On 11 December 2012, HM Revenue & Customs (“HMRC”) and HM Treasury published draft legislation for new tax reliefs for high-end television and animation programmes, and video game development. It is intended that these reliefs will be introduced in Finance Act 2013, and they will be available for certain television and video game production companies that produce sufficiently “British” programmes and video games.
As with many tax reliefs, the detailed provisions are complex (and differ slightly as between video games and television programmes) but the basic conditions are:
- “video game” is not defined (so is expected to take its ordinary meaning), but it specifically does not include:
- anything produced for advertising or promotional purposes (though some minor in-game product placement may be acceptable); or
- anything produced for gambling purposes.
- must be a drama, documentary or animation;
- must not be within an excluded category of programme (eg, advertising, news/current affairs, quiz or panel show etc.); and
- in the case of programmes which are not animations:
- must be commissioned to fill a time slot of over 30 minutes; and
- average “core expenditure” on the programme must be at least £1 million per hour.
In each case, the video game or television programme must be intended for broadcast or supply to the general public, must be “culturally British” (and certified as such), and at least 25 per cent of the core expenditure relating to the video game or programme must be UK expenditure. The “British” test is interesting, not least because it really refers to Europe. HMRC has published draft Regulations setting out the various conditions (essentially, the test is a points system, with relief available if the video game or programme achieves sufficient points). The tests are slightly different for programmes, animations and video games – but a selection of the tests for video games will give a flavour of the requirements:
- the percentage of the video game set in the UK (or EEA);
- the number of UK (or EEA) characters in the game;
- whether the video game story is British (or relates to an EEA state);
- percentage of original dialogue recorded in English (or a “recognised regional or minority language”);
- the video game’s level of contribution to British culture;
- at least 50 per cent of certain types of work being carried out in the UK; and
- whether certain key personnel (project leader, scriptwriter, lead programmer, 50 per cent of the development team etc) are citizens of, or ordinarily resident in, Britain or an EEA state.
The new reliefs are to be welcomed – but does this mean that Lara Croft's future adventures will now be confined to these shores for tax reasons?