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HMRC internal manual

Video Games Development Company Manual

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HM Revenue & Customs
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Losses: Video Game Development Companies - losses - transfer of trade

S940B-S953 Corporation Tax Act 2010 (CTA 2010)

The rules on transfers of trades in CTA 2010 do not apply to transfers of video game trades between companies in common ownership.

The legislation in CTA 2010 prevents the trade from being treated as permanently discontinued in the hands of the first company and a new trade starting in the hands of the second company. Instead, the second company is treated as succeeding to the trade of the first company.

The video game tax regime permits only one company to be the Video Games Development Company (VGDC) in relation to a video game and treats the activities of that company in relation to each video game as a separate trade.

As a result, once a video game trade has commenced it is impossible for a second company to succeed to the trade in relation to the video game. The rules in CTA 2010 do not apply.

Where a VGDC carries on a trade in relation to a qualifying video game and that trade ceases, it may be able to pass any losses on to:

  • another trade in relation to a qualifying video game that it is carrying on at the time of the cessation, or
  • to another trade in relation to a qualifying video game that another group company is carrying on at the time of the cessation.

See VGDC30040 for details.