Corporation Tax Act 2009 section 1179BC

When costs are to be taken as incurred

Section 1179BC establishes the rules for determining when costs relating to a qualifying production are treated as incurred for the purpose of calculating profits and losses under the audio-visual expenditure credit regime.

• Costs are treated as incurred when they are reflected in the state of completion of the work in progress, not simply when payments are made
• Advance payments for work not yet carried out are disregarded until the work is actually done; conversely, deferred payments are recognised to the extent the corresponding work is already complete
• An unpaid amount cannot count as an incurred cost unless there is an unconditional obligation to pay it
• Where a payment obligation is linked to income being earned from the production, the related cost can only be recognised if a corresponding amount of income has also been brought into account