Corporation Tax Act 2009 section 1217RF

Qualifying expenditure

Section 1217RF defines what counts as "qualifying expenditure" for the purposes of orchestra tax relief, and sets out the rules that prevent double claims and limit payments to connected parties.

• Qualifying expenditure is core expenditure on a concert or concert series that is taken into account when calculating the profit or loss of the separate orchestral trade for tax purposes.
• Expenditure does not qualify if the company could claim relief for it under another creative industry tax relief (such as film, television, video games or theatre tax relief) or under the R&D expenditure credit or R&D relief regimes.
• Payments to connected parties are excluded to the extent that they include a profit element — that is, to the extent the amount paid exceeds the connected party's own costs — unless the payment is no more than an arm's length amount.
• Where a supply passes through a chain of connected parties or transactions forming part of a single scheme, the profit element is measured against the costs of the first supplier in the chain, and every transaction in the chain must satisfy the arm's length test.