Part 3Income tax, corporation tax and capital gains tax
Chapter 9Avoidance involving loss relief or partnership
Individuals benefited by film relief
119Individuals benefited by film relief
1
This section applies if—
a
an individual has made a claim under section 380 or 381 of the Taxes Act 1988 in respect of a film-related loss sustained by him in a trade carried on solely or in partnership (“a relevant claim”);
b
there is a disposal on or after 10 December 2003 of a right of the individual to profits arising from the trade (a “relevant disposal”); and
c
an exit event occurs.
2
An “exit event”occurs when any of the following happens—
a
on or after 10 December 2003 the individual receives any non-taxable consideration for a relevant disposal (whether or not he also receives any taxable consideration for it);
b
on or after 10 December 2003 the losses claimed become greater than the individual’s capital contribution to the trade (whether because of a claim or a decrease in that capital contribution);
c
on or after 10 December 2003 there is an increase in the amount (if any) by which the losses claimed exceed the individual’s capital contribution to the trade.
3
A “chargeable event”occurs whenever—
a
the individual makes a relevant claim, if by the time the claim has been made a relevant disposal and an exit event have occurred; or
b
a relevant disposal occurs, if by the time it has occurred an exit event has occurred and the individual has made a relevant claim; or
c
an exit event occurs, if by the time it has occurred a relevant disposal has occurred and the individual has made a relevant claim.
4
Where a chargeable event occursF1—
a
the individual shall be treated as receiving at the time of that event an amount of income equal to the chargeable amount;
b
that income (which shall not be treated as profits of the trade) shall be chargeable to income tax for the year of assessment in which the event occurs; and
c
the individual shall be liable for any tax so chargeable.
5
The “chargeable amount”is an amount equal to the sum of the following (computed as at the time immediately after the chargeable event)—
a
so much of the total amount or value of any consideration received by the individual for the relevant disposal (or, if there has been more than one, for relevant disposals) as is non-taxable; and
b
the amount (if any) by which the losses claimed exceed the individual’s capital contribution to the trade;
but this is subject to section 122(2).
6
For the purposes of subsection (1)(a) it is immaterial when the claim is made.
7
It is immaterial whether the trade is still being carried on by the individual (or by anyone else) when a chargeable event occurs.