Angelic tax

I have a wealthy client who is very keen to become a theatre angel. In effect this means that he invests about £2 500 of his own money in supporting a new play in the West End or possibly £10 000 in a new musical.

If the show is a success he will get all of his money back plus a share in 40% of the profits of the production but if it is a flop then he could lose some or all of the capital he has invested.

The client has asked about the tax treatment of such investments particularly whether profits in one production can be offset against losses in others and whether an overall loss for the year can then be offset against other income on his tax return.

He is a higher rate taxpayer. Also do any of these...