Session 2013 - 14
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Finance Bill


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

288

 

Video game tax credits

1217CH  

Video game tax credit claimable if company has surrenderable loss

(1)   

If video games tax relief is available to the company, it may claim a

video game tax credit for an accounting period in which it has a

surrenderable loss.

5

(2)   

The company’s surrenderable loss in an accounting period is—

(a)   

the company’s available loss for the period in the separate

video game trade (see subsection (3)), or

(b)   

if less, the available qualifying expenditure for the period (see

subsections (5) and (6)).

10

(3)   

The company’s available loss for an accounting period is given by—equation: plus[char[L],times[char[R],char[U],char[L]]]

   

where—

L is the amount of the company’s loss for the period in the

separate video game trade, and

RUL is the amount of any relevant unused loss of the company

15

(see subsection (4)).

(4)   

The “relevant unused loss” of a company is so much of any available

loss of the company for the previous accounting period as has not

been—

(a)   

surrendered under section 1217CI(1), or

20

(b)   

carried forward under section 45 of CTA 2010 and set against

profits of the separate video game trade.

(5)   

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

trade is carried on, the available qualifying expenditure is the

amount that is E for that period for the purposes of section

25

1217CG(1).

(6)   

For any period of account after the first, the available qualifying

expenditure is given by—equation: plus[char[E],minus[char[S]]]

   

where—

E is the amount that is E for that period for the purposes of

30

section 1217CG(2), and

S is the total amount previously surrendered under section

1217CI(1).

(7)   

If a period of account of the separate video game trade does not

coincide with an accounting period, any necessary apportionments

35

are to be made by reference to the number of days in the periods

concerned.

1217CI  

Surrendering of loss and amount of video game tax credit

(1)   

The company may surrender the whole or part of its surrenderable

loss in an accounting period.

40

(2)   

If the company surrenders the whole or part of that loss, the amount

of the video game tax credit to which it is entitled for the accounting

period is 25% of the amount of the loss surrendered.

 
 

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

289

 

(3)   

The company’s available loss for the accounting period is reduced by

the amount surrendered.

1217CJ  

Payment in respect of video game tax credit

(1)   

If the company—

(a)   

is entitled to a video game tax credit for a period, and

5

(b)   

makes a claim,

   

the Commissioners for Her Majesty’s Revenue and Customs (“the

Commissioners”) must pay to the company the amount of the credit.

(2)   

An amount payable in respect of—

(a)   

a video game tax credit, or

10

(b)   

interest on a video game tax credit under section 826 of ICTA,

   

may be applied in discharging any liability of the company to pay

corporation tax.

   

To the extent that it is so applied the Commissioners’ liability under

subsection (1) is discharged.

15

(3)   

If the company’s company tax return for the accounting period is

enquired into by the Commissioners, no payment in respect of a

video game tax credit for that period need be made before the

Commissioners’ enquiries are completed (see paragraph 32 of

Schedule 18 to FA 1998).

20

   

In those circumstances the Commissioners may make a payment on

a provisional basis of such amount as they consider appropriate.

(4)   

No payment need be made in respect of a video game tax credit for

an accounting period before the company has paid to the

Commissioners any amount that it is required to pay for payment

25

periods ending in that accounting period—

(a)   

under PAYE regulations,

(b)   

under section 966 of ITA 2007 (visiting performers), or

(c)   

in respect of Class 1 national insurance contributions under

Part 1 of the Social Security Contributions and Benefits Act

30

1992 or Part 1 of the Social Security Contributions and

Benefits (Northern Ireland) Act 1992.

(5)   

A payment in respect of a video game tax credit is not income of the

company for any tax purpose.

Miscellaneous

35

1217CK  

No account to be taken of amount if unpaid

(1)   

In determining for the purposes of this Chapter the amount of costs

incurred on a video game at the end of a period of account, ignore

any amount that has not been paid 4 months after the end of that

period.

40

(2)   

This is without prejudice to the operation of section 1217BD (when

costs are taken to be incurred).

 
 

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

290

 

1217CL  

Artificially inflated claims for additional deduction or tax credit

(1)   

So far as a transaction is attributable to arrangements entered into

wholly or mainly for a disqualifying purpose, it is to be ignored in

determining for any period—

(a)   

any additional deduction which a company may make under

5

this Chapter, and

(b)   

any video game tax credit to be given to a company.

(2)   

Arrangements are entered into wholly or mainly for a disqualifying

purpose if their main object, or one of their main objects, is to enable

a company to obtain—

10

(a)   

an additional deduction under this Chapter to which it

would not otherwise be entitled or of a greater amount than

that to which it would otherwise be entitled, or

(b)   

a video game tax credit to which it would not otherwise be

entitled or of a greater amount than that to which it would

15

otherwise be entitled.

(3)   

“Arrangements” includes any scheme, agreement or understanding,

whether or not legally enforceable.

1217CM  

Confidentiality of information

(1)   

Section 18(1) of the Commissioners for Revenue and Customs Act

20

2005 (restriction on disclosure by Revenue and Customs officials)

does not prevent disclosure to the Secretary of State for the purposes

of the Secretary of State’s functions under any of the provisions listed

in subsection (2).

(2)   

The provisions referred to in subsection (1) are—

25

(a)   

sections 1216CB to 1216CD (certification of relevant

programmes as British),

(b)   

sections 1217CB to 1217CD (certification of video games as

British), and

(c)   

Schedule 1 to the Films Act 1985 (certification of films as

30

British).

(3)   

Information so disclosed may be disclosed to the British Film

Institute.

(4)   

The Treasury may by order amend subsection (3)—

(a)   

so as to substitute for the person or body specified in that

35

subsection a different person or body, or

(b)   

in consequence of a change in the name of the person or body

so specified.

(5)   

A person to whom information is disclosed under subsection (1) or

(3) may not otherwise disclose it except—

40

(a)   

for the purposes of the Secretary of State’s functions under

any of the provisions listed in subsection (2),

(b)   

if the disclosure is authorised by an enactment,

(c)   

in pursuance of an order of a court,

(d)   

for the purposes of a criminal investigation or legal

45

proceedings (whether civil or criminal) connected with the

 
 

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

291

 

operation of any of Parts 15 to 15B of this Act or Schedule 1 to

the Films Act 1985,

(e)   

with the consent of the Commissioners for Her Majesty’s

Revenue and Customs, or

(f)   

with the consent of each person to whom the information

5

relates.

1217CN  

Wrongful disclosure

(1)   

A person (“X”) commits an offence if—

(a)   

X discloses revenue and customs information relating to a

person (as defined in section 19(2) of the Commissioners for

10

Revenue and Customs Act 2005),

(b)   

the identity of the person to whom the information relates is

specified in the disclosure or can be deduced from it, and

(c)   

the disclosure contravenes section 1217CM(5).

(2)   

If a person (“Y”) is charged with an offence under subsection (1), it is

15

a defence for Y to prove that Y reasonably believed—

(a)   

that the disclosure was lawful, or

(b)   

that the information had already and lawfully been made

available to the public.

(3)   

A person guilty of an offence under subsection (1) is liable—

20

(a)   

on conviction on indictment, to imprisonment for a term not

exceeding two years or a fine or both, or

(b)   

on summary conviction, to imprisonment for a term not

exceeding 12 months or a fine not exceeding the statutory

maximum or both.

25

(4)   

A prosecution for an offence under subsection (1) may be brought in

England and Wales only—

(a)   

by the Director of Revenue and Customs Prosecutions, or

(b)   

with the consent of the Director of Public Prosecutions.

(5)   

A prosecution for an offence under subsection (1) may be brought in

30

Northern Ireland only—

(a)   

by the Commissioners for Her Majesty’s Revenue and

Customs, or

(b)   

with the consent of the Director of Public Prosecutions for

Northern Ireland.

35

(6)   

In the application of this section—

(a)   

in England and Wales, in relation to an offence committed

before the commencement of section 282 of the Criminal

Justice Act 2003, or

(b)   

in Northern Ireland,

40

   

the reference in subsection (3)(b) to 12 months is to be read as a

reference to 6 months.

 
 

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

292

 

Chapter 4

Video game losses

1217D   

Application of sections 1217DA and 1217DB

(1)   

Sections 1217DA and 1217DB apply to a company that is the video

games development company in relation to a video game.

5

(2)   

In those sections—

“the completion period” means the accounting period of the

company—

(a)   

in which the video game is completed, or

(b)   

if the company does not complete the video game, in

10

which it abandons video game development activities

in relation to the video game,

“loss relief” includes any means by which a loss might be used

to reduce the amount in respect of which the company, or any

other person, is chargeable to tax,

15

“pre-completion period” means an accounting period of the

company before the completion period, and

“the separate video game trade” means the company’s separate

trade in relation to the video game (see section 1217B).

1217DA  

Restriction on use of losses while video game in development

20

(1)   

This section applies if in a pre-completion period a loss is made in the

separate video game trade.

(2)   

The loss is not available for loss relief except to the extent that it may

be carried forward under section 45 of CTA 2010 to be set against

profits of the separate video game trade in a subsequent period.

25

1217DB  

Use of losses in later periods

(1)   

This section applies to the following accounting periods of the

company (“relevant later periods”)—

(a)   

the completion period, and

(b)   

any subsequent accounting period during which the separate

30

video game trade continues.

(2)   

Subsection (3) applies if a loss made in the separate video game trade

is carried forward under section 45 of CTA 2010 from a pre-

completion period to a relevant later period.

(3)   

So much (if any) of the loss as is not attributable to video games tax

35

relief (see subsection (6)) may be treated for the purposes of loss

relief as if it were a loss made in the period to which it is carried

forward.

(4)   

Subsection (5) applies if in a relevant later period a loss is made in the

separate video game trade.

40

(5)   

The amount of the loss that may be—

(a)   

deducted from total profits of the same or an earlier period

under section 37 of CTA 2010, or

(b)   

surrendered as group relief under Part 5 of that Act,

 
 

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

293

 

   

is restricted to the amount (if any) that is not attributable to video

games tax relief (see subsection (6)).

(6)   

The amount of a loss in any period that is attributable to video games

tax relief is calculated by deducting from the total amount of the loss

the amount there would have been if there had been no additional

5

deduction under Chapter 3 in that or any earlier period.

(7)   

This section does not apply to a loss to the extent that it is carried

forward or surrendered under section 1217DC.

1217DC  

Terminal losses

(1)   

This section applies if—

10

(a)   

a company (“company A”) is the video games development

company in relation to a qualifying video game,

(b)   

company A ceases to carry on its separate trade in relation to

that video game (“trade X”) (see section 1217B), and

(c)   

if company A had not ceased to carry on trade X, it could

15

have carried forward an amount under section 45 of CTA

2010 to be set against profits of trade X in a later period (“the

terminal loss”).

(2)   

If on cessation of trade X company A—

(a)   

is the video games development company in relation to

20

another qualifying video game, and

(b)   

is carrying on its separate trade in relation to that video game

(“trade Y”),

   

it may (on making a claim) make an election under subsection (3).

(3)   

The election is to have the terminal loss (or a part of it) treated as if it

25

were a loss brought forward under section 45 of CTA 2010 to be set

against the profits of trade Y in the first accounting period beginning

after the cessation and so on.

(4)   

Subsection (5) applies if on cessation of trade X—

(a)   

there is another company (“company B”) that is the video

30

games development company in relation to a qualifying

video game,

(b)   

company B is carrying on its separate trade in relation to that

video game (“trade Z”), and

(c)   

company B is in the same group as company A for the

35

purposes of Part 5 of CTA 2010 (group relief).

(5)   

Company A may surrender the terminal loss (or a part of it) to

company B.

(6)   

On the making of a claim by company B the amount surrendered is

treated as if it were a loss brought forward by company B under

40

section 45 of CTA 2010 to be set against the profits of trade Z of the

first accounting period of that company beginning after the cessation

and so on.

(7)   

The Treasury may, in relation to the surrender of a loss under

subsection (5) and the resulting claim under subsection (6), make

45

provision by regulations corresponding, subject to such adaptations

or other modifications as appear to them to be appropriate, to that

 
 

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

294

 

made by Part 8 of Schedule 18 to FA 1998 (company tax returns:

claims for group relief).

(8)   

“Qualifying video game” means a video game in relation to which

the conditions for video games tax relief are met (see 1217C(2)).

Chapter 5

5

Provisional entitlement to relief

1217E   

Introduction

(1)   

In this Chapter—

“the company” means the video games development company

in relation to a video game,

10

“the completion period” means the accounting period of the

company—

(a)   

in which the video game is completed, or

(b)   

if the company does not complete the video game, in

which it abandons video game development activities

15

in relation to it,

“interim accounting period” means any earlier accounting

period of the company during which video game

development activities are carried on in relation to the video

game,

20

“interim certificate” and “final certificate” have the meaning

given by section 1217CC,

“the separate video game trade” means the company’s separate

trade in relation to the video game (see section 1217B), and

“special video games relief” means—

25

(a)   

video games tax relief, or

(b)   

relief under section 1217DC (transfer of terminal

losses from one video game to another).

(2)   

The company’s company tax return for the completion period must

state that the video game has been completed or that the company

30

has abandoned video game development activities in relation to it

(as the case may be).

1217EA  

Certification as a British video game

(1)   

The company is not entitled to special video games relief for an

interim accounting period unless its company tax return for the

35

period is accompanied by an interim certificate.

(2)   

If an interim certificate ceases to be in force (otherwise than on being

superseded by a final certificate) or is revoked, the company—

(a)   

is not entitled to special video games relief for any period for

which its entitlement depended on the certificate, and

40

(b)   

must amend accordingly its company tax return for any such

period.

(3)   

If the video game is completed by the company—

(a)   

its company tax return for the completion period must be

accompanied by a final certificate,

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