Part II Income Tax, Corporation Tax and Capital Gains Tax
Chapter I General
Films
C142 Relief for production or acquisition expenditure.
1
Subject to the following provisions of this section and any other provisions of the Tax Acts, in computing for tax purposes the profits or gains accruing to a person in a relevant period from a trade or business which consists of or includes the exploitation F7of original master versions of films, that person shall (on making a claim) be entitled to deduct an amount in respect of any expenditure—
a
which is expenditure to which subsection (2) or (3) below applies, and
2
This subsection applies to any expenditure of a revenue nature incurred by the claimant on the production F8of the original master version of a film where—
a
c
that version was owned by the claimant at the time the film was completed.
3
This subsection applies to any expenditure of a revenue nature incurred by the claimant on the acquisition of the F11original master version of a film where—
a
the film was completed in the relevant period to which the claim relates or an earlier relevant period, F20...
c
that version has not previously been acquired by the claimant.
F243ZA
Subsection (3) does not apply to so much of that expenditure as exceeds the total production expenditure in respect of the film concerned.
3ZB
For the purposes of this section the “total production expenditure” in respect of a film means the total of all the expenditure incurred on the production of the original master version of the film.
F223A
A claim under this section for a relevant period, in relation to the original master version of a film, may be made in respect of either expenditure to which subsection (2) applies or expenditure to which subsection (3) applies, but not both.
3B
Where, in relation to a trade or business, a company (“C”) makes a claim under this section (“the relevant claim”) for a deduction in respect of expenditure relating to the original master version of a film, C is not entitled to make that deduction if—
a
the relevant claim is in respect of expenditure to which subsection (2) applies and—
i
a previous claim under this section has been made in relation to the same trade or business for any relevant period, or
ii
in computing the profits of that trade or business of any relevant period, a deduction has been made under section 138, 138A or 140 of the Income Tax (Trading and Other Income) Act 2005,
in respect of expenditure incurred on the acquisition of that version,
b
the relevant claim is in respect of expenditure to which subsection (3) applies and—
i
a previous claim under this section has been made in relation to the same trade or business for any relevant period, or
ii
in computing the profits of that trade or business of any relevant period, a deduction has been made under section 138 or 139 of that Act,
in respect of expenditure incurred on the production of that version,
c
a previous claim under this section has been made in relation to another trade or business, for any relevant period, in respect of expenditure to which subsection (2) or (3) applies which relates to that version, or
d
a deduction has been made in respect of expenditure relating to that version under any of sections 138 to 140 of the Income Tax (Trading and Other Income) Act 2005 in computing the profits of another trade or business of any relevant period.
3C
For the purposes of subsection (3B)—
a
it does not matter whether the previous claim was made before, or on or after, 2nd December 2004, and
b
“relevant period”, in relation to a deduction under the Income Tax (Trading and Other Income) Act 2005, means a relevant period within the meaning of section 133 of that Act.
3D
Where, in relation to any particular film, more than one claim under this section is made at the same time, the Inland Revenue may determine which of the claims is to be regarded as made first for the purposes of subsection (3B).
In this subsection references to a claim under this section are to be read as including references to a deduction of a kind mentioned in that subsection.
3E
In this section “the Inland Revenue” means any officer of the Board.
4
Any amount deducted for a relevant period under subsection (1) above shall not exceed—
a
one third of the total expenditure incurred by the claimant on the production F13or acquisition of the original master version of the film concerned,
b
one third of the sum obtained by deducting from the amount of that total expenditure the amount of so much of that total expenditure as has already been deducted by virtue of section 41 above, or
c
so much of that total expenditure as has not already been deducted by virtue of F2section 40B or, section 41 above or this section,
whichever is less.
5
In relation to a relevant period of less than twelve months, the references to one third in subsection (4) above shall be read as references to a proportionately smaller fraction.
F235A
For the purposes of subsection (4) the total expenditure incurred by the claimant on the production or acquisition of the original master version of the film concerned is—
a
in the case of a deduction in respect of expenditure to which subsection (2) applies, the total expenditure incurred by the claimant on the production of the original master version of the film concerned, and
b
in the case of a deduction in respect of expenditure to which subsection (3) applies, the total expenditure incurred by the claimant on the acquisition of that original master version (“the claimant’s acquisition expenditure”).
F255B
Where the claimant’s acquisition expenditure exceeds the total production expenditure in respect of the film, paragraph (b) of subsection (5A) has effect as if the claimant’s acquisition expenditure were an amount equal to that total production expenditure.
F36
A claim under this section shall be made—
a
for the purposes of income tax, on or before the first anniversary of the 31st January next following the year of assessment in which ends the relevant period to which the claim relates,
b
for the purposes of corporation tax, not later than two years after the end of the relevant period to which the claim relates,
and shall be irrevocable.
7
Where any expenditure is deducted by virtue of F4section 40B above in computing the profits or gains of a trade or business for a relevant period, no deduction shall be made under this section for that relevant period in respect of expenditure incurred on the production or acquisition F14of the original master version of the film concerned.
8
F268A
For the purposes of this section the expenditure incurred on the production of the original master version of a film does not include any amount that at the time the film is completed—
a
has not been paid, and
b
is not the subject of an unconditional obligation to pay within 4 months after the date of completion.
8B
Subsections (1) to (5) of section 5 of the Capital Allowances Act 2001 (when capital expenditure is incurred) apply for determining when for the purposes of this section any expenditure is incurred as they apply for determining when for the purposes of that Act any capital expenditure is incurred, but as if, in subsection (6) of that section, “at an earlier time” were substituted for “in an earlier chargeable period”.
F69
This section has effect in relation to expenditure incurred -
a
on the production F16of the original master version of a film completed on or after 10th March 1992, or
b
on the acquisition of the F17original master version of a film completed on or after that date.