Section 1179BB | Calculation of profits ^F1

(1)The profits of the separate production trade are to be calculated in accordance with this section.^F1

(2)For the first period of account, the following are to be brought into account—^F1

(a)as a debit, the costs of the qualifying production incurred by the qualifying company to date, and^F1

(b)as a credit, the proportion of the qualifying company’s estimated total income from the qualifying production that is treated as earned at the end of that period.^F1

(3)For subsequent periods of account, the following are to be brought into account—^F1

(a)as a debit, the difference between—^F1

(i)the amount of the costs of the qualifying production incurred by the qualifying company to date, and^F1

(ii)the corresponding amount for the previous period, and^F1

(b)as a credit, the difference between—^F1

(i)the proportion of the qualifying company’s estimated total income from the qualifying production that is treated as earned at the end of that period, and^F1

(ii)the corresponding amount for the previous period.^F1

(4)The proportion of the qualifying company’s estimated total income that is treated as earned at the end of a period of account is given by—^F1

(5)What counts as costs of, and income from, the qualifying production is determined by—^F1

(a)section 1179DX, in the case of a film or television programme;^F1

(b)section 1179FP, in the case of a video game.^F1

(See also section 1179CB.)

(6)But nothing in this Part, except section 1179BE, allows an amount to count as costs of the qualifying production if it would not generally be allowed as a deduction in calculating the profits of a trade for corporation tax purposes.^F1

(7)Estimates for the purposes of this section must be made—^F1

(a)as at the balance sheet date for each period of account, and^F1

(b)on a just and reasonable basis taking into consideration all relevant circumstances.^F1

(8)Subsection (9) applies if a period of account of the separate production trade does not coincide with an accounting period of the qualifying company.^F1

(9)The expenditure and receipts brought into account for the period under this section, and the resulting profit or loss, are to be apportioned to accounting periods of the company for the purposes of this Part by reference to the number of days in the periods concerned.^F1