BIM56610 - Film and audio products: avoidance: individual exit schemes: who is affected by the legislation?

The legislation to counter individual exit schemes can be found at FA04/S119 to S123. It only applies to individuals. There is separate legislation to counter corporate exits (see BIM56650).

The legislation to prevent exits by individuals potentially applies to any individual who has benefited from film relief. An individual benefited by film relief is someone who has:

• sustained a film related loss,
• in a trade carried on by the individual either alone or in partnership, and
• who has claimed relief for those losses under ICTA88/S380 or ICTA88/S381.

Loss relief under ICTA88/S380 and ICTA88/S381 is given against other income and (by virtue of FA91/S72) capital gains (see BIM75400), and is often referred to as ‘sideways loss relief’.

A film related loss is any trading loss where any of the legislation at:

• FA92/S40A to S40C ( BIM56200 onwards),
• F2A92/S41 ( BIM56320),
• F2A92/S42 ( BIM56330),
• F2A92/S43 (interpretation rules for the above sections), or
• F2A97/S48 ( BIM56380),

has been applied in computing the losses of the trade (FA04/S123).

Such an individual will be subject to a charge to IT ( BIM56625) where:

• he has disposed of any of his rights to profits arising from the trade ( BIM56620), and
• an exit event has occurred (see BIM56615).

For a charge to arise both the exit event and the disposal of rights must occur on or after 10 December 2003.