FPC90010 - FA06/Chapter 3: Commencement & Transition: Commencement of FA06/Chapter 3
Commencement
Although it was originally intended that the new rules in
FA06 - and therefore Film Tax Relief (FTR) - would be implemented
from 1 April 2006, FTR is a State aid, and had to be approved first
by the European Commission. Clearance was not obtained until late
in 2006. The Commission then required changes to the definition of
a “British film” for the purpose of the new tax relief,
which were made in December 2006 and took effect from 1 January
2007. Commencement was therefore delayed to 1 January 2007.
Without further provisions, the relief as set out in FA06
therefore applies to films that commence principal photography on
or after 1 January 2007. The previous reliefs are withdrawn for
such films, but would continue to apply for earlier films, (except
that the extra relief for low budget films under
F2A98/S48ITTOIA2005/S139, and ITTOIA2005/S140 only applies to films
that commenced principal photography before 1 April 2006 and were
completed on or before 31 December 2006 (see FA05/S58).
It was always intended, however, to withdraw the old reliefs
as speedily as possible and to bring films already in production at
1 January 2007, and uncompleted then ("overlapping" films) within
the new rules. This has been done through regulations (The
Corporation Tax (Taxation of Films) (Transitional Provisions)
Regulations 2007) (SI2007/ 1050) made under FA06/S52. Broadly,
these provide that modified versions of the new rules in FA06, the
old rules, and of the Films Act 1985 apply to overlapping films
Two classes of overlapping films are not brought within the
new rules and continue to be taxed as before;
- Overlapping films that do not meet the definition of a “British film” because they neither satisfy the "cultural test" introduced in December 2006 nor qualify under a co-production treaty. This is determined by whether or not the Secretary of State has refused to issue a certificate that the film is British according to either of these criteria.
- Overlapping films not intended, at the
time principal photography commences, for theatrical release. If
the intention changes after principal photography commences, this
does not affect which rules the film is taxed under. So if, for
example, when principal photography commences, a film is intended
to be shown on TV, it is within the old rules. Even if this changes
and the film becomes intended for theatrical release, it is still
taxed under the old rules (and may then be able to claim s42
relief).
