CREC042000 - Losses: completion period and later periods
Section 1179BF CTA 2009
The Part 14A rules restrict the use of losses of the separate production trade in pre-completion periods. That restriction applies until the accounting period in which the film, TV programme or video game is completed or abandoned. In that completion period, and any later period(s), losses can be used more flexibly.
Losses arising in the completion period and later periods
If a production company makes a loss in the completion period or any later period, the company is not restricted to carrying it forward for use against profits of the same trade. Instead, the company has a range of ways to use the loss. It can:
set the loss against total taxable profits of the production company in the current or previous period (section 37 CTA 2010),
surrender the loss as group relief (Part 5 CTA 2010), or
carry the loss forward for use against profits of the same trade in a later period (section 45B CTA 2010).
Losses brought forward from pre-completion periods
Where losses have been brought forward from pre-completion periods into the completion period, or any later period, they are treated as having been incurred in that current period. Such losses can therefore be used the same ways as above:
offset against total taxable profits of the production company in the current or previous period,
surrendered to other companies in the group as group relief, or
carried forward again for use against future profits of the same trade.
2017 reform of Corporation Tax loss relief
Losses which arise in the completion period or a later period, and losses treated as incurred in the completion period or later period, may be affected by the 1 April 2017 loss reforms. The reforms introduced a restriction limiting the total amount of relief available for carried-forward losses. Guidance is available in CTM04800.