CREC063300 - Expenditure credit calculation: examples: multi-period production 2

Introduction

Company C is producing an independent film (CREC021100). In the first two accounting periods, AP1 and AP2, it calculates its expenditure credits as follows.

AP1

Description Amount (£)
Total expenditure to date 10,000,000
Core expenditure to date 9,500,000
Excluded expenditure to date 0
Non-UK core expenditure to date 500,000
Qulaifying expenditure to date in last period in which a claim was made n/a

Note: 바카라 사이트˜to date바카라 사이트™ means up to the end of the accounting period to which the claim relates. 

Step 1 - Find the amount of relevant global expenditure 

Relevant global expenditure must be expenditure which is brought into account as part of the separate trade, is core expenditure and is not excluded expenditure. 

There is no excluded expenditure, so assuming that all of Company B바카라 사이트™s core expenditure has been brought into account as part of total expenditure, relevant global expenditure is £9,500,000.

Step 2 바카라 사이트“ Deduct non-UK expenditure from the result of step 1 

Assuming that all of Company B바카라 사이트™s non-UK expenditure is core expenditure:

£9,500,000 - £500,000 = £9,000,000

UK expenditure is therefore £9,000,000.

Step 3 바카라 사이트“ Find the lesser of UK expenditure and 80% of relevant global expenditure 

UK expenditure (the result of step 2) = £9,000,000 

80% of relevant global expenditure = £9,500,000 x 80% = £7,600,000

The lesser amount (£7,600,000) is 바카라 사이트˜qualifying expenditure to date바카라 사이트™. 

Step 4 바카라 사이트“ Deduct 바카라 사이트˜qualifying expenditure to date바카라 사이트™ in the last period in which the company claimed a credit from 바카라 사이트˜qualifying expenditure to date바카라 사이트™ in the current period 

Because this is the company바카라 사이트™s first claim for this production, there is no need to do anything at this step. 바카라 사이트˜Qualifying expenditure for the period바카라 사이트™ is equal to 바카라 사이트˜qualifying expenditure to date바카라 사이트™: £7,600,000. 

Step 5 바카라 사이트“ Multiply 바카라 사이트˜qualifying expenditure for the period바카라 사이트™ by the relevant percentage 

Because Company C is making an independent film, the relevant percentage is 53%. 

The amount of credit to which Company C is entitled for AP1 is £7,600,000 x 53% = £4,028,000

AP2

Description AP1 amount (£) AP2 amount (£) Total to date (£)
Total expenditure 10,000,000 8,000,000 18,000,000
Core expenditure 9,500,000 6,500,000 16,000,000
Excluded expenditure 0 0 0
Non-UK core expenditure 500,000 6,500,000 7,000,000
Qualifying expenditure to date in last period in which a claim was made n/a 7,600,000 -

Note: 'to date바카라 사이트™ means up to the end of the accounting period to which the claim relates. Therefore, in the second AP it includes all the expenditure from both AP1 and AP2.  

Step 1 - Find the amount of relevant global expenditure 

Again, there is no excluded expenditure. Assuming again that all core expenditure has been brought into account as part of total expenditure, relevant global expenditure would ordinarily be £16,000,000.

However, independent films are capped so that no more than £15,000,000 relevant global expenditure can be included at step 1 of the credit calculation (CREC061100). Relevant global expenditure is therefore restricted to £15,000,000.

Step 2 바카라 사이트“ Deduct non-UK expenditure from the result of step 1 

UK expenditure is assumed to count towards the £15m cap before non-UK expenditure. Therefore, the £15,000,000 relevant global expenditure from step 1 is made up of the £9,000,000 UK expenditure incurred to date and £6,000,000 non-UK expenditure.

The other £1,000,000 of non-UK core expenditure is the amount restricted by the cap and excluded from the credit calculation.

Therefore, the step 2 calculation is:

£15,000,000 - £6,000,000 = £9,000,000

So, UK expenditure is £9,000,000. 

Step 3 바카라 사이트“ Find the lesser of UK expenditure and 80% of relevant global expenditure 

UK expenditure (the result of step 2) = £9,000,000

80% of relevant global expenditure = £15,000,000 x 80% = £12,000,000

The lesser amount (£9,000,000) is 바카라 사이트˜qualifying expenditure to date바카라 사이트™. 

Step 4 바카라 사이트“ Deduct 바카라 사이트˜qualifying expenditure to date바카라 사이트™ in the last period in which the company claimed a credit from 바카라 사이트˜qualifying expenditure to date바카라 사이트™ in the current period 

The most recent period in which Company C claimed a credit was the previous period, AP1. 바카라 사이트˜Qualifying expenditure to date바카라 사이트™ in AP1 was £7,600,000. 

£9,000,000 - £7,600,000 = £1,400,000

바카라 사이트˜Qualifying expenditure for the period바카라 사이트™ is therefore £1,400,000. 

Step 5 바카라 사이트“ Multiply 바카라 사이트˜qualifying expenditure for the period바카라 사이트™ by the relevant percentage 

The relevant percentage is still 53%. 

The amount of credit to which Company C is entitled for AP2 is £1,400,000 x 53% = £742,000