Corporation Tax Act 2009 section 1216BD

When costs are taken to be incurred

Section 1216BD establishes the rules for determining when costs relating to a television programme are treated as incurred for corporation tax purposes, linking cost recognition to the stage of completion of the work in progress.

• Costs are recognised when they are reflected in the state of completion of the work in progress, not simply when payments are made
• Advance payments are disregarded until the corresponding work is actually done; deferred payments are recognised to the extent work has been completed
• Only amounts for which there is an unconditional obligation to pay can be treated as costs incurred
• Where the obligation to pay is linked to the programme earning income, the cost can only be recognised once an appropriate amount of that income has been brought into account