Acquiring and sublicensing film rights not a "trade"

Still on the subject of UK tax and its impact on the creative industries, the Court of Appeal (Sir Terence Etherton (Chancellor) and Lords Justices Christopher Clarke and Vos) gave a ruling yesterday in Eclipse Film Partners No 35 LLP v HM Revenue and Customs [2015] EWCA Civ 95. In July 2012 the First-Tier Tribunal held, on the facts before it, that a partnership's activities in acquiring film rights and then sublicensing them to a distributor did not amount to carrying on a trade [see earlier IP Finance blogpost here]. This being so, the partnership's members were unable to obtain tax relief on interest paid on the borrowings which they had made in order to finance the partnership's activities under the Income and Corporation Taxes Act 1988 sections 353 and 362.