BIM50735 - Literary profits: spread lump sum: copyright: claims for relief

These reliefs do not apply to payments actually receivable after 5 April 2001. They were repealed by ICTA88/S95A, which introduced averaging (see BIM73000+).

The provisions regarding copyright in ICTA88/S534 and ICTA88/S535 apply to the author of a literary work, and also to a composer, dramatist, painter or sculptor who receives a lump sum payment for assigning or granting an interest in the copyright of a work which they have produced. Relief may be claimed in respect of post-cessation receipts (see BIM50740 and BIM80500 onwards).

The agreement with the publisher of a literary work will normally establish the nature of the payment. An advance which is not reclaimable by the publisher, but may be wholly or partially returned by the author etc if he or she terminates the agreement, should be regarded as within the Sections.

Where in a claim under ICTA88/S538, an artist states that his or her works were, or are being, prepared for an exhibition and there are no grounds for doubting it, the claim may be accepted without other evidence that the exhibition was, or is to be, held.

When allowing relief under ICTA88/S534 or ICTA88/S535, the amount to be spread is the gross amount before deduction of expenses. Where an agent's commission is deducted from the lump sum before it is passed on to the author etc, the net amount after deduction of the commission may be spread if the taxpayer prefers.

Cases of difficulty should be submitted to Business Tax (Technical) at an early stage and in any event before an appeal is set down for hearing. Appeals under ICTA88/S534 are heard by the Special Commissioners and under ICTA88/S535 by the General Commissioners.