BIM56020 - Film and audio products: introduction: where to find the legislation for CT

The legislation governing the various reliefs for expenditure on the production or acquisition of the original master version of a film is found in F2A92, F2A97, FA02, FA04 and FA05. The legislation in F2A92, F2A97 and FA02 also applied for IT purposes for 2004/05 and earlier years of assessment, before ITTOIA came into effect.

F2A92

Section 40A is the provision that deems the expenditure on the original master version of a film to be revenue in nature and treats associated receipts as income for tax purposes, BIM56205.

Section 40B determines how the expenditure is to be brought into account for tax purposes where the provisions for qualifying films ( BIM56105) do not apply. It also defines relevant period in the film relief legislation, BIM56210.

Section 40C excludes expenditure that has been relieved under Section 42 (see below), or where the master version is held as trading stock, from the rules under Section 40B, BIM56255.

Section 40D provides an alternative treatment where the film is a qualifying film. It enables an election to be made for the original master version to qualify for capital allowances, BIM56310.

Section 41 provides relief for preliminary expenditure incurred for the purpose of enabling a decision to be taken as to whether or not to make a film. It only applies to films that are qualifying films, or films that would be reasonably likely to be qualifying films if made, BIM56320.

Section 42 is the main relieving section for qualifying films. It provides for the accelerated write- off of expenditure on production or acquisition over a minimum of three-years. FA05 amended Section 42, effective from 2 December 2004, to prevent relief being claimed more than once on any film (double dipping), and to restrict the relief to the immediate cost of production of the film, BIM56325.

Section 43 is an interpretation section for the purposes of Sections 40A to 42.

F2A97

Section 48 amends the legislation in F2A92/S42, providing a more advantageous regime for qualifying films which cost £15million or less to produce. It enables up to 100% of the expenditure on the production or acquisition of the original master version of a qualifying film to be written off in a single relevant period, rather than over 3 years as in F2A92/S42, BIM56380.

FA02

Section 99 narrows the definition of qualifying film for tax purposes to films that are intended for release for viewing by the public at the commercial cinema, BIM56110.

Section 99 also provides transitional relief for certain film and television drama where principal photography had commenced on or before 30 June 2002, BIM56125.

Section 100 amended F2A97/S48, introducing subsection 6A which restricts the amount that can be claimed as production expenditure to sums actually paid on or before the date that the film is completed, or to sums that are unconditionally payable within four months thereafter, ( BIM56385).

Section 101 is anti-avoidance legislation to prevent relief under F2A97/S48 for multiple acquisitions of the same film. It was repealed by FA05, BIM56530.

FA05

Section 58 extended F2A97/S48 relief for films starting principal photography before 6 April 2006, BIM56375.

Section 59 and Schedule 3 part 1 prevents double dipping - relief being obtained more than once under F2A92/S42 and F2A97/S48, BIM56360.

Section 59 and Schedule 3 part 2 restricts total relief under F2A92/S42 to no more than the direct costs of production unconditionally payable within 4 months, BIM56340.

Sections 60 to 65 claw back part of the relief given under F2A92/S42 and F2A97/S48 where the film reliefs are used in a scheme to defer tax for more than 15 years, BIM56700.

Sections 66 to 71 (‘corporate exit charge’) prevents groups of companies escaping deferred tax liabilities arising from income from a film on which any company has claimed a deduction under F2A92/S42 (which includes Section 42 as amended by F2A97/S48), BIM56650.