Recipient Requirements:

 

Additional restrictions apply to the lending fund due to the Tax Credit. In order to receive funding from the Lending Function, recipients must meet the following requirements:

 

• Must be a UK Limited company. A non-UK individual or company may be a borrower, but only via a UK subsidiary.

• Funds must be lent directly to a producing entity for a specific, identifiable, and named theatrical production (i.e.production-specific). This entity must be the ‘true producing company’ according to HMRC Guidance on Theatre Tax Relief.

 

 

Terms of Loan:

 

Funds will only be lent against one or a combination of the following securities:

1. Theatre Tax Credit

2. Value Added Tax*

3. Bonds with SOLT/Equity*

 

*only where security can be repaid into lender’s account. These elements are less likely to be lent against.

 

Lending will be up to a maximum of 90% of the agreed value of each of these securities. Lender will quote the available funding amount at the point of contract.

 

 

Security Value will be determined by the following processes:

​

Theatre Tax Relief:

The production in question must demonstrate how it adheres to all of HMRC guidance for qualification for TTR via provided form.

 

A thorough line-item budget must be provided to the Lender in the Lender’s template, breaking down production and running costs, as well as any expected non-UK expenditure and related-party transactions. The Lender will use the budget to determine the expected value of the payable tax credit.

 

Funds will be paid once the borrower can demonstrate actual payments or invoices of the relevant qualifying costs.

• Should the Lender’s bookkeeper be hired by the borrower, funds may be distributed on an ongoing basis as costs are confirmed.

• Otherwise, the borrower must pay a fee to the Lender for an audit of costs at the point at which the Borrower seeks fund withdrawal. Earlier withdrawal will likely result in a smaller loan relative to the maximum potential, as certainty of outcome will be lower.

 

Should the Borrower be part of a corporate group, group tax liabilities that reduce the payable credit from TTR shall be taken into consideration.

​

Lender will make an assessment of the risk of reduction in TTR payout from HMRC for the borrower, such as edge-cases on narrative performance, country of expenditure, determination of production or running expense, etc. Use of the Lender’s bookkeeper will result in more oversight, likely reducing potential risk.

 

Bonds with SOLT / Equity / MU:

 

Once a figure is agreed to by the relevant parties for the bond, up to 90% of that amount may be received by the borrower to pay on to the unions.

 

Value Added Tax:

 

A completed submission to HMRC for a VAT refund will determine relevant value.

 

If the Borrower is using the Lender’s bookkeeping services, no additional verification is required. In such a case, funds may be withdrawn ahead of a VAT submission, provided that a relevant VAT invoice has been paid to a supplier.

 

Otherwise, the Lender may charge a fee to audit the Borrower’s accounts to verify the accuracy of the VAT submission, including inspecting supplier invoices and bank statements.

 

 

Repayment Terms:

Borrowers will pay a minimum fee on any sums borrowed of up to 10% (lower fees available at the discretion of the Lender). The fee is repayable along with the principal on receipt of the relevant security from HMRC, the union, or the deposit-holder as the case may be.

 

This minimum fee shall be against an interest rate on the sums borrowed of Bank of England base rate plus 5% per annum.

 

The security shall be repayable directly into the Lender’s account, with any surplus in excess of the principal and interest/fee amounts to be remitted to the Borrower.

 

At the outset, the maximum loan from the Lending Function will be £700,000.

 

Borrower must be completely transparent about all matters that may relate to the production, or to the ability to repay, and must communicate such information as soon as it arises.

 

Lender has priority to receive repayment from the securities in question. Should a production be in deficit in any way, the producer, investors, or any other participants may not be paid from proceeds of the security before the Lender is repaid the principal and fee/interest in full.