CREC032000 - Taxation: pre-completion and completion periods
Sections 1179DY and 1179FQ Corporation Tax Act (CTA) 2009
A pre-completion period is defined as any accounting period which is before the completion period for a production. A production can have multiple pre-completion periods.
The completion period for a production is the accounting period in which:
the film, TV programme or video game is completed, or
the film, TV programme or video game is abandoned.
A production company should indicate whether a production has been completed or abandoned in its tax return for the completion period. The additional information form that must be completed before submitting a claim (CREC081000) asks for the status of each production at the end of the accounting period of the claim: ongoing, complete or abandoned.
This page covers the definition of ‘completed’ and what happens when a production is completed. Please see CREC033000 for the meaning of abandonment and what happens when a production is abandoned.
When a production is completed – films and TV programmes
A film is completed when it can reasonably be regarded as being ready for copies of it to be distributed for public presentation, e.g. at the cinema.
In the case of a film intended for theatrical release in the commercial cinema, this will normally be when it is ready to be delivered to a distributor, even if, exceptionally, it is later sent back to the producer for changes. (While a film may be exhibited earlier at a film festival, this may not be a completed version which would be released to the distributor. Indeed, the purpose of exhibition at a festival may be to sell the film, raising money so that it can be completed.)
A TV programme is completed when it is first ready to be broadcast to the public.
Similar to films, this is normally when it is delivered to a broadcaster, even if it is later sent back to the producer for changes.
A film or TV programme will not fail to be completed simply because it is not eventually released at the cinema or broadcast. The condition is that it must be ready for release or broadcast, and not that it is actually released or broadcast. Situations may arise, for example, in which release/broadcast is delayed for a period after completion or a suitable distribution/broadcast deal cannot be found. Neither of these circumstances should prevent the film or programme from being regarded as completed.
When a production is completed – video games
A video game is completed when it is first ready for copies of it to be made available to the general public. In the case of a video game intended for supply, this will normally be when it is ready to be delivered to the supplier. This is the case even if it is later sent back to the producer for changes.
A video game will not fail to be completed simply because it is not eventually supplied for sale. The condition is that it must be ready for supply. Situations may arise, for example, in which supply is delayed for a period after completion or a suitable supply deal cannot be found. Neither of these circumstances should prevent the video game from being regarded as completed.
BFI certificates
Only films, TV programmes and video games that have been certified as a British film, TV programme or video game are eligible for AVEC and VGEC. A production company must provide a cultural certificate to HMRC alongside its claim for a production, otherwise the claim is not valid.
Whether a production has been completed affects the type of certificate a company must provide with its claim.
For claims relating to accounting periods before the production is completed (known as pre-completion periods), the production company must provide an interim certificate for each production.
For claims relating to the completion period – the accounting period in which the production is completed – and any later periods, the company must provide a final certificate. If the company fails to provide a final certificate, it must amend its tax return(s) to withdraw any interim claims to relief. Credit previously given in reliance on an interim certificate must be repaid, or will be clawed back.
Please see CREC028000 for more details.
Loss rules
Special rules apply to losses arising from the separate production trade for a film, TV programme or video game.
In pre-completion periods, losses attributable to a separate production trade are only available to carry forward for relief against future profits of the same production trade. Once the production has been completed, only then can losses be used against other profits of the company or surrendered through group relief.
Whether a production has been completed therefore affects the treatment of losses arising in the separate production trade.
Please see CREC042000 for more details.
UK minimum expenditure
At least 10% of the total core expenditure incurred on a production must be UK expenditure, in order for the production to be eligible for AVEC or VGEC.
UK expenditure is expenditure on goods and services that are used or consumed in the United Kingdom (see CREC054000).
Credit may be given on an interim basis during pre-completion periods, provided that the production company expects to meet the minimum expenditure condition in the completion period. The production company must provide a statement with its claim for the completion period, showing the amount of core expenditure and core expenditure that is also UK expenditure, so that the condition can be tested.
Whether a production has been completed therefore affects whether a company needs to provide a final statement of expenditure.
Please see CREC029000 for more details.