Theatre Tax Relief (TTR) is one of the UK’s most generous incentives created specifically for production companies. It provides three different types of benefits, all of which serve as an important financial incentive and support for companies operating in this type of creative industries. However, to qualify, a production must meet HMRC’s criteria, centring around two key terms: “Story” and “Roles”.
In this blog post, we will learn more about HMRC’s definition of these terms, and how Thursford Enterprises Limited v HMRC (FTT Decision) sheds light on this.
For a show to qualify under the TTR scheme, it must be a live theatrical performance which revolves around a specific narrative(s) and defined characters. It must also be intended for a live audience and should not be produced for marketing purposes. At least 25% of core costs must be incurred within the UK or EEA.
According to HMRC, for a production to qualify, it needs to have sequential storyline (with a developed script & a linear narrative — basically, a plot) with performing characters. However, the Thursford Enterprises case has proven HMRC wrong in this regard and its own interpretation of the legislation.
HMRC contended that the traditional “Christmas Spectacular” show did not qualify for Theatre Tax Relief (TTR) because the production primarily consisted of musical performances without a linear storyline, and the characters functioned mainly as a choir rather than contributing to a narrative structure.
The First-tier Tribunal (FTT) ruled in favor of Thursford and rejected HMRC’s claims, concluding that the production met the requirements for TTR. The tribunal determined that the singers and dancers predominantly performed roles, which created a dramatic illusion and qualified for relief under Section 1217FA.
Key Outcomes
Key outcomes of this have been the following:
• Story: It is not always necessary to have a sequential storyline or even a developed story. The productions whose emphasis is on a greater understanding of the common theme, emotional experience, or abstract ideas could also be included.
• Roles: Do not have to be limited to acting or narrating but can also include any other interpretive and non-verbal aspects which are part of the production.
While HMRC has not appealed the decision, they have made it clear through discussions with Grantica that they do not agree with all aspects of the judgment. Because of this stance, it is still important to note that, without future legislative changes, in order to qualify, a production must still revolve around a story and have roles, production data and scripts to strengthen your claim.
Theatre Tax Relief (TTR) is one of the UK’s most generous incentives designed to support the creative arts sector. But how can you be sure your productions qualify?
Conclusion
In this ever-changing landscape, businesses need to stay proactive and adaptable to potential legislative shifts from HMRC. Its interpretations of terms like “roles” and “story” tend to be conservative, making the claims process complex and often stressful. Partnering with someone experienced in handling these claims can ease the burden, allowing you to focus on what you do best — bringing exceptional entertainment to the stage!
If you want to talk through your current shows and how they could qualify, feel free to reach out to Gray Burke-Stowe to learn more about how Grantica can help you.
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