F1PART 15EMuseums and galleries exhibition tax relief
CHAPTER 2Taxation of activities of production company
Separate exhibition trade
1218ZBSeparate exhibition trade
(1)
Subsection (2) applies to a company in relation to an exhibition if, and only for so long as, the company qualifies for museums and galleries exhibition tax relief in relation to the production of the exhibition (see section 1218ZCA).
(2)
The company’s activities in relation to the production of the exhibition are treated as a trade separate from any other activities of the company (including activities in relation to the production of any other exhibition).
(3)
In this Part the separate trade mentioned in subsection (2) is called “the separate exhibition trade”.
(4)
Subsections (5) and (6) apply where the company is the primary production company for the exhibition.
(5)
The company is treated as beginning to carry on the separate exhibition trade—
(a)
at the beginning of the production stage of the exhibition at the first venue at which it is held, or
(b)
if earlier, at the time of the first receipt by the company of any income from the production of the exhibition.
(6)
The company is treated as ceasing to carry on the separate trade when the exhibition closes at the last venue at which it is held.
(7)
Subsections (8) and (9) apply where the company is a secondary production company for the exhibition.
(8)
The company is treated as beginning to carry on the separate exhibition trade—
(a)
at the beginning of the production stage of the exhibition at the first venue for which the company is the secondary production company, or
(b)
if earlier, at the time of the first receipt by the company of any income from the production of the exhibition.
(9)
The company is treated as ceasing to carry on the separate trade when the exhibition closes at the last venue for which the company is the secondary production company.
Profits and losses of separate exhibition trade
1218ZBACalculation of profits or losses of separate exhibition trade
(1)
This section applies for the purpose of calculating the profits or losses of the separate exhibition trade.
(2)
For the first period of account during which the separate exhibition trade is carried on, the following are brought into account—
(a)
as a debit, the costs of the production of the exhibition incurred to date;
(b)
as a credit, the proportion of the estimated total income from that production treated as earned at the end of that period.
(3)
For subsequent periods of account the following are brought into account—
(a)
as a debit, the difference between the amount (“C”) of the costs of the production of the exhibition incurred to date and the amount corresponding to C for the previous period, and
(b)
as a credit, the difference between the proportion (“PI”) of the estimated total income from that production treated as earned at the end of that period and the amount corresponding to PI for the previous period.
(4)
The proportion of the estimated total income treated as earned at the end of a period of account is—
where—
C is the total to date of costs incurred;
T is the estimated total cost of the production of the exhibition;
I is the estimated total income from the production of the exhibition.
1218ZBBIncome from the production
(1)
References in this Chapter to income from a production of an exhibition are to any receipts by the company in connection with the production or exploitation of the exhibition.
(2)
This includes—
(a)
receipts from the sale of tickets or of rights in the exhibition;
(b)
royalties or other payments in connection with the exploitation of the exhibition or aspects of it (such as a particular exhibit);
(c)
payments for rights to produce merchandise;
(d)
a grant designated as made for the purposes of the exhibition;
(e)
receipts by the company by way of a profit share agreement.
1218ZBCCosts of the production
(1)
References in this Chapter to the costs of a production of an exhibition are to expenditure incurred by the company on—
(a)
activities involved in developing, producing, running, deinstalling and closing the exhibition, or
(b)
activities with a view to exploiting the exhibition.
(2)
This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.
1218ZBDWhen costs are taken to be incurred
(1)
For the purposes of this Chapter, the costs that have been incurred on a production of an exhibition at a given time do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay.
(2)
Where an obligation to pay an amount is linked to income being earned from the production of the exhibition, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1218ZBA.
1218ZBEPre-trading expenditure
(1)
This section applies if, before the company begins to carry on the separate exhibition trade, it incurs expenditure on activities falling within section 1218ZBC(1)(a).
(2)
The expenditure may be treated as expenditure of the separate exhibition trade and as if incurred immediately after the company begins to carry on that trade.
(3)
If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.
(4)
Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.
1218ZBFEstimates
Estimates for the purposes of section 1218ZBA must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.