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HMRC internal manual

Theatre Tax Relief

Avoidance: tax avoidance arrangements

S1217LA Corporation Tax Act 2009

The theatre tax regime includes a targeted anti-avoidance provision (TAAR) designed to prevent contrived arrangements aimed at inflating the amount of Theatre Tax Relief (TTR) to which a Theatre Production Company (TPC) is entitled.

Its effect is to exclude any transaction undertaken with the aim of inflating the relief.

A company will not qualify for relief where the main or one of the main purposes of the arrangements is to claim the Theatre Tax Credit (TTC) or otherwise benefit from the relief to obtain a tax advantage such as gaining TTR that would not otherwise be available. This may include increasing the amount of additional deduction or Theatre Tax Credit beyond what was otherwise available.

The meaning of ‘tax advantage’ is given by Section 1139 of Corporation Tax Act 2010.


A TPC hires an actor for £100k, but draws up a contract in which the total fee payable is set at £150k.  The actor agrees to reinvest £50k in the production in the form of a non-recourse loan to the TPC.

The TPC has no obligation to repay the loan from the actor and so this aspect of the contract has no commercial basis.  Instead, the whole purpose of that part of the transaction was to gain an amount of TTR which would not otherwise be available.  Therefore, £50k of the contracted fee should be disregarded when calculating the amount of TTR to which the TPC is entitled.