Finance Act 2005

Section 42 of the Finance (No.2) Act 1992 (c. 48)

1 (1) Section 42 of F(No 2)A 1992 (relief for production or acquisition expenditure) is amended as follows.

(2) In subsection (2) omit “and” immediately before paragraph (b) and after that paragraph insert “, and

(c) that version was owned by the claimant at the time the film was completed.”

(3) In subsection (3) omit “and” immediately before paragraph (b) and after that paragraph insert “, and

(c) that version has not previously been acquired by the claimant.”

(4) After subsection (3) insert—

“(3A) 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.”

(5) After subsection (5) insert—

“(5A) 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”).”

(6) Subject to sub-paragraphs (7) to (10), the amendments made by this paragraph are deemed to have come into force on 2nd December 2004.

(7) The amendments made by this paragraph do not have effect in relation to any claim for relief which—

(a) is made before 2nd December 2004, or

(b) is in respect of expenditure relating to a film which was in production on that date.

(8) The amendments made by sub-paragraphs (2) and (3) do not have effect in relation to pre-announcement expenditure.

(9) Where the relevant claim within the meaning of subsection (3B) of section 42 of F(No 2)A 1992 is a claim in respect of pre-announcement expenditure only, the references in paragraphs (a) to (d) of that subsection to a previous claim, or a deduction, do not include a previous claim, or a deduction, in respect of pre-announcement expenditure only.

(10) Section 42 of F(No 2)A 1992 (as amended by this Schedule) has effect, for income tax purposes, for the year 2004-05 and earlier years of assessment, as if in subsection (3B) for “company” there were substituted “person”.

(11) For the purposes of this paragraph “claim for relief” means a claim for relief under section 42 of F(No 2)A 1992 (including a claim for relief under that section as modified by section 48 of F(No 2)A 1997).