All British film and television production companies that qualify for tax relief can claim a tax rebate of up to 25% of qualifying expenditure incurred in the UK, awarded 6-12 weeks after filing your claim. However, delays with HMRC are frequent.
The amount of tax relief that your company is awarded is capped at 80% of your qualifying expenditure. The good news is that there is no budget limit that is specified by HMRC.
FTR works by enhancing expenditure incurred in the development process thereby creating an additional deduction. This additional deduction will either reduce profit, or, create or extend a loss. Where the additional deduction creates or extends a loss, HMRC allows this loss to be surrendered for a payable tax credit. Therefore, by claiming FTR, a company will either reduce their Corporation Tax liability or receive a payable tax credit.
A company will be eligible if it qualifies as the Film Production Company (FPC).
To qualify as the FPC it must:
A film will qualify if:
The Cultural Test is a point system in which there are specific sections that pertain to content, cultural contribution, location and cast and crew. Films need to achieve at least 18 from a possible 35 points.
The sections are:
There is a specialist unit within HMRC known as the Creative Industries Unit which handles claims for FTR and other creative industry tax reliefs. Once a business-owner has all the necessary documentation prepared and has successfully filled in the form issued by the Creatives Industries Unit, s/he can submit their claim to HMRC. This submission must include your tax return or company’s amended tax return.
When the validity of your claim has been thoroughly vetted and verified, HMRC will process the tax credit directly to your company’s bank account. As far as the actual amount of tax relief that the business will receive is concerned, HMRC provides a unique formula for each creative sector to help you estimate your claim.
However, in most cases, HMRC accepts claims for losses that amount to about 20% to 25% of enhanceable expenditure. This depends on the ability of a company to surrender those losses.
However, the entire process of dealing with HMRC, filing for the claim and having the money reflect in your account has proven to be a very slow and tedious process. This is where Adsum comes in.
The process of dealing with HMRC for your claim and the long cumbersome wait for the relief to reflect in your account can be tiring. Which is why with Adsum, you do not need to go through the hassle of strenuously dealing with HMRC regarding your claim. Based on your claim on the tax return filed by your accountant, Adsum can deliver you a Creative Tax Credit Loan while processing your claim.
Our team of experienced specialists help you review everything needed for submitting the claim and then deal with HMRC on your behalf – making the entire process hassle-free for you. Get in touch with us for more information on creative industry tax relief loans.