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Company A is a film production company (FPC). It is making an FTR-qualifying film, Film 1.

»Ê¹ÚÌåÓýapp trade in relation to the Film 1 commences on 3 July 2019. »Ê¹ÚÌåÓýapp film is completed on 10 February 2020. »Ê¹ÚÌåÓýapp company sells Film 1 outright on 15 August 2020 and ceases to trade.

Company A is in a group as defined for group relief purposes with Company B. Company B also carries on a trade in relation to a film qualifying for Film Tax Relief. Company B’s trade in relation to Film 2 commences on 17 March 2020.

Both companies draw up accounts to 31 December.

»Ê¹ÚÌåÓýapp accounting periods are therefore:

Company A	Company B
3 July to 31 December 2019	17 March to 31 December 2020
Period ended 15 August 2020	Year ended 31 December 2021

»Ê¹ÚÌåÓýapp computations of Company A show:

Company A: APE 31 December 2019	Amount
Income from Film 1	100,000
Costs of Film 1	(850,000)
Film tax relief	(400,000)
Loss on Film 1	(1,150,000)
Other income	10,000

Company A’s computation for this period shows a trade loss of 1,150,000 on Film 1.»Ê¹ÚÌåÓýapp company chooses not to surrender any part of this loss for the Film Tax Credit. Thisis a production accounting period and so the loss is restricted. It can only be carried forward under CTA10/S45B.

»Ê¹ÚÌåÓýapp other income therefore remains taxable and a loss of 1,150,000 is carried forward. Of this loss, 750,000 is not attributable to FTR; 400,000 is attributable.

Company A: APE 15 August 2020 � Film 1 completed and trade ceases	Amount
Income from Film 1	500,000
Costs of Film 1	(150,000)
Film tax relief	(100,000)
Profit on Film 1	250,000
Other income	20,000

Company B: APE 31 December 2020 - Film 2 commences	Amount
Income from Film 2	800,000
Costs of Film 2	(400,000)
Film tax relief	(300,000)
Profit on Film 2	100,000
Other income	20,000

Company A’s computation for the accounting period ended 31 December 2020 shows aprofit of 250,000 on Film 1. This is a completion accounting period and a cessation accounting period in respect of Film 1.

»Ê¹ÚÌåÓýapp brought forward loss of 1,150,000 reduces the profit on Film 1 to nil leaving a lossof 900,000 available.

»Ê¹ÚÌåÓýapp brought forward loss attributable to FTR (400,000) is sufficient to cover the profitsof the same trade (250,000).

»Ê¹ÚÌåÓýapp whole of the brought forward production period loss not attributableto FTR (750,000) is now treated as a loss of this accounting period for the purposes ofloss relief. »Ê¹ÚÌåÓýapp options available for these losses, and the extent to which the company chooses to utilise those options are as follows:

-	Amount of loss
Set against other profits of the same accounting period	20,000
Carry back against profits of an earlier accounting period	10,000
Surrender as group relief where appropriate	120,000
Total	150,000

Of the full brought forward loss of 1,150,000 a total of 400,000 has been utilized. »Ê¹ÚÌåÓýappremaining 750,000 would be available to carry forward under CTA10/S45A and S45B but for thefact that the trade has now ceased. In normal circumstances this loss would be stranded.

»Ê¹ÚÌåÓýapp company can instead elect to surrender the stranded loss to Company B so that it can treat it as a loss brought forward in the trade in relation to Film 2 in the next accounting period. Company A chooses to surrender the full 750,000 to Company B.

Company B: APE 31 December 2021	Amount
Income from Film 2	1,000,000
Costs of Film 2	(400,000)
Film tax relief	(200,000)
Profit on Film 2	400,000
Other income	50,000

Company B’s computation for this period shows a profit of 400,000 on Film 2 and other income of 50,000.

»Ê¹ÚÌåÓýapp company claims to treat the loss surrendered by Company A (750,000) as a loss broughtforward in its trade in relation to Film 2. »Ê¹ÚÌåÓýapp profit on Film 2 is therefore reduced to nil and a loss of 350,000 is carried forward to the next accounting period under CTA10/S45B. This loss will only be available to utilise against profits of the tradein respect of Film 2. Note that the special treatment afforded to some production periodlosses does not carry over into the Film 2 trade.

»Ê¹ÚÌåÓýapp following table tracks the losses in the accounting periods.

-	FTR losses - Company A	non-FTR losses - Company A	Company B
APE 31 December 2019	-	-	-
Production period loss carried forward into completion period	400,000	750,000	-
APE 31 December 2020	-	-	-
Losses brought forward	400,000	750,000	-
Set off against current period profit of Film 1	(250,000)	-	-
Set off against current period other income	-	(20,000)	-
Carried back against other income of earlier period	-	(10,000)	-
Surrendered as group relief	-	(120,000)	-
Carried forward to set against future profits of Film 2	150,000	600,000	-
APE 31 December 2021	-	-	-
Losses brought forward by surrender from Company A	-	-	750,000
Set off against current period profits of Film 2	-	-	(400,000)
Loss carried forward	-	-	350,000