BIM56525 - Film and audio products: avoidance: transfer pricing

The film reliefs can ensure that a significant amount of expenditure is relieved before the receipts from the exploitation of the film are brought into account. It is possible that attempts will be made to turn these intended timing advantages into permanent tax benefits by avoiding tax altogether on the receipts.

One possible device would be to sell the master version of the film to an connected person (such as an overseas affiliate) at undervalue. If there is reason to believe that this has happened the provisions at ICTA88/SCH28AA (transfer pricing) may apply. Alternatively, it may be arguable that the company is not trading with a view to a profit.

Where you consider that a film may have been sold or purchased at a price which is not at arm’s length you should refer the case to CT&VAT (Technical).