Part 2Trading income
Chapter 9Trade profits: films and sound recordings
Certified master versions: special rules for allocating expenditure
F1138ACertified master versions: acquisition expenditure
1
This section applies if—
a
the person carrying on the trade has incurred acquisition expenditure in respect of the original master version of a film in, or before, the relevant period,
F2aa
section 140 does not apply in relation to that film,
b
the original master version has not previously been acquired by that person,
c
the film was completed in, or before, that period,
d
the original master version is a certified master version,
e
the film is genuinely intended for theatrical release, and
f
there has not already been a disqualifying deduction in respect of expenditure relating to the film (see section 140A).
2
A deduction is allowed for the amount of the expenditure allocated to the relevant period, but this is subject to the application of any prohibitive rule.
3
The person carrying on the trade may allocate up to the permissible amount of the expenditure to the relevant period.
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But the total amount allocated under this section may not exceed the total production expenditure in respect of the original master version.
4
The permissible amount of the expenditure is the smallest amount given by the following calculations.
5
The calculations are—
Calculation 1
Calculate one-third of the total acquisition expenditure incurred by the person in respect of the original master version (“the total expenditure”).
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Calculation 3
Calculate so much of the total expenditure as has not already been allocated to the relevant period or any other relevant period—
a
under this section or any other provision of this Chapter, or
b
under any of sections 40B or 42 of F(No.2)A 1992.
6
If the relevant period is less than 12 months the above references to one-third are to be read as references to a proportionately smaller fraction.
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Where the total acquisition expenditure incurred by the person in respect of the original master version exceeds the total production expenditure in respect of the original master version, the calculations in subsection (5) have effect as if that total acquisition expenditure were an amount equal to that total production expenditure.
7
If any acquisition expenditure in respect of the original master version is allocated to the relevant period—
a
under section 135 above, or
b
under section 40B of F(No.2)A 1992,
no other acquisition expenditure in respect of the original master version may be allocated to the relevant period under this section.