|
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1217AF | “Company tax return” |
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| In this Part “company tax return” has the same meaning as in |
| |
Schedule 18 to FA 1998 (see paragraph 3(1)). |
| |
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Taxation of activities of video games development company |
| 5 |
Separate video game trade |
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1217B | Activities of video games development company treated as a separate |
| |
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(1) | This Chapter applies for corporation tax purposes to a company that |
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is the video games development company in relation to a video |
| 10 |
| |
(2) | The company’s activities in relation to the video game are treated as |
| |
a trade separate from any other activities of the company (including |
| |
any activities in relation to any other video game). |
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(3) | In this Chapter the separate trade is called “the separate video game |
| 15 |
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(4) | The company is treated as beginning to carry on the separate video |
| |
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(a) | when the design of the video game begins, or |
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(b) | if earlier, when any income from the video game is received |
| 20 |
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1217BA | Calculation of profits or losses of separate video game trade |
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(1) | This section applies for the purpose of calculating the profits or |
| |
losses of the separate video game trade. |
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(2) | For the first period of account the following are brought into |
| 25 |
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(a) | as a debit, the costs of the video game incurred (and |
| |
represented in work done) to date, and |
| |
(b) | as a credit, the proportion of the estimated total income from |
| |
the video game treated as earned at the end of that period. |
| 30 |
(3) | For subsequent periods of account the following are brought into |
| |
| |
(a) | as a debit, the difference between the amount of the costs of |
| |
the video game incurred (and represented in work done) to |
| |
date and the corresponding amount for the previous period, |
| 35 |
| |
(b) | as a credit, the difference between the proportion of the |
| |
estimated total income from the video game treated as earned |
| |
at the end of that period and the corresponding amount for |
| |
| 40 |
|
| |
|
| |
|
(4) | The proportion of the estimated total income treated as earned at the |
| |
end of a period of account is given by—![equation: cross[over[char[C],char[T]],char[I]]](missing.gif) |
| |
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C is the total to date of costs incurred (and represented in work |
| |
| 5 |
T is the estimated total cost of the video game, and |
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I is the estimated total income from the video game. |
| |
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1217BB | Income from the video game |
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(1) | References in this Chapter to income from the video game are to any |
| 10 |
receipts by the company in connection with the production or |
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exploitation of the video game. |
| |
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(a) | receipts from the sale of the video game or rights in it, |
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(b) | royalties or other payments for use of the video game or |
| 15 |
aspects of it (for example, characters or music), |
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(c) | payments for rights to produce games or other merchandise, |
| |
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(d) | receipts by the company by way of a profit share agreement. |
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(3) | Receipts that (apart from this subsection) would be regarded as of a |
| 20 |
capital nature are treated as being of a revenue nature. |
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1217BC | Costs of the video game |
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(1) | References in this Chapter to the costs of the video game are to |
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expenditure incurred by the company on— |
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(a) | video game development activities in connection with the |
| 25 |
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(b) | activities with a view to exploiting the video game. |
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(2) | This is subject to any provision of the Corporation Tax Acts |
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prohibiting the making of a deduction, or restricting the extent to |
| |
which a deduction is allowed, in calculating the profits of a trade. |
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(3) | Expenditure that (apart from this subsection) would be regarded as |
| |
of a capital nature by reason only of being incurred on the creation of |
| |
an asset (the video game) is treated as being of a revenue nature. |
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1217BD | When costs are taken to be incurred |
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(1) | For the purposes of this Chapter costs are incurred when they are |
| 35 |
represented in the state of completion of the work in progress. |
| |
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(a) | payments in advance for work to be done are ignored until |
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the work has been carried out, and |
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(b) | deferred payments are recognised to the extent that the work |
| 40 |
is represented in the state of completion. |
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|
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|
| |
|
(3) | The costs incurred on the video game are taken to include an amount |
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that has not been paid only if it is the subject of an unconditional |
| |
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(4) | If an obligation is linked to income being earned from the video |
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game, no amount is to be brought into account in respect of the costs |
| 5 |
of the obligation unless an appropriate amount of income is or has |
| |
been brought into account. |
| |
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| Estimates for the purposes of this Chapter must be made as at the |
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balance sheet date for each period of account, on a just and |
| 10 |
reasonable basis taking into consideration all relevant circumstances. |
| |
| |
| |
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1217C | Availability and overview of video games tax relief |
| 15 |
(1) | This Chapter applies for corporation tax purposes to a company that |
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is the video games development company in relation to a video |
| |
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(2) | Relief under this Chapter (“video games tax relief”) is available to the |
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company if the conditions specified in the following sections are met |
| 20 |
in relation to the video game— |
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(a) | section 1217CA (intended for supply), |
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(b) | section 1217CB (British video game), and |
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(c) | section 1217CE (UK expenditure). |
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(3) | Video games tax relief is given by way of— |
| 25 |
(a) | additional deductions (see sections 1217CF and 1217CG), and |
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(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 |
| |
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(a) | the company is entitled to an R&D expenditure credit under |
| 30 |
Chapter 6A of Part 3 in respect of the expenditure, or |
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(b) | the company has obtained relief under Part 13 (additional |
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relief for expenditure on research and development) in |
| |
respect of the expenditure. |
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(5) | Sections 1217CK to 1217CN contain provision about unpaid costs, |
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artificially inflated claims and confidentiality of information. |
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(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 |
| |
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(7) | See Schedule 18 to FA 1998 (in particular, Part 9D) for information |
| 40 |
about the procedure for making claims for video games tax relief. |
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|
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|
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|
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1217CA | Intended for supply |
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(1) | The video game must be intended for supply to the general public. |
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(2) | Whether this condition is met is determined when video game |
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production activities begin, so that— |
| 5 |
(a) | where a video game is originally intended for supply, this |
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condition continues to be met even if that ceases to be the |
| |
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(b) | where a video game is not originally intended for supply, this |
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condition is not met even if that becomes the intention. |
| 10 |
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1217CB | British video game |
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(1) | The video game must be certified by the Secretary of State as a British |
| |
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(2) | The Secretary of State, with the approval of the Treasury, may by |
| 15 |
regulations specify conditions which must be met by a video game |
| |
before it may be certified as a British video game. |
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| These conditions are known as the “cultural test”. |
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(3) | Regulations under subsection (2) may— |
| |
(a) | specify different conditions in relation to different |
| 20 |
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 |
| 25 |
game that meets specified conditions. |
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| “Specified” means specified in the regulations. |
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(4) | Regulations under subsection (2) are to be made by statutory |
| |
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(5) | A statutory instrument containing regulations under subsection (2) |
| 30 |
is subject to annulment in pursuance of a resolution of the House of |
| |
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(6) | Sections 1217CC and 1217CD contain further provision about |
| |
certification of video games as British video games, including |
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provision about applications for, and withdrawal of, certification. |
| 35 |
1217CC | Applications for certification |
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(1) | An application for certification of a video game as a British video |
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game is to be made to the Secretary of State by the video games |
| |
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(2) | The application may be for an interim or final certificate. |
| 40 |
(3) | An interim certificate is a certificate that— |
| |
(a) | is granted before the video game is completed, and |
| |
|
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|
| |
|
(b) | states that the video game, if completed in accordance with |
| |
the proposals set out in the application, will be a British video |
| |
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(4) | A final certificate is a certificate that— |
| |
(a) | is granted after the video game is completed, and |
| 5 |
(b) | states that the video game is a British video game. |
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(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. |
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(6) | The Secretary of State may require information provided for the |
| 10 |
purposes of the application to be accompanied by a statutory |
| |
declaration, made by the person providing it, as to the truth of the |
| |
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(7) | The Secretary of State may by regulations make provision |
| |
supplementing this section, including— |
| 15 |
(a) | provision about the form of applications, |
| |
(b) | provision about the particulars and evidence necessary for |
| |
satisfying the Secretary of State that a video game meets the |
| |
| |
(c) | provision that any statutory declaration which is required by |
| 20 |
subsection (6) to be made by any person may be made on the |
| |
person’s behalf by such person as is specified in the |
| |
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(8) | Regulations under subsection (7) are to be made by statutory |
| |
| 25 |
(9) | A statutory instrument containing regulations under subsection (7) |
| |
is subject to annulment in pursuance of a resolution of the House of |
| |
| |
1217CD | Certification and withdrawal of certification |
| |
(1) | If the Secretary of State is satisfied that the requirements are met for |
| 30 |
interim or final certification of a video game as a British video game, |
| |
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— |
| 35 |
(a) | may be given subject to conditions, and (unless the Secretary |
| |
of State directs otherwise) is of no effect if the conditions are |
| |
| |
(b) | may be expressed to expire after a specified period, and |
| |
(unless the Secretary of State directs otherwise) ceases to have |
| 40 |
effect at the end of that period. |
| |
(4) | An interim certificate ceases to have effect when a final certificate is |
| |
| |
(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 |
| 45 |
may revoke its certification. |
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|
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|
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|
(6) | Unless the Secretary of State directs otherwise, a certificate that is |
| |
revoked is treated as never having had effect. |
| |
| |
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(1) | At least 25% of the core expenditure on the video game incurred by |
| 5 |
the company must be UK expenditure. |
| |
(2) | The Treasury may by regulations amend the percentage specified in |
| |
| |
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1217CF | Additional deduction for qualifying expenditure |
| 10 |
(1) | If video games tax relief is available to the company, it may (on |
| |
making a claim) make an additional deduction in respect of |
| |
qualifying expenditure on the video game. |
| |
(2) | The deduction is made in calculating the profit or loss of the separate |
| |
| 15 |
(3) | In this Chapter “qualifying expenditure” means core expenditure on |
| |
the video game that falls to be taken into account under Chapter 2 in |
| |
calculating the profit or loss of the separate video game trade for tax |
| |
| |
(4) | The Treasury may by regulations— |
| 20 |
(a) | amend subsection (3), and |
| |
(b) | provide that expenditure of a specified description is or is not |
| |
to be regarded as qualifying expenditure. |
| |
1217CG | Amount of additional deduction |
| |
(1) | For the first period of account during which the separate video game |
| 25 |
trade is carried on, the amount of the additional deduction is—![equation: char[E]](missing.gif) |
| |
| |
(a) | so much of the qualifying expenditure as is UK expenditure, |
| |
| |
(b) | if less, 80% of the total amount of qualifying expenditure. |
| 30 |
(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]]]](missing.gif) |
| |
| |
| |
(a) | so much of the qualifying expenditure incurred to |
| 35 |
date as is UK expenditure, or |
| |
(b) | if less, 80% of the total amount of qualifying |
| |
expenditure incurred to date, and |
| |
P is the total amount of the additional deductions given for |
| |
| 40 |
|
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|
| |
|
(3) | The Treasury may by regulations amend this section. |
| |
| |
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 |
| 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 |
| 10 |
subsections (5) and (6)). |
| |
(3) | The company’s available loss for an accounting period is given by—![equation: plus[char[L],times[char[R],char[U],char[L]]]](missing.gif) |
| |
| |
L is the amount of the company’s loss for the period in the |
| |
separate video game trade, and |
| 15 |
RUL is the amount of any relevant unused loss of the company |
| |
| |
(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 |
| |
| 20 |
(a) | surrendered under section 1217CI(1), or |
| |
(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 |
| 25 |
amount that is E for that period for the purposes of section |
| |
| |
(6) | For any period of account after the first, the available qualifying |
| |
expenditure is given by—![equation: plus[char[E],minus[char[S]]]](missing.gif) |
| |
| 30 |
E is the amount that is E for that period for the purposes of |
| |
| |
S is the total amount previously surrendered under section |
| |
| |
(7) | If a period of account of the separate video game trade does not |
| 35 |
coincide with an accounting period, any necessary apportionments |
| |
are to be made by reference to the number of days in the periods |
| |
| |
1217CI | Surrendering of loss and amount of video game tax credit |
| |
(1) | The company may surrender the whole or part of its surrenderable |
| 40 |
loss in an accounting period. |
| |
|
| |
|