Chapter 1: Introduction
135.New sections 1217A (1) to (6) set out the scope and basic concepts of the legislation contained within each Chapter.
136.New section 1217AA (2) provides that ‘video game’ does not include anything produced for advertising or promotional purposes or gambling.
137.New section 1217AA (3) provides that references to a video games includes the game’s soundtrack.
138.New section 1217AA (4) provides that a video game is regarded as being completed when copies of it can be made and these are made available to the general public.
139.New section 1217AB(2) provides that there can only be one video games development company in relation to a video game.
140.New section 1217AB(3) sets out the general rule that governs whether a company is a video games development company in relation to a video game. The company must be responsible for developing the game and it must be actively engaged in planning and decision making during the design, production and testing of the game; and it must directly negotiate, contract and pay for rights, goods and services.
141.New section 1217AB(4) recognises that there may be more than one company meeting the conditions of 1217AB(3) and provides that where this is the case, the company most directly engaged in the activities referred to is the video games development company in relation to the relevant game.
142.New section 1217AB(5) makes it clear that it is possible that there may be no video games development company in relation to the relevant game.
143.New sections 1217AB (6) to (8) allow for a company not be regarded as a company not meeting the description in 1217AB (3) provided it makes an election in its company tax return for an accounting period. That election has effect in relation to relevant games which begin to be produced in that or any subsequent accounting period.
144.New section 1217AC(1) provides that ‘video game development activities’ include work involved in designing, producing and testing the video game.
145.New section 1217AC (2) provides that HM Treasury may, by regulations, amend subsection (1) and provide that certain activities are or are not video game development activities.
146.New section 1217AD (1) defines what is meant by ‘core expenditure’ in relation to the video game.
147.New section 1217AD(2) provides that any expenditure incurred in designing the initial concept for the video game (e.g. setting out the business case for making a game) and on further debugging a completed video game or carrying out maintenance in connection with a video game is not regarded as core expenditure.
148.New sections 1217AE(1) to (2) provide that for the purposes of the legislation “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom. The nationality of those providing the goods and services has no bearing on whether the expenditure qualifies. The ‘used or consumed’ test does not focus on the supplier of goods and services, but instead concentrates on the recipient or customer as the means of determining UK qualifying expenditure. Any apportionment between non-UK expenditure and UK expenditure is made on a just and reasonable basis.
149.New section 1217AE (3) provides that HM Treasury may, by regulations amend subsection (1).
