Finance Act 1982

72 Expenditure on production and acquisition of films etc.

(1) Expenditure which—

(a) is incurred on or after 10th March 1982 on the production or acquisition of a film, tape or disc, and

(b) would, apart from this subsection, constitute capital expenditure on the provision of machinery or plant for the purposes of Chapter I of Part III of the [1971 c. 68.] Finance Act 1971 (first-year and other allowances in respect of machinery and plant),

shall be regarded for the purposes of the Tax Acts as expenditure of a revenue nature unless it is expenditure falling within subsection (7) below.

(2) In this section—

(a) any reference to a film is (except where, in subsection (8) below, the context otherwise requires) a reference to an original master negative of the film and its soundtrack (if any);

(b) any reference to a tape is a reference to an original master film tape or original master audio tape ; and

(c) any reference to a disc is a reference to an original master film disc or original master audio disc;

and any reference to the acquisition of a film, tape or disc includes a reference to the acquisition of any description of rights in a film, tape or disc.

(3) Subject to the following provisions of this section, in computing the profits or gains accruing to any person from a trade or business which consists of or includes the exploitation of a film, tape or disc, expenditure which—

(a) is incurred on or after 10th March 1982 on the production or acquisition of a film, tape or disc, and

(b) is expenditure of a revenue nature (whether by virtue of subsection (1) above or otherwise),

shall be allocated to relevant periods in accordance with subsection (4) below ; and in this subsection and subsection (4) below " relevant period " means a period for which the accounts of the trade or business concerned are made up or, if those accounts are not made up for any period, a period the profits or gains of which are taken into account in assessing the income of the trade or business for any chargeable period.

(4) The amount of expenditure falling within subsection (3) above which falls to be allocated to any relevant period shall be such as is just and reasonable, having regard to—

(a) the amount of that expenditure which remains un allocated at the beginning of that period;

(b) the proportion which the estimated value of the film, tape or disc which is realised in that period (whether by way of income or otherwise) bears to the aggregate of the value so realised and the estimated remaining value of the film, tape or disc at the end of that period ; and

(c) the need to bring the whole of the expenditure falling within subsection (3) above into account over the time during which the value of the film, tape or disc is expected to be realised.

(5) Subsections (3) and (4) above do not apply to the profits or gains of a trade in which the film, tape or disc concerned constitutes trading stock, as defined in section 137(4) of the Taxes Act.

(6) In a case where any expenditure on the production or acquisition of a film, tape or disc is expenditure to which subsection (1) above applies, sums received from the disposal of that film, tape of disc shall be regarded for the purposes of the Tax Acts as receipts of a revenue nature (if they would not be so regarded apart from this subsection); and the reference in this subsection to sums received from the disposal of any film, tape or disc shall be construed as including—

(a) sums received from the disposal of any interest or right in or over the film, tape or disc, including an interest or right created by the disposal; and

(b) insurance or compensation moneys and other moneys of a like nature which are derived from the film, tape or disc.

(7) The preceding provisions of this section do not apply to expenditure which is incurred by any person on or before 31st March 1984 if it consists of the payment of sums payable under a contract entered into by him before 10th March 1982 or it is incurred—

(a) by a person who carries on a trade or business which consists of or includes the exploitation of films, tapes or discs; and

(b) on the production or acquisition of a film, tape or disc which is certified by the Secretary of State for the purposes of this section as a qualifying film, tape or disc and the value of which is expected to be realisable over a period of not less than two years.

(8) The Secretary of State shall not certify a film, tape or disc as a qualifying film, tape or disc for the purposes of this section unless he is satisfied that it is the master negative, master tape or master disc of a film which, in his opinion.—

(a) is an eligible film for the purposes of regulations made or having effect as if made under section 6 of the [1981 c. 16.] Film Levy Finance Act 1981 (payments by the British Film Fund Agency to the makers of British films) and in force immediately before the passing of this Act; or

(b) would be such an eligible film if it were not a television film within the meaning of those regulations.

(9) In this section " expenditure of a revenue nature " means expenditure which, if it were incurred in the course of a trade the profits or gains of which are chargeable to tax under Case i of Schedule D, would be taken into account for the purpose of computing the profits, gains or losses of the trade; and " receipts of a revenue nature" means receipts which, if they were receipts of such a trade, would be taken into account for that purpose.