This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet
HMRC publish amendments to loss relief proposals
07/03/2007, by Sarah Laing, Tax News - Business Tax
Rating: 2/5 from 1 people

Following comments received, HMRC have published Brief 19/07, which explains that two amendments will be made to the proposed legislation announced in Brief 18/07 (Tackling Avoidance - Individuals in partnership - restriction of loss relief). The amendments relate to the treatment of certain film-related losses.

Brief 18/07 contained a technical note detailing proposed legislation to tackle avoidance based on abuse of sideways loss relief by non-active partners. The technical note explained two changes affecting the amount of trading losses for a tax year for which a non-active partner can claim sideways loss relief:

  • A ‘purpose test’ for capital contributions by a non-active partner to a partnership when applying the existing restrictions on sideways loss relief based on capital contributed in ICTA 1988, ss 117, 118ZB and 118ZE.
  • An ‘annual limit’ of £25,000 (or, if lower, the amount of trading losses for that tax year for which a non-active partner can claim sideways loss relief after applying existing restrictions in ICTA 1988, ss 117, 118ZB, 118ZE and 118ZL.

The annual limit

The proposed annual limit of £25,000 (paragraphs 20 to 25 of the Technical Note) will not apply to losses derived from relevant film-related expenditure.

The purpose test

The proposed ‘purpose test’ (paragraphs 18 and 19 of the Technical Note) will not apply to capital contributions made by a non-active partner to a partnership carrying on a film-related trade where the trading loss for which the partner is claiming sideways loss relief is derived solely from relevant film-related expenditure.

Relevant film-related expenditure
Relevant film-related expenditure for these purposes is expenditure deducted under ITTOIA 2005, ss 137 to 140 and relevant incidental expenditure. These sections include the legislation formerly in Finance (No 2) Act 1992, s 42  and Finance (No 2) Act 1997, s 48).

Relevant incidental expenditure is incidental expenditure which (although not deducted under ITTOIA 2005, ss  137 to 140) is incurred in connection with the production of a film, or the acquisition of the original master version of a film, in relation to which expenditure is deducted under those sections. Expenditure is incidental if it is on management, administration or obtaining finance.

Related news

Restriction of loss relief proposed


HMRC Brief 19/07: Tackling avoidance - individuals in partnership - restriction of loss relief: film-related losses

HMRC Brief 18/07: Tackling Avoidance - Individuals in partnership - restriction of loss relief

About The Author

Sarah Laing
Editor, TaxationWeb News

Sarah is a Chartered Tax Adviser. She has been writing professionally since joining CCH Editions in 1998 as a Senior Technical Editor, contributing to a range of highly regarded publications including the British Tax Reporter, Taxes - The Weekly Tax News, the Red & Green legislation volumes, Hardman's, International Tax Agreements and many others. She became Publishing Manager for the tax and accounting portfolio in 2001 and later went on to help run CCH Seminars (including ABG Courses and Conferences).

Sarah originally worked for the Inland Revenue in Newbury and Swindon Tax Offices, before moving out into practice in 1991. She has worked for both small and Big 5 firms. She now works as a freelance author providing technical writing services for the tax and accountancy profession.

Back to Tax News

Please register or log in to add comments.

There are not comments added

Tony Margaritelli gives us an update following the recent government announcement about easing lockdown.