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HMRC internal manual

Video Games Development Company Manual

Losses: introduction

S1217D-S1217DC Corporation Tax Act 2009 (CTA 2009)

The profits or losses of video game activity conducted by a Video Games Development Company (VGDC) are calculated by the rules in Part 15B CTA 2009. The video game produces profits and losses of a separate trade. VGTR may create or increase losses incurred by this trade for tax purposes.

There are restrictions for losses of a video game trade of a VGDC.

Losses attributable to a video game trade are only available to:

  • carry forward for relief against future profits of the same video game trade,
  • be used against profits of the company once the video game has been completed, and
  • available for surrender under specific Video Games Tax Relief (VGTR) rules for terminal losses.

For normal trades not eligible for VGTR or similar reliefs, losses may be set off in a number of ways including against other income or surrendering to other companies in a group. This is not possible for a video game trade within Part 15B CTA 2009 until the video game is completed.