MGETR30100 - Museums and Galleries Exhibition Tax Relief: Taxation: Commencement

S1218ZCE (4) Corporation Tax Act 2009 (CTA 2009)

Where a company is a Museums and Galleries Exhibition Production Company (MGEPC) for the purposes of Part 15E CTA 2009, a qualifying exhibition is treated as a separate exhibition trade if Museums and Galleries Exhibition Tax Relief (MGETR) is claimed in respect of that exhibition.  This isolates each exhibition on an individual basis for the purposes of calculating profits and losses.

The normal rules for deciding when a trade commences do not apply when deciding when a separate exhibition trade commences.  Special rules apply instead.

The company is treated as commencing a new exhibition trade on the earliest of:

  • commencement of the production phase, or
  • receipt of income for the production.

Commencement triggered by production expenditure

In many cases, the separate exhibition trade will commence when the exhibition begins the production phase. This means that as soon as the company begins to incur production expenditure on an exhibition, a separate exhibition trade relating only to that exhibition begins.  Income and expenditure relating to the exhibition is then accounted for in relation to that trade using the MGETR rules.

Commencement triggered by receipt of income

In some cases, the separate exhibition trade will commence before the production phase starts if the company receives income relating to the exhibition. For example, the commencement of the separate exhibition trade may be triggered when a MGEPC receives a grant to help fund development activity of a production, or receives income from advance sales of tickets.

This ensures that all exhibition income is taxable as trading income.  This income will be offset by pre-trading expenditure brought into account on the commencement of the separate exhibition trade.  However, it may produce taxable profits if insufficient expenditure has been incurred by the end of the accounting period.

The fact that the company has commenced a separate exhibition trade does not necessarily mean that the production phase has commenced.