Corporation Tax Act 2009

[F1 CHAPTER 4 U.K. Video game losses

Textual Amendments

F1 Pt. 15B inserted (17.7.2013 for specified purposes and 1.4.2014 in so far as not already in force) by Finance Act 2013 (c. 29), Sch. 17 paras. 1, 2; S.I. 2014/1962, art. 2(1)(2)

1217D Application of sections 1217DA and 1217DB U.K.

(1) Sections 1217DA and 1217DB apply to a company that is the video games development company in relation to a video game.

(2) In those sections—

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

  (a)

  in which the video game is completed, or

  (b)

  if the company does not complete the video game, in which it abandons video game development activities in relation to the video game,

• “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 1217B).

1217DA Restriction on use of losses while video game in development U.K.

(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 [F2 or 45B] of CTA 2010 to be [F3 deducted from] profits of the separate video game trade in a subsequent period.

[F4 (3) If the loss is carried forward under section 45 or 45B of CTA 2010 and deducted from profits of the separate video game trade in a subsequent period, the deduction is to be ignored for the purposes of section 269ZB of CTA 2010 (restriction on deductions from trading profits).]

Textual Amendments

F2 Words in s. 1217DA(2) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 36(2)(a)

F3 Words in s. 1217DA(2) substituted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 36(2)(b)

F4 S. 1217DA(3) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 36(3)

Modifications etc. (not altering text)

C1 S. 1217DA modified by 2010 c. 4, s. 357TF (as inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), s. 1)

1217DB Use of losses in later periods U.K.

(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 [F5 or 45B] 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 games tax relief (see subsection (6)) may be treated for the purposes of [F6 section 37 and Part 5 of CTA 2010] as if it were a loss made in the period to which it is carried forward.

(4) [F7 Subsections (5) and (5A) apply] 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) deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or

[F8 (ab) carried forward under section 45A of that Act to be deducted from the total profits of a later period,]

(b) surrendered as group relief under Part 5 of that Act,

is restricted to the amount (if any) that is not attributable to video games tax relief (see subsection (6)).

[F9 (5A) A deduction under section 45 or 45B of CTA 2010 which is made in respect of so much of the loss as is attributable to video games tax relief is to be ignored for the purposes of section 269ZB of that Act (restriction on deductions from trading profits).]

(6) The amount of a loss in any period that is attributable to video games 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 1217DC.

Textual Amendments

F5 Words in s. 1217DB(2) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 37(2)

F6 Words in s. 1217DB(3) substituted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 37(3)

F7 Words in s. 1217DB(4) substituted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 37(4)

F8 S. 1217DB(5)(ab) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 37(5)

F9 S. 1217DB(5A) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 37(6)

Modifications etc. (not altering text)

C2 S. 1217DB modified by 2010 c. 4, s. 357TG (as inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), s. 1)

1217DC Terminal losses U.K.

(1) This section applies if—

(a) a company (“company A”) is the video games development 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 1217B), and

(c) if company A had not ceased to carry on trade X, it could have carried forward an amount under section 45[F10 , 45A or 45B] of CTA 2010 to be set against profits of F11 ... a later period (“the terminal loss”).

(2) If on cessation of trade X company A—

(a) is the video games development 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 a part of it) treated[F12 —

(a) in a case where the loss could have been carried forward under section 45 of CTA 2010 had trade X not ceased, as if it were a loss carried forward under that section to be set against the profits of trade Y of the first accounting period beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward under section 45A or 45B of CTA 2010 had trade X not ceased, as if it were a loss made in trade Y which has been carried forward under section 45B of that Act to the first accounting period beginning after the cessation.]

(4) Subsection (5) applies if on cessation of trade X—

(a) there is another company (“company B”) that is the video games development 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[F13 —

(a) in a case where the amount could have been carried forward under section 45 of CTA 2010 had trade X not ceased, as if it were a loss carried forward under that section to be set against the profits of trade Z of the first accounting period beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward under section 45A or 45B of CTA 2010 had trade X not ceased, as if it were a loss made in trade Z which has been carried forward under section 45B of that Act to the first accounting period beginning after the cessation.]

(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).

[F14 (7A) A deduction under section 45 or 45B of CTA 2010 which is made in reliance on this section is to be ignored for the purposes of section 269ZB of that Act (restriction on deductions from trading profits).]

(8) “Qualifying video game” means a video game in relation to which the conditions for video games tax relief are met (see 1217C(2)).]

Textual Amendments

F10 Words in s. 1217DC(1)(c) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 38(2)(a)

F11 Words in s. 1217DC(1)(c) omitted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 38(2)(b)

F12 Words in s. 1217DC(3) substituted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 38(3)

F13 Words in s. 1217DC(6) substituted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 38(4)

F14 S. 1217DC(7A) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 38(5)

Modifications etc. (not altering text)

C3 S. 1217DC modified by 2010 c. 4, s. 357TH (as inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), s. 1)