[F1142ADeferred income agreements which exist when deduction madeU.K.
(1)This section applies where—
(a)in calculating the profits of a relevant period of a trade carried on by a person (“P”), a deduction is made under any of sections 138 to 140 in respect of expenditure relating to a film (“the relevant expenditure”), and
(b)when the deduction is made, one or more deferred income agreements in respect of the film exist to which P is or has been a party and which P entered into on or after 2nd December 2004.
(2)An amount equal to the amount of excess relief is brought into account as a receipt in calculating the profits of the trade of the relevant period in respect of which the deduction was made.
(3)If, at the time immediately after the end of the 15 year period, P is carrying on the trade, P is to be treated for the purposes of section 135 (normal rules for allocating expenditure to periods) as incurring at that time relevant film expenditure of an amount equal to the amount of excess relief.
(4)The “amount of excess relief” is the amount given by the following formula—
where—
D is the amount of the deduction allowed;
T1 is the number of days in the 15 year period;
T2 is the number of days in the period which begins with the operative date and ends with the final deferral date.
(5)The “15 year period” means the period of 15 years which begins with the operative date.
(6)The “operative date” means—
(a)where the relevant expenditure is acquisition expenditure only, the date of the acquisition in question, and
(b)in any other case, the date upon which the film is completed.
(7)The “final deferral date” means—
(a)the last date of deferral in relation to the deferred income agreement mentioned in subsection (1)(b) (see section 142B), or
(b)where there is more than one such agreement, the date which is the latest of the last dates of deferral in relation to those agreements.
(8)“Relevant film expenditure” means production or acquisition expenditure relating to the original master version of the film.]
Textual Amendments
F1Ss. 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)