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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Films and sound recordings: master versions of sound recordings: income matching method: batching

S135 Income Tax (Trading and Other Income) Act 2005, S151 Corporation Tax Act 2009

The income matching method of write-off requires the estimation of future income separately for each sound recording. In cases where the person producing or acquiring master versions of sound recordings does so on a regular basis and consistently has a portfolio of such master versions it may be possible to show that the income flow follows a fairly regular pattern. Where past experience is likely to apply to current productions it may be acceptable to write off expenditure on that same basis. It will, however, be necessary to check from time to time that the income-earning pattern has not changed.

Some productions, particularly in the popular music field, may have a relatively short period over which income is likely to arise. The exploitation of the master disc of a popular music single may produce income for only a few weeks after release, particularly if the artist is not well known. Where the costs of production are relatively small, say, less than about £100,000, and the predicted life is less than 12 months, there will normally be no objection to writing off the cost when the product is released provided that is the practice followed in preparing the accounts. This effectively ignores the possibility of related income arising in the next accounting period even though some may occur, particularly where the product is released towards the end of the accounting period.