|
| |
|
49 | Sound recordings: allocation of expenditure |
| |
(1) | This section applies in calculating for the purposes of corporation tax the |
| |
profits or losses of a company from a trade where— |
| |
(a) | the trade consists of or includes the exploitation of original master |
| |
versions of sound recordings, and |
| 5 |
(b) | the original master versions do not constitute trading stock of the trade |
| |
as defined by section 100(2) of ICTA. |
| |
| |
(a) | incurred on the production or acquisition of the original master version |
| |
of a sound recording, and |
| 10 |
(b) | expenditure of a revenue nature (whether as a result of section 48 or |
| |
| |
| must be allocated to relevant periods in accordance with this section. |
| |
(3) | The company must allocate to a relevant period so much of the expenditure as |
| |
is just and reasonable having regard to— |
| 15 |
(a) | the amount of the expenditure that remains unallocated at the |
| |
| |
(b) | the proportion that the estimated value of the original master version |
| |
of the sound recording that is realised in that period (whether by way |
| |
of income or otherwise) bears to the aggregate of the value so realised |
| 20 |
and the estimated remaining value of the original master version at the |
| |
| |
(c) | the need to bring the whole of the expenditure into account over the |
| |
time during which the value of the original master version is expected |
| |
| 25 |
(4) | The company may also allocate to a relevant period a further amount, so long |
| |
as the total amount allocated does not exceed the value of the original master |
| |
version of the sound recording realised in that period (whether by way of |
| |
| |
50 | Sound recordings: interpretation |
| 30 |
For the purposes of sections 48 and 49 (corporation tax treatment of sound |
| |
| |
(a) | “sound recording” does not include a film soundtrack; |
| |
(b) | “original master version” means the master tape or master audio disc |
| |
| 35 |
(c) | references to the original master version of a sound recording include |
| |
any rights in the original master version that are held or acquired with |
| |
| |
(d) | “relevant period” means— |
| |
(i) | a period for which accounts of the trade are made up, or |
| 40 |
(ii) | if no accounts of the trade are made up for a period, an |
| |
accounting period of the company. |
| |
|
| |
|
| |
|
| |
51 | Corporation tax: films and sound recordings as intangible fixed assets |
| |
(1) | In Schedule 29 to FA 2002 (corporation tax: gains and losses from intangible |
| |
fixed assets), for paragraph 80 (exclusion of films and sound recordings) |
| |
| 5 |
“Assets excluded: certain films |
| |
80A (5) | This Schedule does not apply to an intangible fixed asset held by a |
| |
film production company to the extent that it represents production |
| |
expenditure on a film to which Schedule 4 of the Finance Act 2006 |
| |
| 10 |
| Expressions used in this sub-paragraph have the same meaning as in |
| |
Chapter 3 of Part 3 of the Finance Act 2006. |
| |
(2) | Except as regards royalties, this Schedule does not apply to an |
| |
intangible fixed asset held by a company to the extent that it |
| |
represents expenditure by the company— |
| 15 |
(a) | on the production of the original master version of a film that |
| |
commenced principal photography before 1st April 2006; |
| |
(b) | on the acquisition before 1st October 2007 of the original |
| |
master version of a film that commenced principal |
| |
photography before 1st April 2006. |
| 20 |
(3) | In sub-paragraph (2)— |
| |
(a) | “film” has the same meaning as in Chapter 3 Part 3 of the |
| |
| |
(b) | “original master version” means the original negative, tape or |
| |
| 25 |
(c) | references to the original master version of a film include the |
| |
original master version of the film soundtrack (if any); |
| |
(d) | references to the original master version include any rights in |
| |
the original master version that are held or acquired with it. |
| |
Assets excluded except as regards royalties: sound recordings |
| 30 |
80B (1) | Except as regards royalties, this Schedule does not apply to an |
| |
intangible fixed asset held by a company to the extent that it |
| |
represents expenditure by the company on the production or |
| |
acquisition of the master version of a sound recording. |
| |
| 35 |
(a) | “sound recording” does not include a film soundtrack; |
| |
(b) | “master version” means master tape or master audio disc of |
| |
| |
(c) | references to the master version include any rights in the |
| |
master version that are held or acquired with it.”. |
| 40 |
(2) | In determining for the purposes of that Schedule whether an asset representing |
| |
production expenditure on a film was created before or after 1st April 2002, the |
| |
asset shall be treated as created when the film was completed. |
| |
|
| |
|
| |
|
52 | Films: application of provisions to certain films already in production |
| |
(1) | The Treasury may make provision by regulations for the application of the |
| |
provisions of this Chapter, and of any enactment amended by this Chapter, in |
| |
relation to films that commenced principal photography before 1st April 2006 |
| |
but are not completed before 1st January 2007. |
| 5 |
(2) | The regulations may provide for such adaptations and modifications of the |
| |
provisions of this Chapter, of any enactment amended by this Chapter and of |
| |
any other provision of the Corporation Tax Acts, as appear to the Treasury |
| |
appropriate for that purpose. |
| |
| 10 |
(a) | provide that the provisions of this Chapter (or any specified provisions |
| |
of this Chapter) shall have effect as if they had been in force at all |
| |
| |
(b) | require or authorise the making or amendment of returns, or the |
| |
making of assessments, in relation to past accounting periods or tax |
| 15 |
years (whether before or after the commencement of this Chapter); |
| |
(c) | authorise the making of any such return, amendment or assessment |
| |
notwithstanding any limitation on the time within which a return, |
| |
amendment or assessment may normally be made. |
| |
(4) | No regulations shall be made under this section unless a draft of them has been |
| 20 |
laid before and approved by a resolution of the House of Commons. |
| |
53 | Films and sound recordings: commencement and power to alter dates |
| |
(1) | The provisions of this Chapter come into force on such day as the Treasury |
| |
| |
(2) | The Treasury may by order amend any provision of this Chapter that refers to |
| 25 |
1st April 2006, the date on which this Act is passed or 1st October 2007 so as to |
| |
substitute a reference to a later date. |
| |
| |
| |
54 | Transactions with substantial donors |
| 30 |
(1) | After section 506 of ICTA insert— |
| |
“506A | Transactions with substantial donors |
| |
(1) | This section applies to the following transactions— |
| |
(a) | the sale or letting of property by a charity to a substantial donor, |
| |
(b) | the sale or letting of property to a charity by a substantial donor, |
| 35 |
(c) | the provision of services by a charity to a substantial donor, |
| |
(d) | the provision of services to a charity by a substantial donor, |
| |
(e) | an exchange of property between a charity and a substantial |
| |
| |
(f) | the provision of financial assistance by a charity to a substantial |
| 40 |
| |
|
| |
|
| |
|
(g) | the provision of financial assistance to a charity by a substantial |
| |
| |
(h) | investment by a charity in the business of a substantial donor. |
| |
(2) | For the purposes of this section a person is a substantial donor to a |
| |
charity in respect of a chargeable period if— |
| 5 |
(a) | the charity receives relievable gifts of at least £25,000 from him |
| |
in a period of 12 months in which the chargeable period wholly |
| |
| |
(b) | the charity receives relievable gifts of at least £100,000 from him |
| |
in a period of six years in which the chargeable period wholly |
| 10 |
| |
| and if a person is a substantial donor to a charity in respect of a |
| |
chargeable period by virtue of paragraph (a) or (b), he is a substantial |
| |
donor to the charity in respect of the following five chargeable periods. |
| |
(3) | A payment made by a charity to a substantial donor in the course of or |
| 15 |
for the purposes of a transaction to which this section applies shall be |
| |
treated for the purposes of section 505 as non-charitable expenditure. |
| |
(4) | If the terms of a transaction to which this section applies are less |
| |
beneficial to the charity than terms which might be expected in a |
| |
transaction at arm’s length, the charity shall be treated for the purposes |
| 20 |
of section 505 as incurring non-charitable expenditure equal to that |
| |
amount which the Commissioners for Her Majesty’s Revenue and |
| |
Customs determine as the cost to the charity of the difference in terms. |
| |
(5) | A payment by a charity of remuneration to a substantial donor shall be |
| |
treated for the purposes of section 505 as non-charitable expenditure |
| 25 |
unless it is remuneration, for services as a trustee, which is approved |
| |
| |
(a) | the Charity Commission, |
| |
(b) | another body with responsibility for regulating charities by |
| |
virtue of legislation having effect in respect of any Part of the |
| 30 |
| |
| |
506B | Section 506A: exceptions |
| |
(1) | Section 506A shall not apply to a transaction within section 506A(1)(b) |
| |
or (d) if the Commissioners for Her Majesty’s Revenue and Customs |
| 35 |
determine that the transaction— |
| |
(a) | takes place in the course of a business carried on by the |
| |
| |
(b) | is on terms which are no less beneficial to the charity than those |
| |
which might be expected in a transaction at arm’s length, and |
| 40 |
(c) | is not part of an arrangement for the avoidance of any tax. |
| |
(2) | Section 506A shall not apply to the provision of services to a substantial |
| |
donor if the Commissioners determine that the services are provided— |
| |
(a) | in the course of the actual carrying out of a primary purpose of |
| |
| 45 |
(b) | on terms which are no more beneficial to the substantial donor |
| |
than those on which services are provided to others. |
| |
|
| |
|
| |
|
(3) | Section 506A shall not apply to the provision of financial assistance to |
| |
a charity by a substantial donor if the Commissioners determine that |
| |
| |
(a) | is on terms which are no less beneficial to the charity than those |
| |
which might be expected in a transaction at arm’s length, and |
| 5 |
(b) | is not part of an arrangement for the avoidance of any tax. |
| |
(4) | Section 506A shall not apply to investment by a charity in the business |
| |
of a substantial donor where the investment takes the form of the |
| |
purchase of shares or securities listed on a recognised stock exchange. |
| |
(5) | A disposal at an undervalue to which section 587B applies shall not be |
| 10 |
a transaction to which section 506A applies (but may be taken into |
| |
account in the application of section 506A(2)). |
| |
(6) | A disposal at an undervalue to which section 257(2) of the 1992 Act |
| |
(gifts of chargeable assets) applies shall not be a transaction to which |
| |
section 506A applies (but may be taken into account in the application |
| 15 |
| |
(7) | In the application of section 506A payments by a charity, or benefits |
| |
arising to a substantial donor from a transaction, shall be disregarded |
| |
| |
(a) | relate to a donation by the donor, and |
| 20 |
(b) | do not exceed the relevant value in relation to the donation for |
| |
the purposes of section 339 or section 25 of FA 1990. |
| |
(8) | A company which is wholly owned by a charity within the meaning of |
| |
section 339(7AB) shall not be treated as a substantial donor in relation |
| |
to the charity which owns it (or any of the charities which own it). |
| 25 |
506C | Sections 506A and 506B: supplemental |
| |
(1) | A gift is “relievable” for the purposes of section 506A(2) if relief is |
| |
available in respect of it under— |
| |
| |
| 30 |
(c) | sections 587B and 587C, |
| |
(d) | section 25 of the Finance Act 1990 (individual gift aid), |
| |
(e) | section 257 of the 1992 Act (gifts of chargeable assets), |
| |
(f) | section 63 of the Capital Allowances Act 2001 (gifts of plant and |
| |
| 35 |
(g) | sections 713 to 715 of ITEPA 2003 (payroll giving), |
| |
(h) | section 108 of ITTOIA 2005 (gifts of trading stock), or |
| |
(i) | sections 628 and 630 of ITTOIA 2005 (gifts from settlor- |
| |
| |
(2) | A charity is treated as incurring expenditure in accordance with section |
| 40 |
506A(4) at such time (or times) as the Commissioners determine. |
| |
(3) | Section 506A applies to a transaction entered into in a chargeable |
| |
period with a person who is a substantial donor in respect of that |
| |
period, even if it was not until after the transaction was entered into |
| |
that he first satisfied the definition of “substantial donor” in respect of |
| 45 |
| |
|
| |
|
| |
|
(4) | Either or both of subsections (3) and (4) of section 506A may be applied |
| |
to a single transaction; but any amount of non-charitable expenditure |
| |
which a charity is treated as incurring under section 506A(3) in respect |
| |
of a transaction shall be deducted from any amount which it would |
| |
otherwise be treated as incurring under section 506A(4) in respect of the |
| 5 |
| |
(5) | Two or more connected charities shall be treated as a single charity for |
| |
the purposes of section 506A and 506B and this section; and for this |
| |
purpose “connected” means connected in a matter relating to the |
| |
structure, administration or control of a charity. |
| 10 |
(6) | Where remuneration is paid otherwise than in money, section 506A(5) |
| |
shall apply as to a payment in money of the amount that would, under |
| |
Part 3 of ITEPA, be the cash equivalent of the remuneration as a benefit. |
| |
(7) | In sections 506A and 506B and this section— |
| |
(a) | a reference to a substantial donor or other person includes a |
| 15 |
reference to a person connected with him within the meaning of |
| |
| |
(b) | “financial assistance” includes, in particular— |
| |
(i) | the provision of a loan, guarantee or indemnity, and |
| |
(ii) | entering into alternative finance arrangements within |
| 20 |
the meaning of section 46 of the Finance Act 2005, and |
| |
(c) | a reference to a gift of a specified amount includes a reference to |
| |
a non-monetary gift of that value. |
| |
(8) | On an appeal against an assessment the Special Commissioners may |
| |
review a decision of the Commissioners in connection with section |
| 25 |
| |
(9) | The Treasury may by regulations vary a sum, or a period of time, |
| |
specified in section 506A(2).” |
| |
(2) | This section shall have effect in relation to transactions occurring on or after |
| |
22nd March 2006; and for that purpose a person may satisfy the definition of |
| 30 |
“substantial donor” by reference to gifts made at any time. |
| |
(3) | But this section shall not have effect in relation to a transaction entered into in |
| |
pursuance of a contract made before 22nd March 2006 (otherwise than in |
| |
pursuance of a variation on or after that date). |
| |
55 | Non-charitable expenditure |
| 35 |
(1) | For section 505(3) to (8) of ICTA (charities: exemption: non-qualifying |
| |
| |
“(3) | In subsections (4) to (7)— |
| |
(a) | “charitable expenditure” has the meaning given by section 506, |
| |
(b) | “relief” means relief or exemption under— |
| 40 |
(i) | subsection (1) above, |
| |
(ii) | section 56(3)(c) above, |
| |
(iii) | section 761(6) below, |
| |
(iv) | section 256 of the 1992 Act (charities), or |
| |
(v) | section 46 of FA 2000 (small trades), |
| 45 |
|
| |
|
| |
|
(c) | “relievable income and gains” means income and gains which |
| |
would be eligible for relief or exemption under any of those |
| |
provisions (disregarding subsections (4) to (6)), and |
| |
(d) | “total income and gains” means the aggregate of— |
| |
(i) | relievable income and gains, |
| 5 |
(ii) | income and gains, other than relievable income and |
| |
gains, chargeable to tax, and |
| |
(iii) | donations, legacies and other similar receipts that are |
| |
| |
(4) | If a charity incurs (or is treated as incurring) non-charitable |
| 10 |
expenditure in a chargeable period, relief shall be disallowed in respect |
| |
of such amount of relievable income and gains as equals the amount of |
| |
the non-charitable expenditure. |
| |
(5) | If in a chargeable period a charity’s non-charitable expenditure exceeds |
| |
its total income and gains the excess shall be treated as non-charitable |
| 15 |
expenditure of the previous period for the purposes of subsection (4); |
| |
and any necessary adjustments shall be made, whether by making |
| |
assessments or otherwise. |
| |
(6) | Subsection (5) may apply to a chargeable period wholly or partly as a |
| |
result of the application of that subsection in respect of a later period; |
| 20 |
but no excess of non-charitable expenditure shall be treated as non- |
| |
charitable expenditure of a chargeable period which ended more than |
| |
six years before the end of the period in which the expenditure was |
| |
| |
(7) | Where an amount of a charity’s relievable income and gains is |
| 25 |
disallowed for relief by subsection (4) (whether or not as a result of the |
| |
application of subsection (5))— |
| |
(a) | the charity may by notice to the Board specify which items of |
| |
income or gains are to be disallowed, but |
| |
(b) | if the Board requires the charity to give a notice under |
| 30 |
paragraph (a) and the charity fails to comply within the period |
| |
of 30 days beginning with the date on which the requirement is |
| |
imposed, the Board shall determine which items to disallow.” |
| |
(2) | In section 506 of ICTA (section 505: supplemental)— |
| |
(a) | in subsection (1) for the definitions of “qualifying expenditure” and |
| 35 |
“non-qualifying expenditure” substitute— |
| |
“charitable expenditure” means (subject to subsections (3) to (5) |
| |
below) expenditure which is exclusively for charitable |
| |
| |
(b) | in subsection (2) omit “and subsection (1) above,” |
| 40 |
(c) | in subsection (3) for “qualifying expenditure” substitute “charitable |
| |
| |
(d) | in subsection (4) for “non-qualifying expenditure” substitute “non- |
| |
| |
(e) | in subsection (5) for “non-qualifying expenditure” substitute “non- |
| 45 |
| |
(f) | omit subsection (6), and |
| |
(g) | for the heading, substitute “Charitable and non-charitable |
| |
| |
|
| |
|