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Finance Bill


Finance Bill
Schedule 16 — Tax relief for video games development
Part 1 — Amendments of CTA 2009

284

 

1217BE  

Estimates

   

Estimates for the purposes of this Chapter must be made as at the

balance sheet date for each period of account, on a just and

reasonable basis taking into consideration all relevant circumstances.

Chapter 3

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Video games tax relief

Introductory

1217C   

Availability and overview of video games tax relief

(1)   

This Chapter applies for corporation tax purposes to a company that

is the video games development company in relation to a video

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game.

(2)   

Relief under this Chapter (“video games tax relief”) is available to the

company if the conditions specified in the following sections are met

in relation to the video game—

(a)   

section 1217CA (intended for supply),

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(b)   

section 1217CB (British video game), and

(c)   

section 1217CE (UK expenditure).

(3)   

Video games tax relief is given by way of—

(a)   

additional deductions (see sections 1217CF and 1217CG), and

(b)   

video game tax credits (see sections 1217CH to 1217CJ).

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(4)   

But video games tax relief is not available in respect of any

expenditure if—

(a)   

the company is entitled to an R&D expenditure credit under

Chapter 6A of Part 3 in respect of the expenditure, or

(b)   

the company has obtained relief under Part 13 (additional

25

relief for expenditure on research and development) in

respect of the expenditure.

(5)   

Sections 1217CK to 1217CN contain provision about unpaid costs,

artificially inflated claims and confidentiality of information.

(6)   

In this Chapter “the separate video game trade” means the

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company’s separate trade in relation to the video game (see section

1217B).

(7)   

See Schedule 18 to FA 1998 (in particular, Part 9D) for information

about the procedure for making claims for video games tax relief.

“Intended for supply”

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1217CA  

Intended for supply

(1)   

The video game must be intended for supply to the general public.

(2)   

Whether this condition is met is determined when video game

production activities begin, so that—

 
 

Finance Bill
Schedule 16 — Tax relief for video games development
Part 1 — Amendments of CTA 2009

285

 

(a)   

where a video game is originally intended for supply, this

condition continues to be met even if that ceases to be the

intention, and

(b)   

where a video game is not originally intended for supply, this

condition is not met even if that becomes the intention.

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British video games

1217CB  

British video game

(1)   

The video game must be certified by the Secretary of State as a British

video game.

(2)   

The Secretary of State, with the approval of the Treasury, may by

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regulations specify conditions which must be met by a video game

before it may be certified as a British video game.

   

These conditions are known as the “cultural test”.

(3)   

Regulations under subsection (2) may—

(a)   

specify different conditions in relation to different

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descriptions of video game,

(b)   

provide that specified descriptions of video game may not be

certified as a British video game, and

(c)   

enable the Secretary of State to direct that any provision

made by virtue of paragraph (b) does not apply to a video

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game that meets specified conditions.

   

“Specified” means specified in the regulations.

(4)   

Regulations under subsection (2) are to be made by statutory

instrument.

(5)   

A statutory instrument containing regulations under subsection (2)

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is subject to annulment in pursuance of a resolution of the House of

Commons.

(6)   

Sections 1217CC and 1217CD contain further provision about

certification of video games as British video games, including

provision about applications for, and withdrawal of, certification.

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1217CC  

Applications for certification

(1)   

An application for certification of a video game as a British video

game is to be made to the Secretary of State by the video games

development company.

(2)   

The application may be for an interim or final certificate.

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(3)   

An interim certificate is a certificate that—

(a)   

is granted before the video game is completed, and

(b)   

states that the video game, if completed in accordance with

the proposals set out in the application, will be a British video

game.

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(4)   

A final certificate is a certificate that—

(a)   

is granted after the video game is completed, and

(b)   

states that the video game is a British video game.

 
 

Finance Bill
Schedule 16 — Tax relief for video games development
Part 1 — Amendments of CTA 2009

286

 

(5)   

The applicant must provide the Secretary of State with any

documents or information which the Secretary of State requires in

order to determine the application.

(6)   

The Secretary of State may require information provided for the

purposes of the application to be accompanied by a statutory

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declaration, made by the person providing it, as to the truth of the

information.

(7)   

The Secretary of State may by regulations make provision

supplementing this section, including—

(a)   

provision about the form of applications,

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(b)   

provision about the particulars and evidence necessary for

satisfying the Secretary of State that a video game meets the

cultural test, and

(c)   

provision that any statutory declaration which is required by

subsection (6) to be made by any person may be made on the

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person’s behalf by such person as is specified in the

regulations.

(8)   

Regulations under subsection (7) are to be made by statutory

instrument.

(9)   

A statutory instrument containing regulations under subsection (7)

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is subject to annulment in pursuance of a resolution of the House of

Commons.

1217CD  

Certification and withdrawal of certification

(1)   

If the Secretary of State is satisfied that the requirements are met for

interim or final certification of a video game as a British video game,

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the Secretary of State must certify the video game accordingly.

(2)   

If the Secretary of State is not satisfied that those requirements are

met, the Secretary of State must refuse the application.

(3)   

An interim certificate—

(a)   

may be given subject to conditions, and (unless the Secretary

30

of State directs otherwise) is of no effect if the conditions are

not met, and

(b)   

may be expressed to expire after a specified period, and

(unless the Secretary of State directs otherwise) ceases to have

effect at the end of that period.

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(4)   

An interim certificate ceases to have effect when a final certificate is

issued.

(5)   

If it appears to the Secretary of State that a video game certified

under this Part ought not to have been certified, the Secretary of State

may revoke its certification.

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(6)   

Unless the Secretary of State directs otherwise, a certificate that is

revoked is treated as never having had effect.

 
 

Finance Bill
Schedule 16 — Tax relief for video games development
Part 1 — Amendments of CTA 2009

287

 

UK expenditure

1217CE  

UK expenditure

(1)   

At least 25% of the core expenditure on the video game incurred by

the company must be UK expenditure.

(2)   

The Treasury may by regulations amend the percentage specified in

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subsection (1).

Additional deductions

1217CF  

Additional deduction for qualifying expenditure

(1)   

If video games tax relief is available to the company, it may (on

making a claim) make an additional deduction in respect of

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qualifying expenditure on the video game.

(2)   

The deduction is made in calculating the profit or loss of the separate

video game trade.

(3)   

In this Chapter “qualifying expenditure” means core expenditure on

the video game that falls to be taken into account under Chapter 2 in

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calculating the profit or loss of the separate video game trade for tax

purposes.

(4)   

The Treasury may by regulations—

(a)   

amend subsection (3), and

(b)   

provide that expenditure of a specified description is or is not

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to be regarded as qualifying expenditure.

1217CG  

Amount of additional deduction

(1)   

For the first period of account during which the separate video game

trade is carried on, the amount of the additional deduction is—equation: char[E]

   

where E is—

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(a)   

so much of the qualifying expenditure as is UK expenditure,

or

(b)   

if less, 80% of the total amount of qualifying expenditure.

(2)   

For any period of account after the first, the amount of the additional

deduction is given by—equation: plus[char[E],minus[char[P]]]

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where—

E is—

(a)   

so much of the qualifying expenditure incurred to

date as is UK expenditure, or

(b)   

if less, 80% of the total amount of qualifying

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expenditure incurred to date, and

P is the total amount of the additional deductions given for

previous periods.

(3)   

The Treasury may by regulations amend this section.

 
 

 
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