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HMRC internal manual

Business Income Manual

Films and sound recordings: master versions of sound recordings: excluded expenditure

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

Trading stock

If the master version of a sound recording is held as trading stock the expenditure allocation rules do not apply. In such cases the ordinary principles for valuing and carrying forward stock and work in progress apply (see BIM33000 onwards). A master version held for the purpose of exploitation by the granting of rights out of it or for the purpose of producing copies for sale will not generally be held as trading stock. It is a fixed asset of the trade or business notwithstanding the statutory requirement to treat expenditure on it as revenue.

On the other hand, where the master version of a sound recording is produced or acquired with the intention of disposing of it after a relatively short period then the master version may well have the character of stock (circulating asset) rather than a fixed asset of the trade.


The provisions do not cover expenditure on the purchase of reproductions as this would not amount to an acquisition of the master version.