Short Film - no income, all loss on tax return?

Is there any turnover or profit on this company tax return?

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Hi all,

I'm completing a company tax return for a company that was used solely to create a short film. It received a £15,000 award from the BFI (National Lottery Funding), and spent an additional £7,000 (funds from the company director and film director) to create the film. Total expenditure approx £22k.

The project generated no income in this accountancy period (it received a £1k award from a film festival the following tax year). 

Am I correct in thinking that the turnover from trade and taxable trading profits should be £0, and operating costs should be £22k? Or does National Lottery funding count towards turnover/profits?

I will also be claiming creative tax relief for this, which is 25% of the UK Core expenditure, detailed in sections 540, 545, 570, 665, 670 and 885 of the CT600.

Replies (7)

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By FactChecker
10th Jun 2024 20:52

Not my area; is it yours?

My understanding is that the "creative tax relief" to which you refer does what it says on the tin - i.e. provides the possibility of tax relief (not a tax credit payment), so is only of use where relevant tax liabilities exist. But I may be wrong.
Also, "a £15,000 award" surely be income (not just an 'expenditure') - but whether or not that is taxable is unknown to me.

You need someone who has experience of this area - like a specialist accountant say - whom you can appoint to advise.

Thanks (3)
By D V Fields
10th Jun 2024 21:45

The BFI or Lottery income would normally be treated as turnover but regardless should be brought into account in calculating the profit or more specifically loss after enhancement of eligible expenditure on your creative industry project for any repayable tax credit for any surrendered loss.

You’ll need a minimum of an Interim Certificate from the BFI before you can claim I believe.

Use the following as a starting point if you have not already done so:
You’ll find most answers there or on related links.

Thanks (2)
By David Ex
10th Jun 2024 22:33

The traditional starting point for a Corporation Tax return used to be the statutory accounts. Maybe that’s changed since I last completed one.

Thanks (2)
By jonharris999
11th Jun 2024 06:44

The 15K is income.

You haven't told us enough to know whether the 7K is income or a loan. It depends on the terms on which the dosh was handed over.

You also need to consider how many traps creative industry tax reliefs present to the unwary.

Thanks (1)
By Dougscott
11th Jun 2024 08:59

Normally grants are considered income, so it appears your income is £15k, expenditure £22k, carried forward loss £7k. I believe any Film Tax Relief you receive is not taxable. HMRC has a lot of guidance on this - google Film Tax Relief.

Thanks (0)
By SkyBlue22
11th Jun 2024 10:18

Are you sure the creative tax credit applies? Short films tend not to. There is also additional paperwork for the credit which you will need to complete to go with it.

Grant income tends to follow the taxable treatment of the activity, which appears to me to be taxable. Therefore, I imagine the grant is probably taxable.

Thanks (0)
By Jo Nokes
11th Jun 2024 13:14

It’s not my area either, but if the costs are specific to the one film, should they not be carried forward as wip?

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