Source: All England Reporter
Publisher Citation: [2013] All ER (D) 215 (Mar)
Neutral Citation: [2013] UKFTT 157 (TC)
Court: First-tier Tribunal (Tax Chamber)

Sir Stehen Oliver QC and Charles Baker

Representation Michael Sherry and Anne Redston for the taxpayer.
  James McClelland for the Revenue.
Judgment Dates: 15 March 2013


Capital allowances - Machinery or plant - Films - Expenditure on production of film - Taxpayer partnership set up for purposes of producing film - Contracts entered into between production company and individual members of production team relating to, inter alia, 'deferred cast and crew amounts' - Taxpayer and production company entering into agreement for purpose of transferring ownership of completed film to taxpayer - Taxpayer claiming losses in relation to 'deferred cast and crew amounts' in relevant tax return - Revenue and Customs Commissioners rejecting part of claim relating to those losses - Whether agreement between production company and taxpayer transferring obligation to pay deferments to taxpayer - Whether taxpayer under unconditional obligation to pay deferments in year of claim - Finance (No.2) Act 1997, - Capital Allowances Act 2001, s 5(1), (5).

The Case

Capital allowances Machinery or plant. The First-tier Tribunal (Tax Chamber) (the FTT) dismissed the appeal by Alchemist (Devil's Gate) Film Partnership against the amendment by the Revenue and Customs Commissioners to the partnership's tax return which had shown losses of 1,920,259, comprising 1,223,132 by way of deferred cast and crew amounts in respect of the production of a film called 'Devil's Gate'. The effect of that amendment was to reduce the partnership losses to 597,300, the Revenue taking the view that the partnership had been under no obligation to make any payment in respect of the deferred cast and crew amounts to any of the cast and crew individuals. The FTT upheld the Revenue's decision that the disputed amount of 1,223,132, representing the aggregate of the deferred cast and crew amounts, had not been 'capital expenditure' by the partnership on the production of the film for the purposes of of the Finance (No. 2) Act 1997.

Practice Areas

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