Income Tax (Trading and Other Income) Act 2005 sections 31–38

Films and sound recordings

Sections 31–38 of Schedule 2 set out transitional rules governing the tax treatment of expenditure on original master versions of films, including special provisions based on when films were completed, when expenditure was incurred, and whether films qualify for various reliefs such as certified master version status and limited-budget film treatment.

• Modified rules apply to production expenditure on films completed before 21 March 2000 (or begun before that date), and to acquisition expenditure incurred before 6 April 2000, with adjustments to the scope of rights covered and the timing of when expenditure is treated as incurred
• The revenue treatment and allocation rules under sections 134 and 135 do not apply to expenditure on certified master versions of films completed before 10 March 1992, provided the film's value is expected to be realised over at least two years and (subject to exceptions) the film was genuinely intended for theatrical release
• The requirement for a film to be genuinely intended for theatrical release is disapplied in several circumstances, including where the film was certified or applied for certification before 17 April 2002, or where the film is a qualifying drama commissioned by that date with principal photography beginning by 30 June 2002
• The limited-budget film provisions under sections 139 and 140 do not apply to expenditure incurred, or films completed, before 2 July 1997, and certain additional conditions are relaxed for films completed before 17 April 2002 or acquisitions before 30 June 2002

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