41 Relief for preliminary expenditure.U.K.
(1)Subject to the following provisions of this section and any other provisions of the Tax Acts, in computing for [F1the purposes of corporation tax] the profits or gains accruing to [F2a company within the charge to corporation tax] in a relevant period from a trade or business which consists of or includes the exploitation of [F3original master versions of] films, [F4the company] shall (on making a claim) be entitled to deduct the amount of any expenditure of a revenue nature payable by [F5it] in that or an earlier relevant period—
(a)which is expenditure to which this section applies,
(b)in respect of which no deduction has previously been made (whether under this section or otherwise) in computing for tax purposes the profits or gains accruing from the trade or business, and
(c)in respect of which no election has been made under [F6section 40D above] [F7or section 143 of ITTOIA 2005].
(2)This section applies to any expenditure that—
(a)can reasonably be said to have been incurred with a view to enabling a decision to be taken as to whether or not to make a film,
(b)is payable before the first day of principal photography (where the decision that is taken is to make the film), and
(c)is not payable under any contract or other arrangement whereby it may fall to be repaid if the film is not made.
(3)A deduction shall not be made in respect of a film that has been completed unless the [F8original master version] of the film is a qualifying film, tape or disc.
(4)A deduction shall not be made in respect of a film that has not been completed unless it is reasonably likely that if the film were completed the [F9original master version] of the film would be a qualifying film, tape or disc.
(5)The total amount deducted under this section in respect of a film shall not exceed 20 per cent. of the budgeted total expenditure on [F10the original master version of] the film, as calculated at the first day of principal photography.
(6)A claim under this section shall be [F11made not later than two years after the end of the relevant period in which the expenditure to which it relates becomes payable.]
(7)To the extent that a deduction has been made in respect of any expenditure under this section [F12or section 137 of ITTOIA 2005 (corresponding income tax provision)] , no further deduction shall be made in respect of it in computing for [F13the purposes of corporation tax] the profits or gains of the trade or business concerned.
(8)This section shall have effect in relation to expenditure payable on or after 10th March 1992.
Textual Amendments
F1Words in s. 41(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(2)(a) (with Sch. 2)
F2Words in s. 41(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(2)(b) (with Sch. 2)
F3Words in s. 41(1) inserted (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), Sch. 3 paras. 22(2), 31(3)
F4Words in s. 41(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(2)(c) (with Sch. 2)
F5Word in s. 41(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(2)(d) (with Sch. 2)
F6Words in s. 41(1)(c) substituted (22.3.2001 with effect as mentioned s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579(1), Sch. 2 para. 83
F7Words in s. 41(1) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(2)(e) (with Sch. 2)
F8Words in s. 41(3) substituted (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), Sch. 3 paras. 22(3), 31(3)
F9Words in s. 41(4) substituted (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), Sch. 3 paras. 22(3), 31(3)
F10Words in s. 41(5) inserted (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), Sch. 3 paras. 22(4), 31(3)
F11Words in s. 41(6) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(3) (with Sch. 2)
F12Words in s. 41(7) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(4)(a) (with Sch. 2)
F13Words in s. 41(7) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 457(4)(b) (with Sch. 2)
Modifications etc. (not altering text)
C1S. 41 restricted (24.7.2002 with application as mentioned in s. 99(3)-(6) of the amending Act) by 2002 c. 23, s. 99(1)(b)(2)(6)