Creative industries - Expenditure credit

This set of sheets helps calculate the relevant adjustments to be posted to the

Adjustment of profit

sheet in respect of the creative industry profit and loss regime. It also calculates the relevant expenditure credit in respect of this expenditure.

To develop these sheets, you need to choose

Creative industries

as the

Type of trade

on the

Adjustment to profit

sheet. Choose either Film production company, Television production company or Video games development company as the

Type of creative industry

. You should then change the selector

Is the production claiming AVEC or VGEC?

to

Yes

.

The software will then prompt you to insert these sheets.

This sheet tracks income and costs in relation to creative relief. Columns will be inserted for each accounting period.

Firstly, you should ensure that the selector

Is this a pre-completion period?

is set correctly (if there are multiple periods, then for each column). This will impact the treatment of losses in the period.

You should then enter the income and costs in relation to the creative industry trade as prescribed by the legislation – these are the

Total

costs and income to date. Any amounts in relation to income or costs brought into account in prior periods will roll forward from the prior period calculation or, if there is no prior period calculation, these should be entered manually. The

Estimated total costs

will need to be entered manually for each period however the figures entered in the previous period will roll forward as a memo for reference.

A tax adjustment will then be calculated equal to the difference between the profit or loss in the accounts (attributable to that trade) and the profit or loss recognised for tax purposes under the creative industry regime, as calculated on this sheet. This adjustment will be linked directly to

Adjustment of profit

sheet.

There is a section to track the

Core expenditure condition

amounts. In this section you should enter the UK planned core expenditure and Total planned core expenditure amounts for disclosure to HMRC. The core expenditure condition percentage will be calculated based on these amounts - if you do not meet the core expenditure requirements prescribed by the creative industry regime, a warning will show and you should re-review your figures or delete the sheets if you do not meet the requirements of the regime. The core expenditure amounts should be manually entered for each period; however, the prior year figures will roll forward as a memo for reference.

This sheet tracks information regarding the creative relief losses. Columns will be inserted for each accounting period.

If the

Is this a pre-completion period?

selector is set to

No

on the Creative industry profit and loss sheet, extra rows will display in the sheet in relation to treating the loss as a current period loss.

This sheet interacts with the losses tracked and offset on the UK trade losses sheet.

You should enter the relevant creative expenditure onto this sheet. Where there are multiple accounting periods, an

Expenditure

column will be inserted for each accounting period.

The total amount of current period expenditure must reconcile back to the Creative industry profit and loss sheet. Based on the information provided, this sheet follows the relevant steps 1-5 to arrive at the

Creative industry expenditure credit (Step 5)

amount. This figure is then taken to the Tax calculation sheet.

You can switch the

Does company qualify for enhanced AVEC?

selector to

Yes

if the trade qualifies for the higher rate expenditure credit.

The software will prompt you to develop this sheet once you have developed the Creative industry profit and loss set of sheets. A column will be inserted for each accounting period.

This sheet takes the expenditure credit calculated on the Creative expenditure credit at Step 5 sheet as the starting point. If there is more than one creative industry trade in the file, the expenditure credits for each trade will be added together to form the starting point.

The sheet then goes through each of the six steps for redeeming the expenditure credit set out in legislation, in particular it:

Where a restriction is calculated at

step 2

, this will be automatically carried forward to the next period and offset where possible, unless it is shown as Surrendered as group relief.

The creative expenditure credit is taxable and gets taken to the

Adjustment to profit

sheet automatically.