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56 | Application of Chapter |
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(1) | This Chapter has effect in relation to alternative finance arrangements entered |
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into on or after 6th April 2005. |
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(2) | To the extent provided by subsections (3) to (6), this Chapter also has effect in |
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relation to alternative finance arrangements falling within section 49 entered |
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into before 6th April 2005 under which profit share return is payable on or after |
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that date (“existing profit share arrangements”). |
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(3) | For the purposes of income tax, this Chapter has effect in relation to payments |
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of profit share return made on or after 6th April 2005 under existing profit |
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share arrangements to a person other than a company. |
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(4) | Where a company is a party to existing profit share arrangements— |
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(a) | this Chapter has effect in relation to the company in relation to those |
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arrangements with effect from 6th April 2005, and |
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(b) | for the purposes of Chapter 2 of Part 4 of FA 1996, the loan which is |
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treated by section 50 as made by or to the company is a loan made on |
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6th April 2005 of an amount equal to the notional carrying value of the |
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asset or liability representing the existing profit share arrangements. |
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(5) | For the purposes of subsection (4)(b) the notional carrying value is the amount |
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which would have been the carrying value of the asset or liability in the |
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accounts of the company (prepared in accordance with generally accepted |
| 20 |
accounting practice) if a period of accounts had ended immediately before 6th |
| |
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(6) | Section 54 has effect in relation to profit share return paid by a company on or |
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after 6th April 2005 under existing profit share arrangements. |
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57 | Interpretation of Chapter |
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“alternative finance arrangements” has the meaning given by section |
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“alternative finance return” has the meaning given by section 47(5); |
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“financial institution” has the meaning given by section 46(2); |
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“profit share return” has the meaning given by section 49(2); |
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“property business” has the meaning given by section 263(6) of ITTOIA |
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Tax relief for limited-budget films |
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58 | Relief for production and acquisition expenditure on limited-budget films |
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(1) | In section 48 of F(No.2)A 1997 (relief for production and acquisition |
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expenditure on limited-budget films), in subsection (2)— |
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|
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|
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(a) | in paragraph (a) for “before 2nd July 2005” substitute “, if it is |
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expenditure to which section 42(3) of that Act applies, before 1st |
| |
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(b) | after that paragraph insert— |
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“(aa) | the first day of principal photography in relation to the |
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film concerned is before 1st April 2006;”, and |
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(c) | in paragraph (c) after “1997” insert “but before 1st January 2007”. |
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(2) | In section 139 of ITTOIA 2005 (certified master versions: production |
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expenditure on limited-budget films), in subsection (1)— |
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(a) | in paragraph (aa) (requirement that film is completed) (inserted by |
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paragraph 30 of Schedule 3) after “period” insert “and before 1st |
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(b) | for paragraph (b) (requirement that expenditure incurred before 2nd |
| |
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“(b) | the first day of principal photography was before 1st |
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(3) | In section 140 of that Act (certified master versions: acquisition expenditure on |
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limited-budget films), in subsection (1)— |
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(a) | in paragraph (aa) (requirement that film is completed) (inserted by |
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paragraph 30 of Schedule 3), after “period” insert “and before 1st |
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(b) | in paragraph (c) (requirement that expenditure incurred before 2nd |
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July 2005) for “2nd July 2005” substitute “1st October 2007”, and |
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(c) | after that paragraph insert— |
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“(ca) | the first day of principal photography was before 1st |
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(4) | The Treasury may by order amend any of the enactments amended by |
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subsections (1) to (3), so as to substitute for a date inserted by or under this |
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(5) | The amendments made by subsection (1) have effect in relation to claims made |
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under section 42 of F(No.2)A 1992 on or after 2nd July 2005. |
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(6) | The amendments made by subsections (2) and (3) have effect in relation to |
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deductions made under section 139 or 140 of ITTOIA 2005 on or after 2nd July |
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59 | Restrictions on relief for production and acquisition expenditure |
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(1) | Schedule 3 (films: restrictions on relief for production and acquisition |
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(a) | Part 1 imposes restrictions on the circumstances in which relief may be |
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(b) | Part 2 imposes restrictions on the amount of relief which may be |
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(c) | Part 3 makes minor and consequential amendments; |
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(d) | Part 4 contains interpretation provisions. |
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Deferred income agreements |
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60 | Deferred income agreements which exist when relief claimed |
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(1) | This section applies where— |
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(a) | in relation to a trade or business (“the relevant trade”), a company (“C”) |
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makes a claim on or after 2nd December 2004 under section 42 of |
| 5 |
F(No.2)A 1992 for a deduction for a relevant period in respect of |
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expenditure relating to a film (“the claim”), and |
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(b) | when the claim is made, one or more deferred income agreements in |
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respect of the film exist to which C is or has been a party and which C |
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entered into on or after 2nd December 2004. |
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(2) | C is to be treated for corporation tax purposes as receiving, in the relevant |
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period in respect of which the claim is made, an amount of income from the |
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relevant trade equal to the amount of excess relief. |
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(3) | If, at the time immediately after the end of the 15 year period, C is carrying on |
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the relevant trade, C is to be treated for the purposes of section 40B of F(No.2)A |
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1992 (allocation of expenditure to periods) as incurring at that time relevant |
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film expenditure of an amount equal to the amount of excess relief. |
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(4) | The “amount of excess relief” is the amount given by the following formula— |
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D is the amount which C is entitled to deduct under section 42 of F(No.2)A |
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1992 by virtue of the claim; |
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T1 is the number of days in the 15 year period; |
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T2 is the number of days in the period which begins with the operative |
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date and ends with the final deferral date. |
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(5) | The “15 year period” means the period of 15 years which begins with the |
| |
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(6) | The “operative date” means— |
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(a) | where the claim is only in respect of expenditure incurred on the |
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acquisition of the original master version of the film, the date of that |
| 30 |
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(b) | in any other case, the date upon which the film is completed. |
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(7) | The “final deferral date” means— |
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(a) | the last date of deferral in relation to the deferred income agreement |
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mentioned in subsection (1)(b) (see section 61), or |
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(b) | where there is more than one such agreement, the date which is the |
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latest of the last dates of deferral in relation to those agreements. |
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(8) | “Relevant film expenditure” means expenditure of a revenue nature on the |
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production or acquisition of the original master version of the film. |
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(9) | Any income received in a relevant period by virtue of this section is in addition |
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to any other income received in that period. |
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(10) | This section is deemed to have come into force on 2nd December 2004. |
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61 | Meaning of “deferred income agreement in respect of a film” |
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(1) | For the purposes of section 60, a “deferred income agreement in respect of a |
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film” means an agreement which satisfies condition A or condition B. |
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(2) | Condition A is that the agreement (whether or not it supplements or varies |
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(a) | guarantees to any person an amount of income arising from the |
| |
exploitation of the film, and |
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(b) | has the effect that the last date of deferral is a date after the end of the |
| |
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(3) | Condition B is that the agreement— |
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(a) | supplements or varies another agreement (“the earlier agreement”) |
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which guarantees to any person an amount of income arising from the |
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exploitation of the film, and |
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(b) | has the effect that the last date of deferral is a date which is after the end |
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of the 15 year period and after the last date of deferral (if any) in relation |
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to the earlier agreement. |
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(4) | The “last date of deferral” means the last date upon which an amount of the |
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guaranteed income will or may arise. |
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(5) | It does not matter whether any of the agreements mentioned in subsection (2) |
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or (3) existed before 2nd December 2004. |
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(6) | For the purposes of this section— |
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(a) | “agreement” means an agreement or series of agreements, and |
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(b) | an agreement “guarantees” an amount of income if the agreement, or |
| |
any part of it, is designed to secure the receipt of that amount (or at least |
| |
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(7) | This section is deemed to have come into force on 2nd December 2004. |
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62 | Deferred income agreements entered into after relief claimed |
| |
(1) | This section applies where— |
| |
(a) | on or after 2nd December 2004, a company (“C”) enters into a deferred |
| |
income agreement in respect of a film in the course of carrying on a |
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trade or business (“the relevant trade”), and |
| |
(b) | before C entered into the agreement, a claim was made under section |
| |
42 of F(No.2)A 1992, in relation to the relevant trade, for a deduction for |
| |
a relevant period in respect of expenditure relating to the film (“the |
| |
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(2) | C is to be treated for corporation tax purposes as receiving, in the relevant |
| |
period in which C entered into the deferred income agreement, an amount of |
| |
income from the relevant trade equal to the net excess relief. |
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(3) | If, at the time immediately after the end of the 15 year period, C is carrying on |
| |
the relevant trade, C is to be treated for the purposes of section 40B of F(No.2)A |
| 40 |
1992 (allocation of expenditure to periods) as incurring at that time relevant |
| |
film expenditure of an amount equal to the net excess relief. |
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(4) | The “net excess relief” is the amount of excess relief reduced (but not below nil) |
| |
by the recovered amount (if any). |
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(5) | The “amount of excess relief” is the amount given by the following formula— |
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| |
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D is the amount which there was an entitlement to deduct under section |
| |
42 of F(No.2)A 1992 by virtue of the claim; |
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T1 is the number of days in the 15 year period; |
| |
T2 is the number of days in the period which begins with the operative |
| |
date and ends with the final deferral date. |
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(6) | The “recovered amount” means the total of— |
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(a) | the amount (if any) treated under section 60 as income received by C |
| 10 |
from the relevant trade as a result of any application of that section in |
| |
relation to the claim as a result of C’s entry into any deferred income |
| |
agreement in respect of the film concerned, and |
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(b) | the total of any amounts treated under this section as income received |
| |
by C from the relevant trade as a result of any previous application of |
| 15 |
this section in relation to the claim as a result of C’s entry into any |
| |
previous relevant agreements. |
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(7) | The “15 year period” means the period of 15 years which begins with the |
| |
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(8) | The “operative date” means— |
| 20 |
(a) | where the claim is only in respect of expenditure incurred on the |
| |
acquisition of the original master version of the film, the date of that |
| |
| |
(b) | in any other case, the date upon which the film is completed. |
| |
(9) | For the purposes of this section— |
| 25 |
(a) | “deferred income agreement in respect of a film” has the same meaning |
| |
as it has for the purposes of section 60, |
| |
(b) | the “final deferral date” means the last date of deferral in relation to the |
| |
deferred income agreement mentioned in subsection (1)(a) (see section |
| |
| 30 |
(c) | “previous relevant agreement” means a deferred income agreement in |
| |
respect of the film concerned which was entered into by C after the |
| |
claim was made and before the entry into the deferred income |
| |
agreement mentioned in subsection (1)(a), and |
| |
(d) | “relevant film expenditure” means expenditure of a revenue nature on |
| 35 |
the production or acquisition of the original master version of the film. |
| |
(10) | It does not matter for the purposes of subsection (1) whether the claim was |
| |
made before, or on or after, 2nd December 2004. |
| |
(11) | Any income received in a relevant period by virtue of this section is in addition |
| |
to any other income received in that period. |
| 40 |
(12) | This section is deemed to have come into force on 2nd December 2004. |
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