BIM56370 - Film and audio products: deductions for qualifying films: restrictions on relief on or after 2 December 2004: transitional rules to prevent multiple acquisitions

References on this page to ‘Section 42’ should be read as including both F2A92/S42 and ITTOIA/S138 and S138A, and ‘Section 48’ should be read as including both F2A97/S48 and ITTOIA/S139 and S140. ‘Claims’ to relief should be read as including allocations of expenditure under ITTOIA/S138 and 138A (see BIM56318).

The anti-avoidance measures preventing double or multiple claims to Section 42 relief (see BIM56360) do not apply to films ‘in production’ at 2 December 2004 ( BIM56365). Most of the double dipping schemes involved one claim for production expenditure and another for acquisition expenditure. However, the exemption for films in production raised the possibility that new ‘multiple dipping’ avoidance schemes might be devised for these films, with Section 42 relief claimed for more than one acquisition of the film.

Relief for multiple acquisitions under Section 48 (for films costing £15m or less to produce – BIM56380) was already prevented by FA02/S101 (see BIM56530). In order to prevent multiple acquisition schemes on large budget films, similar (but not identical) restrictions on relief for acquisition expenditure on these films were introduced for films in production on 2 December 2004.

For films in production at 2 December 2004, relief for acquisition expenditure under Section 42 can only be given where:

• the acquisition is the first acquisition by the claimant, and
• no-one else has made a claim under Section 42 in respect of any other acquisition of that film.

Acquisition expenditure excluded from relief under Section 42 by this rule can only be relieved under the income matching or cost recovery rules in F2A92/S40B (see BIM56215 and BIM56230).

If, exceptionally, two claims were to be made at the same time, HMRC can determine which claim is to take precedence. Any such cases should be referred to CT&VAT (Technical).

This restriction, like the general rule preventing double dipping, is to be applied strictly on a first come first served basis. It is incumbent on the claimant to ensure there have not been any other claims in respect of an acquisition of the master version of the film. Where a claimant has acquired the master version of a film from a person other than the producer, or has sold a film to another person, you should make any enquiries necessary to satisfy yourself that no other claims have been made.