Putting compelling storylines, picturesque artwork and a captivating soundtrack to one side, a modern game is a masterpiece of software development. It is just as likely to contain as much serious research and development as that undertaken in a laboratory.
The video games and interactive entertainment industry has a clear strong link to high-tech research and development (R&D). Playing an integral part in the development of original intellectual property, R&D has helped the UK become recognised globally as a leading source of original computer games concepts and design.
With access to finance being a priority for the industry, HMRC’s R&D Tax Relief scheme actively encourages developers to engage in technological innovation that can bring huge benefits to the sector.
In order to qualify for relief, HMRC wants to see R&D being used to create an improvement in a field of science or technology. Even if the R&D in which a company has invested does not have the outcome hoped for, it may even still be able to qualify for R&D tax relief.
With this in mind, Games NI held a discussion with R&D tax experts Jumpstart at the Northern Ireland Screen offices to chat about what the R&D Tax Relief scheme actually means for gaming companies here. R&D tax expert Jumpstart was on hand to explain that game development and interactive entertainment companies should take full advantage of the potential financial gains.
“From designers to producers, it was great to chat to a real mixture of gaming companies. You see, I’m not an accountant; I’m a software developer,” says Mark Westwood, a Technical Analyst at Jumpstart, who has over 30 years’ experience in software development.
“The fact that everyone knows about the Video Games Tax Relief (VGTR) is great to hear – I was very impressed by the knowledge the NI gaming sector has of it,” he continued. Mark also revealed that opportunities exist to claim both VGTR and R&D tax relief, but advised that care is required as HMRC are very particular about what is eligible.
Continuing, Mark says: “However, I found that knowledge on the R&D Tax Relief scheme was a bit sketchier. We have found that some people have looked into the scheme, but it really is under-utilised across Northern Ireland. Which is a shame really, as it’s not often HMRC actually offers you ‘money on the table’!”
Kitty Crawford, Deputy Chair of Games NI, thought the event was highly informative for both herself and other companies in attendance: “It was superb to get a good overall grounding on the R&D Tax Relief scheme, as well as the opportunity to ask specific, technical questions which was very useful. Even though some companies may not be in a position to claim relief now, it is of huge benefit to know about it for the future.”
If there was one thing that the gaming sector in NI should know about the R&D Tax Relief scheme, Ian Wolfendale, Jumpstart’s Client Engagement Manager, said: “Take a look into it. Don’t ignore it and think it’s not for you, as you could be pleasantly surprised.
“After all, analysis of HMRC’s latest figures shows that NI companies – across all sectors – account for just 2.7% of total claims and a mere 1.6% of the total tax benefits claimed from across the UK. This tells me that the R&D tax relief scheme is massively underutilised here.”