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HMRC internal manual

Museums and Galleries Exhibition Tax Relief

Museums and Galleries Exhibition Tax Relief; losses; completion period

S1218ZDB Corporation Tax Act 2009 (CTA 2009)

The rules in Part 15E CTA 2009 modify the normal rules for relieving corporate trading losses.

The completion period is the accounting period in which the Museums and Galleries Exhibition Production Company (MGEPC) ceases to carry on the separate exhibition trade.

Prior to the completion period, if a loss is made in the separate exhibition trade the MGEPC can only surrender the loss for Museums and Galleries Exhibition Tax Credit, where applicable, or use it against future profits of the same trade.

Losses of the completion period

The restriction on the use of losses applies until the accounting period in which the separate exhibition trade ceases.  This accounting period is known as the completion period.

Losses are then treated differently depending on whether they are:

  • losses not attributable to Museums and Galleries Exhibition Tax Relief (MGETR), or
  • losses attributable to MGETR.

This divides the losses into two distinct elements.

Loss not attributable to Museums and Galleries Exhibition Tax Relief

Any loss not attributable to Museums and Galleries Exhibition Tax Relief (MGETR) that has been carried forward to the completion period and/or been incurred in the completion period can be:

  • offset against total taxable profits of the Museums and Galleries Exhibition Production Company in the completion or previous accounting periods so far as they fall (wholly or partly) within the period of 12 months ending immediately before the completion period begins, or
  • surrendered as group relief.

 

Losses attributable to MGETR cannot be relieved in this way.

Any remaining loss not attributable to MGETR may only be relieved under the special terminal losses rules (OTR40050).

A loss not attributable to MGETR includes all the expenditure of the separate exhibition trade not including the enhancement for MGETR.  This means non-enhanceable expenditure and enhanceable core expenditure not including the enhancement.

Losses not attributable to MGETR are calculated by removing the element of losses attributable to OTR.

Loss attributable to Museums and Galleries Exhibition Tax Relief

Subject to the special terminal losses rules (MGETR40050), any loss attributable to Museums and Galleries Exhibition Tax Relief (MGETR) carried forward to the completion period and not surrendered for Museums and Galleries Exhibition Tax Credit (MGETC) may only be used against profits of the same exhibition trade made in the completion period.

Any loss attributable to MGETR that is incurred in the completion period and not surrendered for MGETC may only be relieved under the special terminal losses rules (MGETR40050).

The amount of a loss attributable to MGETR is the loss that has arisen from the enhancement element over and above the enhanceable expenditure.  This means the enhancement not including both the non-enhanceable expenditure and enhanceable core expenditure.

Losses attributable to MGETR are calculated by deducting from the loss for the period what the losses for the period would be in the absence of MGETR.

Where there would have been a profit for the period in the absence of MGETR, the deduction from actual losses will be nil.  Therefore, the loss attributable to MGETR will be the actual loss in the period.