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A »Ê¹ÚÌåÓýappatrical Production Company (TPC) has one trade that is a theatrical production which qualifies for »Ê¹ÚÌåÓýappatre Tax Relief (TTR). It is not part of a group of companies for group relief purposes.

»Ê¹ÚÌåÓýapp separate theatrical trade for the purposes of Part 15C Corporation Tax Act 2009 commences on 1 April 2015 and ceases on 31 July 2016. »Ê¹ÚÌåÓýapp company draws up a single set of accounts covering the 15-month trading period. »Ê¹ÚÌåÓýapp accounting periods for tax purposes are therefore:

• year ended 31 March 2016
• period ended 31 July 2016.

»Ê¹ÚÌåÓýapp computations show:

Period ended 31 March 2016	Amount - £
Income from the production	210,000
Costs of the production	(240,000)
»Ê¹ÚÌåÓýappatre tax relief â€� additional deduction (based on qualifying expenditure)	(128,000)
Profit/(loss) on production	(158,000)
Other income � non-trade loan relationship	25,000

»Ê¹ÚÌåÓýapp computation shows a trading loss of £158,000.

»Ê¹ÚÌåÓýapp TPC chooses not to surrender any part of this trading loss for the »Ê¹ÚÌåÓýappatre Tax Credit (TTC). In reality, a TPC would be unlikely to make this choice, which is intended to illustrate the computational principle.

As this is a pre-completion period, the loss is restricted and cannot be offset against other income. »Ê¹ÚÌåÓýapp £25,000 interest income (the non-trade loan relationship income) is therefore taxable.

Period ended 31 July 2016	Amount - £
Income from the production	110,000
Costs of the production	(150,000)
»Ê¹ÚÌåÓýappatre tax relief â€� additional deduction (based on qualifying expenditure)	(80,000)
Profit/(loss) on production	(120,000)
Other income � non-trade loan relationship	20,000

»Ê¹ÚÌåÓýapp computation shows a trading loss of £120,000.

This is the completion period. »Ê¹ÚÌåÓýapp trading loss brought forward that is not attributable to TTR can be treated as a loss of the accounting period for the purposes of loss relief. »Ê¹ÚÌåÓýapp amount carried forward into the completion period that is not attributable to TTR is £30,000 (£158,000 - £128,000).

»Ê¹ÚÌåÓýapp £40,000 loss arising in this accounting period that is not attributable to TTR (£120,000 - £80,000) is therefore enhanced by the trading loss brought forward from the earlier period.

»Ê¹ÚÌåÓýapp losses available to use in this period are £70,000 (£30,000 + £40,000).

»Ê¹ÚÌåÓýapp loss not attributable to TTR treated as incurred in the period may be:

• set against other profits of the same accounting period, or
• carried back against profits of the accounting period ended 31 March 2016.

»Ê¹ÚÌåÓýapp loss cannot be surrendered as group relief because the company is not part of a group.

»Ê¹ÚÌåÓýapp company sets off the losses not attributable to TTR against the non-trade loan relationship income of the current and previous period. This means that there are no taxable profits in the year ended 31 March 2016 and the period ended 31 July 2016.

»Ê¹ÚÌåÓýapp remaining £25,000 losses not attributable to TTR (£70,000 - £20,000 - £25,000) and the £208,000 losses attributable to TTR (£128,000 + £80,000), which have not been surrendered for TTC, are stranded.

»Ê¹ÚÌåÓýapp following table shows how the losses are used in the two accounting periods:

-	TTR - Losses from APE 31/03/2016 - £	non-TTR - Losses from APE 31/03/2016 - £	TTR - Losses from APE 31/07/2016 - £	non-TTR - Losses from APE 31/07/2016 - £
APE 31/03/2016	-	-	-	-
Pre-completion period loss	128,000	30,000	-	-
Losses carried forward into	-	-	-	-
Completion period	128,000	30,000	-	-
APE 31/07/2016	-	-	-	-
Losses brought forward	128,000	30,000	-	-
Completion period loss	-	-	80,000	40,000
Losses utilised against NTLR	-	-	-	-
(CY and PY)	-	(30,000)	-	(15,000)
Remaining losses	128,000	0,000	80,000	25,000