Finance Bill

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—

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—

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,
45