OTR60020 - Orchestra Tax Relief: eligible expenditure: meaning of 'phases of orchestral concert'

Development

Development is the stage of creation of a production in which the project progresses from the initial concept to the point at which a decision can be taken as to whether or not it should proceed to production.

During development all the necessary elements are assembled to enable a producer to make a judgement on whether or not the production is a viable project.

Expenditure on development activities is not core expenditure and will not qualify for OTR if the production does not get ‘green lit’, that is if there is not a firm and definite commitment that the production will go ahead as evidenced, for instance, by ticket sales, hire of concert venues, hiring musicians etc. The intention is to separate speculative expenditure on productions which never go ahead from purposive expenditure undertaken in the knowledge that a decision has been taken to proceed with the production.

However, if the production does get ‘green lit’, some expenditure on development may be reclassified as expenditure on producing the production if it directly relates to activities in the later production phase. Such expenditure can be apportioned where necessary, provided the apportionment is just and reasonable.

Production

The production phase begins when the project has been ‘green lit’–this is when there is a definite commitment to going ahead with the production. Any expenditure incurred prior to this would be part of the development phase.

The production phase involves all the activities necessary to turn the developed idea for a production into an actual orchestral production that is ready to be performed to the public. Such activities may include, but are not limited to: production team meetings, hiring musicians, rehearsals, venue preparation. The production phase is broadly defined for the tax reliefs and includes activities often referred to as pre-production.

There is some blurring between development and production. While a venue might be booked or some players contracted far in advance, this does not necessarily signify that the production phase has started if nothing else has happened to give certainty to the project. Ticket sales are also not necessarily a sign that a project will definitely go ahead or that the production phase has commenced, particularly if they occur a long time before the intended performance date.

The latest possible date that the production phase could commence for a concert is at the start of rehearsals. However, it may start earlier. For example, if a project has contracted the musicians and secured venues, then it is likely to have already started the production phase.

Expenditure on activities directly involved in producing the production during the production phase is core expenditure and qualifies for OTR.

Expenditure on any matters not directly involved in producing the production is not core expenditure and does not qualify for OTR. For instance, expenditure on raising finance, advertising or marketing a production, legal fees, accountancy fees or storage costs.

The production phase continues until the start of the first paid public performance.

Running

The running phase commences at the start of the first paid public or educational performance and continues until the end of the last paid public or educational performance. It is when the production is performed live before the paying general public or provided for educational purposes.

Expenditure on the ordinary running of the production is not core expenditure and does not qualify for OTR. For example, expenditure on ongoing salaries for cast and crew, concert venue costs/rent, maintenance, moving costs, travel (to and from the usual venue) and subsistence, administration, direction and production.

Closing

The closing phase happens after the last paid public or educational performance of a production and marks the end of the production. It includes vacating the venue(s) and moving items into storage or selling them.

Expenditure on closing the production is core expenditure and qualifies for OTR provided it does not include expenditure on activities which would not normally qualify as core expenditure, such as storage costs.