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“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,

“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 1216H).

1216AA

Restriction on use of losses while video game in production

(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.

1216AB

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

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 game tax

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.

(5)	The amount of the loss that may be—

(a)	set against other 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,

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

tax relief (see subsection (6)).

(6)	The amount of a loss in any period that is attributable to video game

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

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 1216AE.

1216AC

Terminal losses

(1)	This section applies if—

(a)	a company (“company A”) is the video game production

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 1216H), and

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Finance (N, continued

(c)	if company A had not ceased to carry on trade X, it could 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 game production company in relation to 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 part of it) treated as if it

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

against the profits of trade Y of 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

game production 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

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

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

first accounting period 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

provision by regulations corresponding, subject to such adaptations or

other modifications as appear to them to be appropriate, to that 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 game tax relief are met (see section 1216O(2)).

Chapter 5

Provisional Entitlement to Relief

1216AD

Introduction

(1)	In this Chapter—

“the company” means the video game production company in relation to

a video game,

“the completion period” means the accounting period of the company—

(a)	in which the video game is completed, or

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Finance (N, continued

(b)	if the company does not complete the video game, in which it

abandons video game-making activities in relation to it,

“interim accounting period” means any earlier accounting period of the

company during which video game-making activities are carried on in

relation to the video game,

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

relation to the video game (see section 1216H), and

“special video game relief” means—

(a)	video game tax relief, or

(b)	relief under section 1216AE (transfer of terminal losses from one

qualifying 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 has

abandoned video game-making activities in relation to it (as the case

may be).

1216AE

The UK expenditure condition

(1)	The company is not entitled to special video game relief for an interim

accounting period unless—

(a)	its company tax return for the period states the amount of

planned core expenditure on the video game that is UK

expenditure, and

(b)	that amount is such as to indicate that the condition in section

1216R (the UK expenditure condition) will be met on

completion of the video game.

If those requirements are met, the company is provisionally treated in

relation to that period as if that condition was met.

(2)	If such a statement is made but it subsequently appears that the

condition will not be met on completion of the video game, the

company—

(a)	is not entitled to special video game relief for any period for

which its entitlement depended on such a ststement, and

(b)	must amend accordingly its company tax return for any such

period.

(3)	When the video game is completed or the company abandons video

game-making activities in relation to it (as the case may be), the

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

accompanied by a final statement of the amount of the core

expenditure on the video game that is UK expenditure.

(4)	If that statement shows that the condition in section 1216R is not met,

the company—

(a)	is not entitled to special video game relief for any period, and

(b)	must amend accordingly its company tax return for any period

for which such relief was claimed.

1216AF

Video game tax relief on basis that video game is limited-budget

                video game

(1)	The company is not entitled to video game tax relief for an interim

accounting period on the basis that the video game is a limited-budget

video game unless—

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Finance (N, continued

(a)	its company tax return for the period states the amount of

planned core expenditure on the video game, and

(b)	that amount is such as to indicate that the condition in section

1216E(2) (definition of “limited-budget video game”) will be

met on completion of the video game.

In that case, the video game is provisionally treated in relation to that

period as if that condition was met.

(2)	If it subsequently appears that the condition will not be met on

completion of the video game, the company—

(a)	is not entitled to video game tax relief for any period on the

basis that the video game is a limited-budget video game, and

(b)	must amend accordingly its company tax return for any such

period for which such relief has been claimed on that basis.

(3)	When the video game is completed or the company abandons video

game-making activities in relation to it (as the case may be), the

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

accompanied by a final statement of the core expenditure on the video

game.

(4)	Subsection (5) applies if that statement shows—

(a)	that the video game is not a limited-budget video game, or (as

the case may be)

(b)	that, having regard to the proportion of work on the video

game that was completed, the video game would not have

been a limited-budget video game had it been completed.

(5)	The company—

(a)	is not entitled to video game tax relief for any period on the

basis that the video game is a limited-budget video game, and

(b)	must amend accordingly its company tax return for any period

for which such relief was claimed on that basis.

1216AG

Time limit for amendments and assessments

Any amendment or assessment necessary to give effect to the

provisions of this Chapter may be made despite any limitation on the

time within which an amendment or assessment may normally be

made.”.

2	In Part 9D of Schedule 18 to the Finance Act 1998, references to film also

include references to video game.

3	In section 825(1)(f) of TA 1988, after “film tax credit”, insert “or video game

tax credit”.’.

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Revised 2 November 2010