MGETR30255 - Museums and Galleries Exhibition Tax Relief; taxation; separate exhibition trade; profit/loss calculation; matching income to expenditure in different periods of account

S1218ZBA, S1218ZBF Corporation Tax Act 2009 (CTA 2009)

Part 15E CTA 2009 sets out how the profits and losses of a separate exhibition trade of a Museums and Galleries Exhibition Production Company (MGEPC) are calculated for tax purposes.

Calculation of profit or loss:  first period of account after trading begins

In the first period of account following the commencement of the separate exhibition trade, there are no costs reflected in work done that are attributable to a preceding accounting period because any pre-trading expenditure is treated as work of the first accounting period

The expenditure to be taken into account as a debit in calculating the taxable profit/loss is the expenditure of the first period which is reflected in the state of completion of the exhibition. The income to be taken into account as a credit in calculating the taxable profits of the first accounting period is the income that is treated as earned at the end of the accounting period using the formula at MGETR30250.

If a separate exhibition trade commences and ceases within a single accounting period, this will be the normal method for calculating the profit or loss attributable to the exhibition.

Calculation of profit or loss: subsequent periods of account

In subsequent periods of account, the profit for the period is calculated by comparing the further work done as measured by the additional expenditure, and the increase (or decrease) in the income treated as earned by the exhibition.

The expenditure to be taken into account as a debit in calculating the taxable profit is the expenditure to date, reflected in the state of completion of the exhibition, less the expenditure to date at the end of the previous accounting period.  This gives the expenditure of the accounting period that is reflected in the state of completion of the exhibition.

The income to be taken into account as a credit in calculating the taxable profits is the income that is treated as earned at the end of the accounting period using the formula at MGETR30250, less the income treated as earned at the end of the previous accounting period.  This gives the increase or decrease in the income treated as earned in the accounting period.