


In the theatre industry, payment for goods and/or services is sometimes contingent on the theatrical production making a profit.  Effectively, the amount the supplier is to be paid is linked to the success of the project and they will only begin to be paid these amounts when the production generates sufficient income.

In that case the costs are recognised if, or when, the income on which they are to be based is also recognised. This applies to all companies, regardless of whether they claim TTR or not.

Theatre Tax Credits due or paid to a TPC in connection with a theatrical production are not regarded as income earned from the production.

See TPC80020 for a worked example involving a TTR claim and deferred, contingent expenditure.