Finance Act 2006

IntroductoryU.K.

31Meaning of “film” and related expressionsU.K.

(1)In this Chapter “film” includes any record, however made, of a sequence of visual images that is capable of being used as a means of showing that sequence as a moving picture.

(2)For the purposes of this Chapter each part of a series of films is treated as a separate film, unless—

(a)the films form a series with not more than 26 parts,

(b)the combined playing time is not more than 26 hours, and

(c)the series constitutes a self-contained work or is a series of documentaries with a common theme,

in which case the films are treated as a single film.

(3)References in this Chapter to a film include the film soundtrack.

(4)For the purposes of this Chapter a film is completed when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public.

32Meaning of “film production company”U.K.

(1)The following provisions have effect for the purposes of this Chapter as regards the meaning of “film production company”.

(2)There cannot be more than one film production company in relation to a film.

(3)A company that (otherwise than in partnership)—

(a)is responsible—

(i)for pre-production, principal photography and post production of the film, and

(ii)for delivery of the completed film,

(b)is actively engaged in production planning and decision-making during pre-production, principal photography and post production, and

(c)directly negotiates, contracts and pays for rights, goods and services in relation to the film,

is the film production company in relation to the film.

(4)In relation to a qualifying co-production, a company that (otherwise than in partnership)—

(a)is a co-producer, and

(b)makes an effective creative, technical and artistic contribution to the film,

is the film production company in relation to the film.

(5)If there is more than one company meeting the description in subsection (3) or (4), the company that is most directly engaged in the activities referred to in that subsection is the film production company in relation to the film.

(6)If there is no company meeting the description in subsection (3) or (4), there is no film production company in relation to the film.

[F1(7)A company may elect to be regarded as a company which does not meet the description in subsection (3) or (4).

(8)The election—

(a)must be made by the company by being included in its company tax return for an accounting period (and may be included in the return originally made or by amendment), and

(b)may be withdrawn by the company only by amending its company tax return for that accounting period.

(9)The election has effect in relation to films which commence principal photography in that or any subsequent accounting period.

(10)“Company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1)).]

33Meaning of “film-making activities” etcU.K.

(1)In this Chapter “film-making activities”, in relation to a film, means the activities involved in development, pre-production, principal photography and post production of the film.

(2)If all or any of the images in a film are generated by computer, references in this Chapter to principal photography shall be read as references to, or as including, the generation of those images.

(3)The Treasury may by regulations—

(a)amend subsections (1) and (2);

(b)provide that specified activities are or are not to be regarded for the purposes of this Chapter as film-making activities or as film-making activities of a particular description;

(c)provide that, in relation to a specified description of film, references in this Chapter to film-making activities of a particular description are to be read as references to such activities as may be specified.

(4)No such regulations shall be made unless a draft of the regulations has been laid before and approved by a resolution of the House of Commons.

34Meaning of “production expenditure” and related expressionsU.K.

(1)In this Chapter, in relation to a film—

• “production expenditure” means expenditure on film-making activities in connection with the film, and

• “core expenditure” means production expenditure on pre-production, principal photography and post production.

(2)For the purposes of this Chapter a “limited-budget film” means a film whose core expenditure is £20 million or less.

(3)In determining whether a film is a limited-budget film, any core expenditure that—

(a)is incurred by a person under or as a result of a transaction entered into directly or indirectly between that person and a connected person, and

(b)might have been expected to have been of a greater amount (“the arm's length amount”) if the transaction had been between independent persons dealing at arm's length,

is treated as having been of an amount equal to the arm's length amount.

[F2(4)For the purposes of subsection (3) whether a person is connected with another person is determined in accordance with section 839 of ICTA (connected persons).]

35Meaning of “UK expenditure”U.K.

(1)For the purposes of this Chapter “UK expenditure”, in relation to a film, means expenditure on goods or services that are used or consumed in the United Kingdom.

(2)Any apportionment of expenditure for the purposes of this Chapter as between UK expenditure and non-UK expenditure shall be made on a fair and reasonable basis.

(3)The Treasury may by regulations amend subsection (1).

(4)No such regulations shall be made unless a draft of the regulations has been laid before and approved by a resolution of the House of Commons.

36Meaning of “qualifying co-production” and “co-producer”U.K.

In this Chapter—

(a)“qualifying co-production” means a film that falls to be treated as a national film in the United Kingdom by virtue of an agreement between Her Majesty's Government in the United Kingdom and any other government, international organisation or authority,

(b)“co-producer” means a person who is a co-producer for the purposes of the agreement.