Cultural test for video game developers

16 September 2014

OMG, it’s like dem suits is down wiv the kidz ‘n’ wannado stuff to, like, big up der creativitiness.

On the basis that I’ve already offended most of the prospective readers of this article, I’ll stop the spoof street-talk, albeit from who-knows-how-many years ago, in the hope that a few will continue reading. In short, the British Government has managed to manoeuvre through the EU its proposals for tax-relief to be given to, that most modern of creative industries, video games developers.

To sit alongside reliefs for research & development generally and the creative industries of film, animation and high-end television, we now have reliefs for video games development companies (VGDCs) that are very similar to those available to their slightly more conventional film and TV producing cousins. All of these creative endeavours must jump through a British cultural hoop to be able to claim the tax relief.

The British cultural test is overseen by the British Film Institute and for VGDCs it’s necessary for the company to be registered at Companies House and within the charge to UK corporation tax. There are then a number of measures covering the headings of:

  • Cultural content,
  • Cultural contribution,
  • Cultural hubs, and
  • Cultural practitioners.

Points are awarded in each category, with a maximum score of 31 and a minimum requirement of 16 to qualify a project as culturally British, although it would seem from the tests that a few compromises were made during the EU negotiations.

There are 4 areas that make up the Cultural Content category and these are:

  • If the game is set in the UK or in the European Economic Area (EEA), then up to 4 points are awarded, although up to 3 points are awarded if it’s in an indeterminate place.
  • Up to 4 points are awarded if the lead character(s) are British or from the EEA, with again some points available for those of indeterminable nationality or residence.
  • The game can score up to 4 points if it has British subject matter or relates to an EEA state or material.
  • Once again up to 4 points are available if most of the dialogue is in English or one of six of the UK’s indigenous languages.

There is only one Cultural Contribution test and if the video game represents/reflects British creativity, British heritage or diversity, up to 4 points are achievable.

Under the Cultural Hubs tests, if 50% or more of the conceptual development, storyboarding, programming or design takes place in the UK, then 2 points are awarded, with a further point if at least 50% of the music recording, audio production or voice recording takes place in the UK.

The Cultural Practitioners heading is all about personnel and there are 8 tests, each worth 1 point, that are based on different members of the creative team being EEA residents.

As can be seen, some of the tests are subjective, but a UK-based VGDC should be able to garner enough points to qualify for the benefits of the tax relief. This could usher in the era of the accountant acting as part of the creative team, advising, ‘ Stick a Union Jack waistcoat on that character – the tax relief’s riding on it!’

If you require any advice on the identification of consumers, please contact one of our tax advisers at your nearest location, or complete the contact form.