VGTR can bring about a valuable source of extra cash for video games companies. Here are our tips for success.
Video Games Tax Relief (VGTR) is one of those lesser-known UK tax reliefs that can really pay out. Aimed at businesses in the video gaming sector, VGTR allows qualifying companies to receive a cash tax credit that reflects their eligible R&D expenditure.
Any video game that’s been designed for the public is likely to attract tax relief, providing it passes the BFI’s cultural test (more on this later). If successful, the game will be awarded a certificate from the Department for Digital Culture Media & Sport (DCMS).
The other stipulation for receiving VGTR is that at least 25% of the total “core” costs spent on developing the video game must have been incurred inside the European Economic Area (EEA).
When it comes to VGTR, the team at Myriad Associates knows what qualifies and what doesn’t. We’ve been in the business for two decades, and during that time we’ve helped thousands of UK-based companies maximise their VGTR claims so they receive their full entitlement, first time.
Here are our 6 top tips:
If the structure, language and layout of your application doesn’t quite hit the spot, then you’re likely to miss some eligible costs. By working with R&D tax and funding specialists like Myriad Associates, you can rest assured that not only are you getting the most current expert advice but that your claim will be maximised too. It means that right from the start of your project you’ll have your VGTR claim in mind which will also help with record keeping.
A VGTR claim will only be successful if the video game passes the BFI’s Cultural Test and has the certificate to prove it. And the good news here is that as long as your company is UK-based it’s extremely difficult to fail.
The BFI’s cultural test works like a checklist. Essentially, the game itself needs to ‘fit in’ with British (or European) culture in terms of content and design. The game must be awarded at least 16 points to pass, but as long as the game is in English or any other UK language then four points are awarded automatically. Two more points are awarded for performing 50%+ of the conceptual storyboarding, design, development and programming in the UK. So the 16 points are fairly easy to get. See the entire points criteria here.
Once your VGTR claim has been submitted, bear in mind that someone at HMRC needs to read and understand it. This means it needs to be clear and concise.
While your explanation and analysis must be detailed and complete, avoid any superfluous waffle; you’re only trying to demonstrate how your game meets VGTR criteria after all.
It’s also important that you don’t try to claim for costs that aren’t actually applicable (again we can guide and advise you with this) and that all your figures are correct. Any queries from HMRC will delay your payment, so it’s worth getting it right first time.
As mentioned above, it’s important you don’t add ineligible costs to your VGTR claim. But at the same time, being over cautious or simply not knowing that a cost can be included can reduce your claim by thousands. It’s money that’s rightfully yours and by missing out some costs, you’re denying yourself the full amount. The devil is definitely in the detail.
Under-claiming is really easy to do and happens a lot. In fact, in the wider context of R&D Tax Credit claiming, it’s one of the most common mistakes.
Specialist VGTR advisors, like us at Myriad Associates, know the claims process inside out. We get to know your business and your claim in detail so we can easily spot the costs you may have missed. We can also advise you on how VGTR and R&D Tax Credits can work together, and help you plan future claims for maximum effect. By making a ‘DIY claim’ the chance of missing out on cash that rightfully belongs to your business is high.
Developing video games doesn’t come cheap and ready investment will no doubt be at the top of your priority list. This will be the case throughout the development process, so anything you can do to attract investors is always a wise move. Whilst VGTR offers a useful rebate of your project costs, ongoing investment will be needed if you want to grow. But the beauty of claiming VGTR is that not only does it provide a useful cash injection, but it also shows investors that you’re keen to utilise the different funding streams available. It also demonstrates that your company takes long term video game development seriously.
This is an important point; using a VGTR tax specialist to make your claim is key to the success of your application. But they shouldn’t be used instead of your usual business accountant, they should be used as well as.
Video Games Tax Relief is just that – a relief. It needs to be treated as additional to your usual tax claims and year-end accounts. The experts at Myriad Associates will only work on your VGTR claim, as well as any claims for R&D Tax Credits or R&D grants. We don’t deal with any other accounting activities, which means we’re highly adept at what we do.
Whilst your accountant will be extremely competent, many are not up to speed with the complexities of this niche area of tax and will no doubt have a lot on their plate already. So it’s not a case of choosing one over the other; you need both.
Myriad Associates has worked with video games development companies large and small to successfully deliver their VGTR claims. Our whole ethos is to support you in making a hassle-free, fully optimised claim, offering a bespoke solution that’s tailored to you.
To discuss any aspect of VGTR claims, please do get in touch. You may also find a couple of our recent articles useful: