Introduction Schedule 16 Part 1: Amendments of CTA 2009 Chapter 2: Taxation of Activities of Television Production Company.
38.New section 1216B(2) to (3) provides that the activities of a television production company in relation to each programme will be treated as a separate trade, (“the separate programme trade”) so that where a television production company makes more than one programme it will have more than one trade unless new section 1216AA(3) applies.
39.New section 1216B (4) sets out that a trade is treated as starting when pre-production begins or when any income is received from the relevant programme, whichever is earlier.
40.New section 1216BA (1) provides the basic rules for the computation of amounts to be brought into account for the purposes of determining a profit or a loss.
41.New section 1216BA (2) explains how this works for the first period of account. It brings in as a debit the cost incurred and as a credit the proportion of the income determined by the formula set out in sub paragraph (4).
42.New section 1216BA (3) explains how this works for subsequent periods of account. It brings in as a debit the difference between the costs incurred to date and the corresponding amount for the previous period and, as a credit, the difference between the proportion of total estimated income treated as earned at the end of the period and the corresponding amount for the previous period.
43.New section 1216BA (4) sets out the formula for calculating the proportion of total estimated income treated as earned at the end of the period of account.
44.New section 1216BB (1) to (3) set out that income from a relevant programme constitutes any receipts in connection with its making or from its exploitation. This includes:
	Receipts from the sale of the programme or rights in it;
	Royalties or other payments for use of the programme or aspects of it (for example characters or music);
	Payments for rights to produce games or other merchandise;
	Receipts received by the company by way of a profit share agreement; and,
	Income from relevant programmes held as capital assets (the income will be treated as revenue in nature).
45.New sections 1216BC (1) to (2) provide the basic rules for when costs on the relevant programme are taken to be incurred. However, expenditure that is prohibited or limited by the Corporation Taxes Acts is excluded.
46.New section 1216BC Section (3) addresses the situation where a company is making a relevant programme that is treated as a capital asset in its hands and such expenditure would be capital and naturally fall to be prohibited. (3) ensures that such expenditure will instead be treated as being of a revenue nature.
47.New section 1216BD (1) sets out the primary rule that costs are incurred when they are represented in the state of completion of the work in progress.
48.New section 1216BD(2) elaborates on this to make clear that payments in advance are ignored until the work is done and deferred payments are recognised to the extent that work is represented in the stage of completion.
49.New section 1216BD (3) makes clear that only amounts for which there is an unconditional obligation to pay can be treated as incurred.
50.New section 1216BD (4) ensures that where this obligation is linked to income being earned, then the cost can only be included when an appropriate amount of income has been brought into account.
51.New section1216BE (1) addresses the case where a company incurs expenditure on development of the relevant programme and this expenditure pre-dates the commencement.
52.New section 1216BE (2) treats such development expenditure as if it were expenditure incurred immediately after the company begins to carry on the trade.
53.New sections 1216BE(3) to (4) require the company to amend its tax return if it has previously taken such expenditure into account and allows any such amendment of a return to be made regardless of the normal time limits.
54.New section 1216BF provides that estimates at the balance sheet date for each period of account must be on a just and reasonable basis and must also take into consideration all relevant circumstances.