»Ê¹ÚÌåÓýapp

S1217LB Corporation Tax Act 2009

»Ê¹ÚÌåÓýapp extent to which »Ê¹ÚÌåÓýappatre Tax Relief (TTR) is available is dependent on the amount of core expenditure on a theatrical production. »Ê¹ÚÌåÓýapp minimum amount of core expenditure that is European expenditure must be 25%.

Furthermore, because the rate at which surrenderable losses are exchanged for a »Ê¹ÚÌåÓýappatre Tax Credit (TTC) can be higher than the rate of Corporation Tax, it may be the case that European expenditure is overstated artificially.

Where a transaction is attributable to arrangements entered into otherwise than for genuine commercial reasons and the purpose is to inflate the amount of the additional deduction and TTC given to a TPC then that transaction is disregarded when computing the additional deduction for TTR.

To prevent the size of the budget being artificially distorted, in determining the size of a theatrical production’s core expenditure:

• where goods or services are being supplied as a result of transactions entered into (directly or indirectly) between connected persons, and
• the amount of core expenditure might have been expected to be less, or greater, if the transaction had been between independent parties, then
• the amount of the expenditure should be established by reference to what the arm’s length value would have been had the parties been unconnected.

»Ê¹ÚÌåÓýapp rules for connected persons which should be applied for this purpose are those set out in S1122 and S1123 Corporation Tax Act 2010.