Section 1217JA | “Qualifying expenditure” ^F1

(1)In this Part “qualifying expenditure”, in relation to a theatrical production, means core expenditure (see section 1217GC) on the theatrical production that—^F1

(a)falls to be taken into account under sections 1217IA to 1217IF in calculating the profit or loss of the separate theatrical trade for tax purposes, and^F1

(b)is not excluded by subsection (2) or (3).^F1F2

(2)The following expenditure is excluded—^F1

(a)Repealed^F3F1

(b)expenditure in respect of which the company would be able to claim relief under Part 13 (... relief for expenditure on research and development).^F1F4F5

(3)Expenditure is excluded to the extent that it represents connected party profit, unless subsection (5) applies.^F6

(4)For the purposes of subsection (3), expenditure represents connected party profit—^F6

(a)if it is a payment to a person (“C”) in exchange for something supplied by that person,^F6

(b)if the company is connected with C, and^F6

(c)if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying that thing.^F6

(5)This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length.^F6

(6)A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded).^F6

(7)Subsections (8) and (9) apply if—^F6

(a)the supply by C to the production company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and^F6

(b)either—^F6

(i)each transacting party in the sequence is connected to at least one other transacting party in the sequence, or^F6

(ii)each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable).^F6

(8)The reference to C in subsection (4)(c) is to be read as a reference to the supplier in the first transaction in the sequence.^F6

(9)The reference to the transaction in subsection (5) is to be read as including each transaction in the sequence.^F6

(10)In this section, “payment” includes any transfer of value.^F6