Clause 45
Finance (No. 2) Bill
2:30 pm
Theresa Villiers (Shadow Chief Secretary To the Treasury, Treasury; Chipping Barnet, Conservative)
The clause concerns terminal losses. When a film production company making a film that qualifies for tax relief ceases trading, the clause will allow its losses to be transferred to another, similar trade of the same company or within the same group. At present, clause 45 relief for terminal losses on the cessation of activity on a film is limited to films qualifying for the enhanced tax credit. Amendments Nos. 36 to 39 would remove that restriction. They are probing amendments so that we can discover the Government’s motivation for providing relief only for certain films. Will the Minister outline his reasons for the proposed restrictions? The amendments would provide that terminal loss relief could be claimed on all films, not only those that qualify for enhanced tax credit. I can see no good reason for the Bill to restrict terminal loss in such a way.
My second point relates to the losses generated by enhanced deductions when they can be surrendered intra-group when the film is completed or has been abandoned. The possibility of surrendering them intra-group is welcome. It is an important part of the clause. My worry relates to subsection (1)(a), which requires that a company
“ceases to carry on a trade in relation to a qualifying film”
before the losses can be passed on. I should welcome the Economic Secretary’s view on the situation in which receipts continue to come in over months or years afterwards. As we have discussed, some of the income that falls within schedule 4 may come in at much later stages, unexpectedly. It would be useful to have a point at which the terminal loss regime can kick in, despite the outside possibility that revenue may be received for the film in an unexpected way in the future. Will the possibility of delayed receipts preclude the possibility of the loss being passed on? I welcome the Minister’s clarification.