Commentary

B5.502 Sound recordings—rules for allocating expenditure

Business tax
Business tax | Commentary

B5.502 Sound recordings—rules for allocating expenditure

Business tax | Commentary

B5.502 Sound recordings—rules for allocating expenditure

In calculating the profits of a trade which consists of, or includes, the exploitation of the original master versions of sound recordings1, a deduction is allowed2 for the amount of production or acquisition expenditure allocated to the relevant period (ie a period of account of the trade, or the basis period for the tax year where no accounts have been made up for a period of account ending in that year3), provided certain conditions are met. The original master versions must not constitute trading stock of the trade4, and the expenditure must be incurred in or before the relevant period5.

A just and reasonable amount of the expenditure must be allocated to the relevant period6, taking into account the following7:

  1.  

    •     the amount of expenditure remaining unallocated at the beginning of the period

  2.  

    •     the amount of expenditure incurred in the period

  3.  

    •     the proportion which the estimated value of the original master version realised in the period (by way of income or otherwise) bears to the sum of the value realised and the estimated remaining value at the end of the

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