Section 797 — Income Tax Act 2007: Individuals claiming sideways or capital gains relief for film-related losses

Individuals claiming sideways or capital gains relief for film-related losses 797 1 This section applies if—

a an individual makes a film-related loss (see section 800) in a trade for which the individual claims sideways relief or capital gains relief (a “relevant claim”),

b there is a disposal of a right of the individual to profits arising from the trade (a “relevant disposal”) (see section 799),

and c an exit event occurs.

2 An exit event occurs whenever—

a the individual receives any non-taxable consideration (see section 798) for a relevant disposal, or b an increase in the individual's claimed film-related losses (see section 800) or a decrease in the individual's capital contribution (see section 801) results in—

i those losses becoming greater than that contribution, or ii an increase in the amount by which those losses exceed that contribution.

3 The individual is treated as receiving an amount of income every time a chargeable event occurs. The income is treated as arising otherwise than as profits of the trade.

4 A chargeable event occurs whenever—

a the individual makes a relevant claim (if by that time a relevant disposal and an exit event have occurred),

b a relevant disposal occurs (if by that time an exit event has occurred and the individual has made a relevant claim), or c an exit event occurs (if by that time a relevant disposal has occurred and the individual has made a relevant claim).

5 The amount of income treated as received when a chargeable event occurs is equal to the sum of—

a the total amount or value of all non-taxable consideration received by the individual for relevant disposals, and b the amount (if any) by which the individual's claimed film-related losses exceed the individual's capital contribution. The calculation in this subsection is made immediately after the chargeable event occurs and is subject to section 803.

6 For the purposes of this section it does not matter—

a if the individual (or anyone else) is still carrying on the trade when a chargeable event occurs, or b if the individual receives both non-taxable and taxable consideration for a relevant disposal.