Chapter VGDC30030
| Published date | 12 April 2016 |
| Record Number | VGDC30030 |
| Court | HM Revenue & Customs |
The rules in Part 15B CTA 2009 modify the normal rules for relieving corporate trading losses. The losses incurred by a video game trade of a Video Games Development Company (VGDC) are restricted to being used against future profits of the same trade prior to completion of the video game.
Losses of the completion or later periodThe restriction to the use of losses applies until the accounting period in which the video game is completed.
Losses are then treated differently depending on whether they are:
- losses not attributable to Video Games Tax Relief (VGTR), or
- losses attributable to VGTR.
This divides the losses into two distinct elements.
Losses brought forward are treated as losses of the current periodWhere losses have been brought forward into the completion period, or any later period, they are treated as having been incurred in that current period.
They also need to be separated into the two elements of losses which are attributable and non-attributable to VGTR.
Losses not attributable to VGTR‘Losses not attributable to VGTR’ includes all the expenditure of the video game trade not including the enhancement for VGTR. This means enhanceable core expenditure not including the enhancement and non-enhanceable expenditure.
The losses not attributable to VGTR are calculated by removing the element of losses attributable to VGTR.
This element of the loss in the completion, or later, period can be:
- offset against total taxable profits of the VGDC in the current or previous period, or
- surrendered to other companies in the group.
Losses attributable to VGTR cannot be relieved in this way.
Losses brought forward that are attributable to VGTR‘Losses attributable to VGTR’ are the losses that have arisen from the enhancement element on top of the enhanceable expenditure only.
This is calculated by calculating what the losses for the period would be in the absence of VGTR. Where there would be a profit, the loss is nil.
Losses attributable to VGTR may only be used against future profits of the same trade.
For brought forward losses, this is calculated by...
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