Micro Fusion 2004-1 Llp v HMRC

Business Tax: Financing of film production

In Micro Fusion 2004-1 Llp v HMRC (CA – 19 March) the CA has overturned the Ch D decision in favour of HMRC reported at [2009] STC 1741. A limited liability partnership (M) claimed that it had made a substantial loss on a trade of exploitation of films including a loss of more than £13 000 000 on film production and a payment of more than £1 600 000 to a company for 'film consultancy services'.

HMRC rejected the claim considering firstly that M was not trading since it had effectively sold the master negative of the film in question to a distribution company (P); second that because the film had not been completed until after June 2005 any relief to which M was entitled was for 2005/06 rather than 2004/05; and thirdly that the relief due...