TPC10110 - Overview and general definitions: meaning of 'Television Production Company'
S1216AE Corporation Tax Act 2009
Television Tax Relief (TTR) is available to Television Production Companies (TPCs) conducting a television production trade.
There can only be one TPC for each relevant programme unless there is an international co-production. See TPC70000 for further details on co-productions.
The TPC is the company that actually produces the programme. The legislation sets out when a company can be regarded as the TPC. The company must:
-
be responsible for the:
- pre-production,
- principal photography,
- post-production, and
- delivery of the programme on completion,
- be actively engaged in production planning and decision-making during the pre-production, principal photography and post-production stages of the programme, and
- directly negotiate, contract and pay for rights, goods and services relating to the programme.
A TPC does need to have direct responsibility for every aspect of all of these activities. Third parties are not prohibited from undertaking some of these activities on behalf of the TPC as subcontractors.
It is common industry practice to subcontract third parties to deliver certain elements of a television programme. This may be activities such as post-production or sound editing. Where this is the case, the contracting company is not prevented from being the TPC for tax purposes.
The TPC must still retain overall responsibility for the subcontracted activities and have active involvement. A TPC cannot simply commission the entire programme and simply hold the creative copyright.
The subcontractors will not qualify as a TPC as they are only delivering an element of a production and do not have the responsibilities outlined above.
If no company meets these requirements for a qualifying programme, then there is no TPC. Therefore, no TTR may be claimed for the production.
A TPC might also have additional responsibilities. This might include the development, marketing and distribution of the programme. There is no requirement that it must do so to be eligible for the relief.
Only one TPC per programme
There can be no more than one TPC for any programme.
In some cases it is possible that more than one company will meet the requirements for qualifying as a TPC. In such circumstances, the company which is most directly engaged in the activities described above will be treated as the TPC.
The phrase ‘most directly engaged’ is not defined in the legislation. This can only be decided on the facts of each case.
If there is no company which meets the requirement of this definition, then there will be no TPC in relation to that programme.
Example
A screenwriter approaches Studio A with an idea for a programme. The studio agrees to fund its development, including commissioning a full screenplay from the writer. The programme proceeds from development to pre-production. During pre-production, Company B is established by A to make the animation. B takes on the remainder of the production, including certain obligations and rights previously held by A. B then continues to make the programme.
Although B was not involved from the start of the process, and had no involvement at all in the early creative decisions made during development, it has been directly responsible for some of the pre-production. Moreover, once B is established and assumes overall control of the delivery of the programme it can revisit work already done in pre-production. As a result of its activities, B is the company most directly engaged in the pre-production of the programme.
B therefore meets the requirements to be a TPC.
Election not to be regarded as a TPC
Where more than one company has the responsibilities set out above, some of the companies may elect to be treated as not satisfying the conditions set out above in order to establish which of them will be treated as the TPC for relief purposes. A company can make such an election when making or amending its company tax return.
A company making this election would not be a TPC. It would therefore be outside the TTR regime and consequently:
- would be taxed according to normal principles, and
- would not be eligible for TTR.
Any election has effect for all programmes starting production in the period to which the return relates or in later periods. The election may be withdrawn by amending the return within a year from the filing date. After this, the election cannot be revoked.
Companies in partnership & co-productions
Although the definition of a TPC excludes those making programmes in partnership, a company is not automatically prevented from being a TPC because it is a member of a partnership.
A company is only prevented from being a TPC with respect to the programme that it is making in partnership. This ensures that the tests are applied to a single company.
The fact that several parties are making a programme as co-producers does not necessarily mean that a partnership exists. Television producers may work collaboratively on a co-production but they do not necessarily do so as legal partners.
Whether a partnership exists or not depends on the definition given in the Partnership Act 1890 and is subject to a significant amount of case law. It will be necessary to consider all the facts in each particular case.
Broadly, a partnership exists where there is a relationship which carries on a business in common with a view to profit. There is no requirement for a formal partnership agreement and it is possible for parties to enter into a partnership without deliberately intending to do so. See BIM82000+
However, sometimes businesses working in association on a single project may not constitute a partnership. These associations are sometimes referred to as a ‘JANE’ which stands for ‘Joint Arrangement No Entity’.
Where there is a JANE, only one company will be regarded as the TPC and it will be the company most directly engaged in the television production activities.
For further details on the treatment of co-productions see TPC70000.