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A quick handy guide to Videogame Tax Relief (VGTR)
Guest blog by Graham Suggett of Creative Tax Reliefs, 30th June 2020

What is VGTR?
VGTR was introduced in April 2014 to encourage and support video games development companies which produce video games. It is processed through the Corporation Tax system and can be claimed by companies that produce qualifying video games. VGTR is based on the Film Tax Relief scheme introduced in 2007 and subsequently extended to other sectors including TV, Animation, Theatres, Orchestras, Museums and Galleries.

How does VGTR work?
VGTR works by enhancing expenditure incurred in the development process thereby creating an additional deduction. This additional deduction will either reduce profit, or, create or extend a loss. Where the additional deduction creates or extends a loss, HMRC allows this loss to be surrendered for a payable tax credit. Therefore, by claiming VGTR, a company will either reduce their Corporation Tax liability or receive a payable tax credit.

Who qualifies?
Video Games Development Companies (VGDCs) who produce qualifying video games will qualify. As this is a Corporation Tax relief, sole traders or partnerships which are taxed under Income Tax rules do not qualify.

To qualify as the VGDC it must:
– be incorporated in the UK or have a UK permanent establishment that falls within the charge to UK corporation tax.
– be responsible for designing, producing and testing the video game.
– be actively engaged in the production, planning and decision making throughout the process.
– directly negotiate, contract and pay for rights, goods and services in relation to the video game.

How does a video game qualify?
A video game qualifies if:
– it is intended for supply to the public
– it has been certified as a British video game by the BFI
– 25% or more of total core expenditure must be European Economic Area (EEA) expenditure.

What is EEA expenditure?
EEA expenditure is expenditure incurred on goods or services from within any of the EU countries or Iceland, Liechtenstein or Norway.

What is the BFI Cultural Test?
For a video game to qualify for the tax relief, it must first be certified as culturally British. The video game achieves certification by achieving a minimum of 16 points from a possible 31 available covering the following sections:

– Cultural content (16 points available)
– Cultural contribution (4 points available)
– Cultural hubs (3 points available)
– Personnel (8 points available)

Applications for certification are made to the BFI Certification Unit. Ideally a game would achieve the 16 points needed in Sections A and B alone, which will save the time and cost of obtaining an accountant’s report.

Which expenditure qualifies for enhancement?
VGTR is only available on core expenditure that is EEA expenditure.
Core expenditure is expenditure that is incurred on:
– designing
– producing and
– testing the game

Not all expenditure is core expenditure. Expenditure that is not core expenditure is referred to as non-core expenditure.
Non-core expenditure includes expenditure on:
x original concept design
x debugging
x post release maintenance
x financing and
x marketing
NB: A limit of £1 million applies to payments to sub-contractors.

How is VGTR claimed?
VGTR is claimed through the Company Tax system which means that claims must be made in a Company Tax Return or an amendment to a Company Tax Return.
Claims must include computations in respect of all income received, as well as core and non-core expenditure.

Further guidance can be found at:
Original legislation: http://www.legislation.gov.uk/uksi/2018/28/contents/made
http://www.legislation.gov.uk/uksi/2014/1962/contents/made
HMRC manual: https://www.gov.uk/hmrc-internal-manuals/video-games-development-company
BFI: https://www.bfi.org.uk/film-industry/british-certification-tax-relief/cultural-test-video-games

Useful contacts:
HMRC’s Creative Industries Unit: creative.industries@hmrc.gsi.gov.uk
The BFI Certification Unit: certifications@bfi.org.uk
Creative Tax Reliefs: graham.suggett@creativetaxreliefs.com

Would your company benefit from SEIS?
Guest blog by Chris Taylor of Eaton Smith LLP, Huddersfield – 19th July, 2019

Eaton Smith is currently offering Game Republic members a free Tuesday morning Chat employment law clinic for Game Republic members 10am – 11am during the coronavirus pandemic. Help with any employment law issues and questions. Contact Eaton Smith for info!

As a game developer running a company, you may have heard of the Seed Enterprise Investment Scheme (“SEIS”) but you may not have looked into what it is and whether your company might benefit from investment through the SEIS. A company can receive up to £150,000 in SEIS investment in its lifetime, so it is something to be taken seriously.

SEIS enables individuals to invest in early stage businesses, the investors receiving tax breaks including income tax relief, capital gains relief and, if appropriate, loss relief on their investment. As you would imagine, there are a number of rules in place concerning SEIS and the reliefs available and tax reliefs will be withheld, or withdrawn, from your investors if your company does not follow the rules for at least 3 years after the investment is made. Whilst it is advisable to speak to an accountant to assist with the preparation for an SEIS investment and a solicitor regarding the investment paperwork, this piece is intended to help developers see if their company might be eligible for SEIS investment.

HMRC has set out qualification criteria for SEIS eligibility and, broadly, the main points (there are others) are as follows:

  • the company must carry out a qualifying trade (game development qualifies) and it can’t have changed the nature of its business from a past activity. It must carry on business with the intention of making profits
  • it must be established in the UK, been carrying on its business for no more than two years and it should have assets of less than £200,000
  • there must be fewer than 25 full-time equivalent employees
  • ideally, it should not have any subsidiaries – it can have subsidiaries but there are specific rules governing that situation
  • the company itself cannot have been a subsidiary of another company since the date of incorporation
  • there must be an element of risk to the capital invested by the investor

The funds raised through the investment and the resulting shares issued in your company must be used for game development (in your case), preparing to carry out such activities or research and development that’s expected to lead to a game’s development.

You can ask HMRC for “advance assurance” that an investment would qualify before you apply, submitting various documents as part of the application. You can use the assurance to show your potential investors that a proposed investment may qualify for a scheme (but it can’t be used to gain assurance that your investor meets conditions relevant to investors).

After you’ve issued shares to an investor or investors, you must submit a formal statement of compliance to HMRC after you’ve carried out your qualifying business activity for 4 months or have spent at least 70% of the investment raised by the relevant share issue.

It is good business practice to carry on business with the seeking of investment in mind so that you are investment-ready when the time is right. This means that a clear and well-structured business plan along with financial forecasts will allow investors doing their due diligence to see the potential of your company. You’d need such information for HMRC’s advance assurance in any event. Running your business from the beginning in an efficient and well thought out way will give investors confidence in you and your business and will make taking shares in your company an attractive option. Make sure you have efficient records and paperwork so that the due diligence process is smooth and engage sub-contractor agreements and confidentiality agreements as appropriate, to show investors that your business has been properly acquiring and looking after its IP (as that is where its value lies).

There’s more info and contacts for Eaton Smith on their website.


GDPR for Games Companies
Guest blog by Chris Taylor of Eaton Smith LLP, Huddersfield – 23rd April, 2018

GDPR. Don’t be fooled by the short-sounding name. From 25 May 2018, the General Data Protection Regulation brings the biggest shake up of data protection rules for 20 years and it impacts the games industry as much as any other sector.

The personal data of staff, suppliers, freelancers, newsletter subscribers, players etc is all in scope and it goes beyond names, addresses, email addresses and telephone numbers. It extends to online identifiers (e.g. usernames, IP addresses), location information and other information connected with an identifiable person. You still must keep personal data secure and guard against unauthorised access and data loss and only completely necessary information is to be gathered. But it is the surrounding framework of data responsibility that has been affected by GDPR.

In practical terms, games businesses will need to consider:

  1. “Documentation” of data processing activities – if you have 250+ employees, you must “document” your data processing activities. Those with under 250 employees must document processing activities that are, amongst other things, “not occasional” or that could result in a risk to individuals’ “rights and freedoms”. This means that developers of (amongst other things) online multiplayer games will need to document their related processing activities. The ICO website has a template to assist.
  2. Whether a formal Data Protection Officer (DPO) is needed – if your core activities lead to data processing through “regular and systematic monitoring of people on a large scale”, you’ll need to appoint a DPO. The operations behind online multiplayer games will most likely fall into this category. The DPO plays a central part in all data protection issues and so you should appoint carefully.
  3. Privacy by Design – in any project and through its lifecycle, data privacy and protection should be at its heart.
  4. Subject Access Requests – if someone requests access to their data, you’ll need to know what data you hold, where and how it’s held. Whilst knowing all that will allow you to understand how best to protect data held, you’ll also know where and how far to search upon a request. Can you locate all a person’s data and provide it to them within 30 days?
  5. Where is personal data held? If any personal data is to be held outside the EU (e.g. your games’ servers), you need to be certain it is held in a country with an “adequate level of protection” or, if that’s not the case, that appropriate contractual safeguards are in place. US companies registered under the EU/US Privacy Shield framework are deemed to provide adequate protection. Check that your data storage providers are GDPR compliant.
  6. Policies – make sure you have clear data processing policies so that all who interact with your games and business know what you do with their data. Privacy notices are used for this and you should set out here the “lawful basis” under which you process personal data.

There are many more issues to consider, for example, consent notices (if necessary), children’s data, data protection impact assessments and breach notification, all these needing to be handled correctly to avoid being hit with potentially ruinous fines. Keep written records of any data-related decisions you take so you can justify whatever actions you took at a later date.

There’s more info and contacts for Eaton Smith on their website.


Export Strategy Workshop for the Games Sector 20th July 2017
Department for International Trade
By Tom Duggan

DIT EXPORTING_is_GREAT_Flag_Blue_CMYK_BNI GRToday as part of Game Republic, I went to a Department for International Trade (DIT) event about exporting games. At the event were numerous games businesses there all interested in the export market.

The DIT is a UK government department responsible for international trade with representatives and embassies in most parts of the world. At the event they explained the export market and the benefits of exporting.

Most importantly they went into detail about the Exporting for Growth program (EFG)
The speaker Gill Greaves mentioned that support is available for small and medium-sized enterprises (SME’s) in Leeds City Region, Sheffield City Region and the Humber region.
She also went into detail about grants, saying that they were available for new exporters (up to £2000) and companies already exporting (up to £5,000), match funded by the companies.

Grants supporting businesses internationally could be used for:
– Trade fairs/exhibitions- entrance fees or stands
– Travel to target country and in-country accommodation
– Translation and internationalization of marketing materials, websites, social media etc.

Finally Gill Greaves said that grants must ideally be claimed within six months of offer, and a minimum one job to be created per grant/project.

To get access to the funding you need to speak to your local DIT trade adviser. If you don’t have a trade adviser then please contact Gill. Gill.Greaves@mobile.trade.gov.uk


Kickstarter Crowdfunding Tips

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At the recent GamesIndustry.biz Investment Summit on 22nd September 2016 at EGX Birmingham, Kickstarter provided some slides for a very handy state-of-play of the platform’s games activity, as well as a collection of extremely useful bits of info for games developers looking at running their own crowdfunding campaign.

Firstly, there have been a total of 8,600 successful games projects on Kickstarter from 2009 – 2016, with a total pledged of $534 million. In the UK, £31,238,036 has been raised for games projects since 2012, with 2,457 games projects launched enjoying a 42% success rate.

Games has the most engaged funding community on Kickstarter with 2.2 million people worldwide that have now backed a games project, with 1.3 million backing more than one project.

For developers planning their campaigns, the $35 reward tier is by far the most popular, followed by $20 and $15 – so you should concentrate on making sure those tiers are attractive to backers. The average pledge to games is $54, which is high considering you can back projects for as little as $1 – again, something to consider. For more information on Kickstarter games, hit the link.

Jamie Sefton
Game Republic
26th September 2016


Game Republic Makes Real and Virtual Connects at GDC 2016

Over 27,000 visitors went to the 20th Game Developers Conference 2016 (GDC) in San Francisco, USA last week from 14th – 18th March. It was the biggest GDC event yet with more exhibitors, more attendees, more tech and more games to see and play than ever before.

Numbers were boosted by Game Republic’s contribution – leading a UK Trade & Investment “Northern Powerhouse” mission to the show and appearing on the superb Ukie stand at the GDC Expo (pictured above).

UKTI and GR took more than 40 companies from across Yorkshire and the North of England (as well as a few smuggled in from the West Midlands) to the event to meet with major publishers and platform-holders, including Microsoft, Sony and Google. The meetings could well result in new opportunities for the companies that joined us to produce new titles and gain greater global interest in the fantastic games we produce in the North.

Fest Of Fun

GDC is the must-attend event for games companies with global ambition. No wonder really when the programme includes world-class technical bootcamps, networking drinks, superb industry talks, star panels, networking drinks, incredible games showcases (such as the IGF – Independent Games Festival), award shows, mindblowing live demos, pop-up shops and dozens of industry networking parties – did I mention those? It’s a festival of games.

Alongside GDC is Game Connection, a separate speed-dating business event that took place over three days of the week. Not in any old meeting room though – this year the networking took place at the San Francisco Giants’ baseball stadium, AT&T Park. The space was a popular spot for developers to have more than 20 meetings a day (using the online meeting schedule system) to hook up with platform-holders, publishers and other developers.

Back to GDC, where there were some great talks, including discussions on how to encourage more diversity in the games industry – ensuring more women get the support and opportunities in games. Other presentations included the funding of games and the different models to get support, the increasing visibility of games (with so many releases every week) plus the growing importance (and profits) of eSports.

Virtual Reality Check

As well as the getting insider and global insights on securing real opportunities for the developers, a huge focus for GDC this year was Virtual Reality (VR). I have seen VR at GDC over the years, but this year there has been a major gearshift, with three major platforms to be launched over next few months – the Oculus Rift, HTC/Valve Vive and PlayStation VR – plus a dedicated VR track for attendees.

IMG_8177How rapidly mainstream VR is going to get adopted across markets remains to be seen, but there looked to be a good appetite for it from games fans and the industry. Our companies were able to see many, many VR demos at GDC, from virtual rollercoasters to flying experiences complete with full physical rig and wind machine (see photo – left).

For me Epic Games’ Bullet Train on the Oculus VR was very impressive (nicely demonstrating the power of Unreal Engine 4 in VR), and the Vive continues to amaze with its full room virtual experience.

However, it was Sony’s PlayStation VR announcement that grabbed most of the headlines, with an announcement that the PlayStation 4 headset add-on would be £349 and launched in October, along with more than 200 games to be released before the end of the year. Pre-orders sold out within 45 minutes on Amazon (and I bagged one of them).

One of the most impressive design features of the Sony headset at GDC was the comfort with easy functionality to move the headset backwards and forwards meaning it can fit over glasses and avoids the tight straps that have often been an issue with the other VR head sets. I was lucky to get a chance to play a few multiplayer games, including one where I was a virtual Ghostbuster. The game involved shining a torch in a virtual playroom to find ghosts and hitting the PlayStation controller pad to suck up the spirits, while the other players helped to locate the remaining ghouls on the main TV. Not particularly complex but looks really nice in VR.

Other impressive demos in VR included Rebellion’s Battlezone (based on the old coin-op) and a new virtual version of Mizuguchi’s mesmerizing game Rez Infinite.

North at its Heights

Stepping away from VR was a challenge, but just two of the new games worth watching out for in reality were Dreams by Media Molecule, an incredible game/creative tool that allows players to make environments, characters and animations, play with them and share online and Astroneer by System Era, a beautiful planet exploration game with you as an astronaut armed with the ability to instantly terraform the landscape around them.

GDC 2016 showed the global games industry in good health, forging ahead with new tech innovations, and creating incredible titles on mobile, console, PC and web. It was great and inspiring that our Yorkshire and Northern companies such as Cardboard Sword, Red Kite Games, Team17, Double Eleven, Sumo Digital, Team Pesky, Draw & Code and Revolution Software are right there at the cutting edge of development, leading the world, innovating and developing amazing games.

Jamie Sefton
Managing Director
Game Republic
23rd March 2016

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