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HMRC internal manual

Museums and Galleries Exhibition Tax Relief

Museums and Galleries Exhibition Tax Relief; taxation; separate exhibition trade; profit/loss calculation; estimating amounts

S121ZBF Corporation Tax Act 2009 (CTA 2009)

Calculation of the profits or losses of the separate exhibition trade may involve estimating the total income and total costs of the exhibition. Part 15E CTA 2009 sets out the basis on which such estimates are made.

The aim of these rules is to ensure that the income that is recognised is in accordance with the substance of transactions in the same way that would be expected for statutory accounts.

Income should be recognised as the seller carries out its contractual obligations and so earns its rights to the income.  This is on the basis that it is probable that the income will flow to the company and that the expected income can be measured reliably.  It follows that speculative income should not be brought into account.  However, where a seller has entered into a transaction with a buyer, income should be recognised in accordance with the substance of that transaction.

If the income does not arise until the occurrence of a critical event, it is not recognised until that event occurs so long as the occurrence is outside the control of the seller. The production and running of the exhibition is regarded as an event that is within the company’s control, and does not delay recognition.

The example below is intended to illustrate how to estimate total income for the purposes of establishing the profits or losses of a separate exhibition trade.  Entitlement to Museums and Galleries Exhibition Tax Relief (MGETR) is not addressed here, but is dealt with separately (MGETR65000).


At the end of the first period of account of production, the estimated income and expenditure for an exhibition is as follows:

Grants and equity investments £50k
Existing sales of tickets £100k
Forecast of sales of remaining tickets £120k
Total cost of exhibition according to the budget £220k

The estimated total income from the exhibition to be brought into the calculation of the income treated as earned under the MGETR rules (MGETR30250) is the money which the Museums and Galleries Exhibition Production Company (MGEPC) has or expects to receive; this is the grants and equity investments of £50k plus the sale tickets of £100k.

The forecast of £120k is a judgment of how much might be expected if the remaining tickets are sold.  The estimate, in this instance, is not considered to be sufficiently probable or reliably measurable and so it would not be just and reasonable to include it in the MGEPC’s estimated total income.