Taxation of film production companies

Produced by Tolley in association with Richard Palmer

The following Corporation Tax guidance note Produced by Tolley in association with Richard Palmer provides comprehensive and up to date tax information covering:

  • Taxation of film production companies
  • Introduction
  • Meaning of a film
  • Meaning of FPC
  • Co-productions
  • Taxation of film production companies
  • Calculation of income and costs
  • Costs of the film
  • Calculating profits and losses of separate film trade
  • Estimates
  • More...

Taxation of film production companies

Introduction

Finance Act 1996 introduced a special regime for film production companies, now included in CTA 2009, ss 1188–1216. The legislation has two parts, firstly, legislation that applies to all companies regarding the recognition of income and costs and the treatment of losses, and a second part that provides for a repayable tax credit to the company where a qualifying film is produced. For details of the film tax credit, see the Film production company tax credits guidance note. Film production companies have their own HMRC tax manual, ‘Film Production Companies’ (FPC). Finance Act 2013 introduced a separate tax regime for companies producing television and animation programmes. See the Television tax reliefs ― key provisions guidance note for further details.

Meaning of a film

A film is defined in CTA 2009, s 1181 as being “a sequence of visual images that is capable of being used as a means of showing that sequence as a moving picture”. It includes images generated by computer and the soundtrack. It does not need to be a UK film.

Where the film production is a series, it will be treated as a single film provided it constitutes a self-contained work or a series of documentaries with a common theme, there are no more than 26 parts and the playing time is no more than 26 hours.

Meaning of FPC

To qualify as an FPC under CTA 2009, s 1182, the FPC must:

  1. be responsible for the pre-production, principal photography and the post production of the film as well as for delivery of the completed film

  2. be actively engaged in production planning and decision-making during the work

  3. directly negotiate, contract and pay for rights, goods and services in relation to the film

As there can only be one qualifying FPC in respect of a film, careful consideration should be given to ensuring that the FPC fulfils all the requirements above and that no other company is involved in an area

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