Income Tax Act 2007 section 74D

Meaning of "qualifying film expenditure" for purposes of sections 74ZA and 74A

Section 74D defines what counts as "qualifying film expenditure" for the purposes of the rules that restrict loss relief on tax-generated losses and cap the amount of loss relief available in any tax year.

• Expenditure qualifies if it is deducted under one of the specific film relief provisions (sections 137 to 140 of ITTOIA 2005) when calculating trade profits.
• Incidental expenditure on management, administration or obtaining finance also qualifies if it is connected with the production of a film, or the acquisition of its original master version, where other expenditure on that film is deducted under those film relief provisions.
• The extent to which incidental expenditure qualifies, and the amount of any loss derived from qualifying film expenditure, must both be determined on a just and reasonable basis.
• Key terms — "film", "the acquisition of the original master version of a film" and "a relevant film provision" — are defined by reference to the Films Act 1985 and ITTOIA 2005.