OTR30120 - Orchestra Tax Relief: taxation: separate trade: pre-trading expenditure

S1217QF Corporation Tax Act 2009 (CTA 2009)

Where a company is an Orchestral Production Company (OPC) for the purposes of Part 15D CTA 2009, a qualifying orchestral concert is treated as a separate orchestral trade if Orchestra Tax Relief (OTR) is claimed in respect of that concert or series. This isolates each concert or series on an individual basis for the purposes of calculating profits and losses.

For an orchestral concert or series that enters the production phase, there will often be expenditure that has been incurred prior to the commencement of the orchestra production’s separate trade

Where a company is set up especially to produce the orchestral concert or series, the preliminary work may be bought by the OPC or its value will be transferred in after the trade has commenced.

Where the preliminary work is instead done by the OPC prior to the commencement of the trade, this pre-trading expenditure can be transferred to the trade. This expenditure is treated as having been incurred by the separate orchestral trade on the day it commences.

It is possible that this pre-trading expenditure may have been incurred some time before the separate orchestral trade commenced.

If the expenditure has already been reflected in the company’s accounts and tax computations, the company must amend any relevant company tax return accordingly. This is because the expenditure relates to the separate orchestral trade not to any other trade. The normal time limits for amending returns and assessments are specifically overridden by the OTR rules to allow the company to do so.