xmlns:atom="http://www.w3.org/2005/Atom" xmlns:atom="http://www.w3.org/2005/Atom"

Part 2U.K.Trading income

Chapter 9U.K.Trade profits: F1. . . sound recordings

Textual Amendments

F1Pt. 2 Ch. 9: words in heading repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

IntroductionU.K.

130Expenditure to which this Chapter appliesU.K.

(1)This Chapter makes provision about—

(a)expenditure incurred on the production or acquisition of the original master version of a F2. . . sound recording, F3. . .

(b)F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)In this Chapter references to production expenditure are to expenditure incurred on the production of the original master version of a F4. . . sound recording.

(3)In this Chapter references to acquisition expenditure are to expenditure incurred on the acquisition of the original master version of a F5. . . sound recording.

(4)In this Chapter references to the original master version of a film or sound recording include any rights in the original master version of a F6. . . sound recording that are held or acquired with it.

(5)In this Chapter references to production or acquisition expenditure do not include—

(a)interest (as to which, see section 29), or

(b)the incidental costs of obtaining finance (as to which, see sections 58 and 59).

(6)F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In this Chapter “any prohibitive rule” means any provision of the Income Tax Acts which—

(a)prohibits a deduction from being made, or

(b)restricts the extent to which it is allowed,

in calculating the profits of a trade.

Textual Amendments

F2Words in s. 130(1)(a) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F3S. 130(1)(b) and word repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F4Words in s. 130(2) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F5Words in s. 130(3) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F6Words in s. 130(4) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F7130(6) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

131Meaning of “film” and related expressionsU.K.

F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F8S. 131 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

132Meaning of “original master version” and “certified master version”U.K.

(1)In this Chapter “original master version” means—

(a)F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)in relation to a sound recording, the original master audio tape or disc.

(2)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9S. 132(1)(a) and following word repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F10S. 132(2)(3) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

133Meaning of “relevant period”U.K.

In this Chapter “relevant period”, in relation to a trade, means—

(a)a period of account of the trade, or

(b)if no accounts of the trade are drawn up for a period, the basis period for a tax year.

Expenditure treated as revenue in natureU.K.

134Expenditure treated as revenue in natureU.K.

(1)If a person carrying on a trade incurs production or acquisition expenditure, the expenditure is treated for income tax purposes as expenditure of a revenue nature.

(2)If expenditure is treated under this section as revenue in nature, sums received by the person carrying on the trade from the disposal of the original master version—

(a)are treated for income tax purposes as receipts of a revenue nature, and

(b)are brought into account in calculating the profits of the trade of the relevant period in which they are received.

(3)For this purpose sums received from the disposal of the original master version include—

(a)sums received from the disposal of any interest or right in or over the original master version (including an interest or right created by the disposal), and

(b)insurance, compensation or similar money derived from the original master version.

(4)F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F11S. 134(4) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

[F12Rules for allocating expenditure]U.K.

Textual Amendments

F12S. 135 cross-heading substituted (with effect as mentioned in s. 46, 47 of the amending Act) by virtue of Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 2(a)}

135[F13Allocation of production or acquisition expenditure to relevant periods]U.K.

(1)This section applies for the purpose of calculating the profits of a trade of a relevant period if—

(a)the trade consists of or includes the exploitation of the original master versions of F14. . . sound recordings,

(b)the original master versions do not constitute trading stock of the trade (within the meaning of section 174),

(c)the person carrying on the trade incurs production or acquisition expenditure in, or before, the relevant period, and

(d)F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)A deduction is allowed for the amount of the production or acquisition expenditure allocated to the relevant period, but this is subject to the application of any prohibitive rule.

(3)The person carrying on the trade must allocate to the relevant period so much of the expenditure as is just and reasonable (but see subsection (5)).

(4)In making this allocation regard must be had to the following—

(a)the amount of the expenditure which remains unallocated at the beginning of the period,

(b)the amount of the expenditure incurred in the period,

(c)the proportion which the estimated value of the original master version realised in the period (by way of income or otherwise) bears to the sum of the value so realised and the estimated remaining value at the end of the period, and

(d)the need to bring the whole of the expenditure into account over the time during which the value of the original master version is expected to be realised.

(5)The person carrying on the trade may also allocate to the relevant period a further amount, so long as the total amount allocated to the period does not exceed the value of the original master version realised in the period (by way of income or otherwise).

(6)Expenditure may not be allocated to the relevant period under this section if it is allocated—

(a)under this section to any other relevant period,

(b)F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F13S. 135 heading substituted (with effect as mentioned in s. 46, 47 of the amending Act) by virtue of Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Notes 1, 2(b)}

F14Words in s. 135(1)(a) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F15S. 135(1)(d) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F16S. 135(6)(b)-(d) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

F17S. 135(7) repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

Certified master versions: special rules for allocating expenditureU.K.

136Application of provisions about certified master versionsU.K.

F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F18Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

137Certified master versions: preliminary expenditureU.K.

F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F19Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

138Certified master versions: production expenditureU.K.

F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F20Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

[F21138ACertified master versions: acquisition expenditureU.K.

F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F21Ss.138, 138A substituted for s. 138 (with effect as mentioned in Sch. 3 para. 3(2)(3) of the amending Act) by Finance Act 2005 (c. 7), s. 59, Sch. 3 para. 3(1)(4)

F22Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

Certified master versions: limited-budget filmsU.K.

139Certified master versions: production expenditure on limited-budget filmsU.K.

F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F23Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

140Certified master versions: acquisition expenditure on limited-budget filmsU.K.

F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F24Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

[F25Interpretation of sections 138 to 140U.K.

Textual Amendments

F25S. 140A and preceding cross-heading inserted (with effect as mentioned in Sch. 3 para. 6(2)-(4) of the amending Act) by Finance Act 2005 (c. 7), Sch. 3 para. 6(1)

140ADisqualifying deductionU.K.

F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F26Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

141“Total production expenditure in respect of the original master version”U.K.

F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F27Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

142When expenditure is incurredU.K.

F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F28Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

[F29Deferred income agreementsU.K.

Textual Amendments

F29Ss. 142A-142E and preceding cross-heading inserted (with effect as mentioned in s. 65(2) of the amending Act) by Finance Act 2005 (c. 7), s. 65(1)

142ADeferred income agreements which exist when deduction madeU.K.

F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F30Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

142BMeaning of “deferred income agreement in respect of a film”U.K.

F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F31Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

142CDeferred income agreements entered into after deduction madeU.K.

F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F32Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

142DMeaning of the “net excess relief”U.K.

F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F33Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

142ESections 142A to 142D: time of entry into an agreementU.K.

F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F34Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

Election for sections 134 to 140 not to applyU.K.

143Election for sections 134 to 140 not to applyU.K.

F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F35Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}

SupplementaryU.K.

144Meaning of “genuinely intended for theatrical release”U.K.

F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F36Ss. 136-144 repealed (with effect as mentioned in ss. 46, 47 of the repealing Act) by Finance Act 2006 (c. 25), s. 178, {Sch. 26 Pt. 3(4) Note 1}