Income Tax Act 2007 section 614BV

Capital allowances deductions: films and sound recordings

Section 614BV addresses the tax treatment when a lessor who has claimed deductions for expenditure on films or sound recordings receives a major lump sum that exceeds the amount already treated as taxable revenue income.

• Applies where the current lessor has received a relevant deduction for expenditure connected with a leased film or sound recording asset, and the major lump sum exceeds the portion already treated as revenue income
• A relevant deduction is one arising from the ITTOIA 2005 rules on allocating expenditure on master versions of films or sound recordings, or from the reliefs for production or acquisition expenditure on films
• The excess of the major lump sum over the amount already treated as revenue income is itself treated as additional revenue income of the lessor's trade or business
• This additional deemed revenue income arises at the point of the relevant occasion, ensuring the lessor cannot shelter the excess from tax