BIM56310 - Film and audio products: deductions for qualifying films: capital allowance treatment

The legislation in F2A92/S40A and ITTOIA/S134 has the effect of treating all expenditure on the production or acquisition of the master version of a film as revenue expenditure. F2A92/S40D and ITTOIA/S143 enable that condition to be disapplied by election where a film is a qualifying film ( BIM56105).

The effect of the election is to enable plant and machinery capital allowances to be claimed under CAA01.

The conditions that have to be met are:

1. The expenditure on the production or acquisition of the master version of the film is incurred by a person who carries on a trade or business that consists of or includes the exploitation of master versions of films.
2. The film is certified as being a qualifying film.
3. The value of the master version of the film is expected to be realised over a period not less than two years (i.e. income from exploitation of the film is likely to arise for more than 2 years).
4. No claim has been made under any of the other treatments that are specifically available for qualifying films ( BIM56305).

The election must be made in respect of all of the expenditure incurred or to be incurred on the production or acquisition of the master version of the qualifying film.

The election must be made in writing and must:

• identify the film,
• state the amount of the expenditure,
• be accompanied by a copy of the certificate giving qualifying film status, and
• be signed, as the case may be, by the individual claimant, by the company secretary in the case of a company or, in the case of a partnership, by the partner signing the partnership tax return.

The time limits for making an election are:

• for the purposes of IT, on or before the first anniversary of the 31 January next following the year of assessment in which ends the relevant period in which the master version of the film is completed,
• for the purposes of CT, not later than two years after the end of the relevant period in which the master version of the film is completed.

Once made, the election is irrevocable.

The relevant period has the same meaning as in F2A92/S40B ( BIM56210).

The master version of a film is regarded as completed for this purpose when the conditions at BIM56315 are met or, if later, the date on which expenditure on the acquisition of the film is incurred.