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HMRC internal manual

Museums and Galleries Exhibition Tax Relief

Museums and Galleries Exhibition Tax Relief: Taxation: Pre-trading expenditure

S1218ZBE 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.

For an exhibition that enters the production phase, there will often be expenditure that has been incurred prior to the commencement of the exhibition separate trade.

Where a company is set up especially to produce the exhibition, the preliminary work may be bought by the MGEPC, or its value will be transferred in after the trade has commenced.

Where the preliminary work is instead done by the MGEPC prior to the commencement of the trade, this pre-trading expenditure can be transferred to the trade. This expenditure is treated as having been incurred by the separate exhibition trade on the day it commences.

It is possible that this pre-trading expenditure may have been incurred some time before the separate exhibition trade commenced.

If the expenditure has already been reflected in the company’s accounts and tax computations, the company must amend any relevant company tax return accordingly.  This is because the expenditure relates to the separate exhibition trade, not to any other trade.  The normal time limits for amending returns and assessments are specifically overridden by the MGETR rules to allow the company to do so.