CREC040100 - Losses: overview
Ordinary loss rules
Losses of a trade are normally available:
to carry forward against profits of the same trade (subject to the loss restriction rules that apply from 1 April 2017 at CTA10/Part 7ZA),
to carry forward against total profits (subject to the same restriction),
to set sideways against other profits of the same company,
to carry back against profits of the same company, or
for surrender as group relief.
Special rules apply to losses arising from the separate production trade for a film, TV programme or video game.
Special rules for separate production trades
The profits or losses of production activities carried out by a production company are calculated according to the rules in Chapter 2 Part 14A CTA 2009. The film, TV programme or video game produces profits and losses of a separate trade.
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.
There are also specific Part 14A rules for surrendering terminal losses of a separate production trade.
Meaning of ‘pre-completion period’, ‘completion period’ and ‘completed’
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 abandoned.
A film is completed when it is first ready for copies of it to be distributed for public presentation, eg, at the cinema. A TV programme is completed when it is first ready to be broadcast to the public. A video game is completed when it is first ready for copies of it to be made publicly available. Please see CREC032000 for more details.
A film, TV programme or video game is abandoned if the production company ceases all production activities in relation to it before it is completed, and does not intend to recommence production activities at a later date.
The full definitions of ‘pre-completion period’ and ‘completion period’ are in section 1179DY CTA 2009 (for film and TV) and section 1179FQ (for video games).
The definitions of ‘completed’ can be found in section 1179EB (for film and TV) and section 1179FS (for video games).