Finance Act, 1989

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Amendment of section 35 (relief for investment in films) of Finance Act, 1987.

28.— Section 35 of the Finance Act, 1987 , is hereby amended—

(a) in subsection (1), by the substitution, in the definition of “qualifying period”, of “fifth” for “third”,

(b) as respects relevant investments made on or after the 9th day of July, 1989, by the substitution for subsection (3) of the following subsection—

“(3) (a) Subject to paragraph (b), where, in any period of twelve months ending on an anniversary of the passing of this Act, the amount, or the aggregate amount, of the relevant investments made by an allowable investor company, or by such company and all companies (which other companies are referred to hereafter in this section as ‘connected companies’) which, at any time in that period, would be regarded as connected with such company, exceeds £200,000, no relief shall be given under this section for the excess and, where there is more than one such relevant investment, the inspector, or, on appeal, the Appeal Commissioners, shall make such apportionment of the relief available as shall be just and reasonable to allocate to each relevant investment a due proportion of the relief available and, where necessary, to grant to each allowable investor company concerned an amount of relief proportionate to the amount of the relevant investment or the aggregate amount of the relevant investments made by it in the period.

(b) Where in a period (hereafter in this paragraph referred to as ‘the first period’) of twelve months ending on an anniversary of the passing of this Act, the amount, or the aggregate amount, of the relevant investments made by an allowable investor company, and by the connected companies, in a qualifying company for the purposes of enabling the qualifying company to make one, and only one, qualifying film, exceeds £200,000 and the allowable investor company, and each of the connected companies, which has made a relevant investment as aforesaid, in making its claim for relief in respect of the relevant investment elects that the provisions of this paragraph shall apply, then—

(i) paragraph (a) shall apply for the first period in relation to the allowable investor company as if the reference therein to £200,000 were a reference to—

(I) the amount equal to £600,000, or

(II) the amount which when added to the amount, or the aggregate amount, of the relevant investments made—

(A) on or after the 9th day of July, 1989, and

(B) in the period of twenty-four months ending on the day immediately preceding the commencement of the first period,

by the allowable investor company, and the connected companies, would amount in the aggregate to £600,000,

whichever is the lesser amount, and

(ii) no relief shall be given under this section in respect of any other or further relevant investment made by the said allowable investor company, or by any of the connected companies, in—

(I) the first period, and

(II) the period of twenty-four months commencing on the day next after the end of the first period.”,

and

(c) by the insertion in subsection (7), after paragraph (b), of the following paragraph:

“(bb) notwithstanding paragraph (b), where, on or after the 9th day of July, 1989, an allowable investor company has made a relevant investment (hereafter in this paragraph referred to as the ‘first relevant investment’) by way of a subscription for new ordinary shares of a qualifying company, and those shares are disposed of by the allowable investor company on a day which is not earlier than twelve months after the date of their acquisition by that company, and if—

(i) the consideration upon such disposal is used, and only used, by the allowable investor company within a period of twelve months commencing on that day for the purpose of making a further relevant investment by way of a subscription for new ordinary shares of a qualifying company, and

(ii) that company uses the sum invested to produce a qualifying film other than a qualifying film on the production of which the first relevant investment was expended,

then, the provisions of paragraph (b) regarding the determination, in respect of the computation of a gain or loss for the purpose of capital gains tax, of sums allowable as deductions from a consideration to which paragraph (b) relates, shall apply in respect of the consideration used for the purpose of making the further relevant investment, as described in this paragraph, as they apply in respect of the consideration to which paragraph (b) relates:

Provided that where an allowable investor company has made a relevant investment by way of a subscription for new ordinary shares of a qualifying company and that relevant investment is a relevant investment to which paragraph (b) of subsection (3) refers, then, if those shares are disposed of by the allowable investor company not earlier than twelve months after the date of their acquisition by that company, this paragraph shall apply—

(a) where the relevant investment is not less than £600,000, in respect of the consideration upon such disposal, or

(b) where the relevant investment is less than £600,000, in respect of such part of the consideration upon such disposal as bears to the total consideration on disposal the same proportion as the excess of the investment over £200,000 bears to the total amount of the investment,

without the provision that the consideration be used for the purpose of making a further relevant investment.”,

and the said definition in the said subsection (1), as so amended, is set out in the Table to this section.

TABLE

“qualifying period” means the period commencing on the date of the passing of this Act and ending on the fifth anniversary of that date;

CHAPTER IV

Capital Gains Tax