TIGA proposes enhanced Research and Development (R&D) tax credits

TIGAproposes enhanced Research and Development (R&D) tax credits

TIGA
proposes reforms in response to Treasury’s consultation document

TIGA, the trade association representing the
UK video games industry, today proposed that the Coalition Government should
widen the scope of the Small Firms R&D Tax Credit to promote a high
technology recovery and job creation in high technology industries. TIGA made
the comments in response to a consultation exercise by HM Treasury on the R&D
tax credits.

TIGA proposed that the scope of the R&D
tax credits should be expanded to include the following associated costs:

• premises costs,
  such as rents and rates;
• design costs,
  including building a user interface; artistic work involved in game
  development; and user testing; and
• IP protection costs, including the
  costs of patent registration, legal costs incurred in defending copyright
  and costs incurred in trying to prevent privacy.

TIGA also called for the retention and
expansion of relief for Qualifying
Indirect Activities (QIAs). The creation of
a successfultechnological
product can involve significant non-technological activities. QIAs could be
expanded to cover the production of essential non-technological supporting
materials such as, for example, the graphic design, audio production, and level
design that go into turning an unprofitable game engine into a profitable game.

TIGA
also

Dr Richard Wilson, TIGA CEO, said:

“The UK needs business investment and exports to drive the
economic recovery. A tax regime which promotes investment in R&D can
contribute to the achievement of this objective. Historically, the UK has
invested less in R&D in comparison to some other G7 countries.

“TIGA campaigned
for the level of R&D qualifying relief to be raised from 175 per cent to
200 per cent: we were pleased by the Chancellor’s decision in the March 2011
Budget to implement this proposal and indeed to increase the level to 225 per
cent from April 2012.

“Yet the Government could do still more to improve the
R&D tax credits, particularly the small firms’ scheme. Expanding the scope of the R&D tax credit
scheme to include premises costs, design costs and IP protection costs,
together with the retention and expansion of Qualifying Indirect Activities,
would provide games developers and other high technology firms with more
resources with which to invest in R&D and expand employment.””

Jason Kingsley, TIGA Chairman and CEO and Creative Director at Rebellion, said:

“TIGA would like to see more UK businesses benefit from the
R&D tax credit schemes. In 2008-9, 6,450 SME
companies benefited from the SME R&D scheme at a cost to the Treasury of
£260 million. In 2008-09, 2,150 large companies benefited from the large
company R&D scheme at a cost to the Treasury of £720 million.^[1] We need more UK businesses to benefit from
the R&D tax credit schemes and we need to make the SME scheme in particular
still more effective by widening the scope of the relief. Reformed R&D tax credits can help to
stimulate a high technology recovery.””

_{About TIGA:}

_{TIGA is the trade association representing the UK’s games
industry.The majority of our members are either independent games
developers or in-house publisher owned developers.We also have games
publishers, outsourcing companies, technology businesses and universities
amongst our membership. TIGA was awarded ‘Trade Association of the Year’ and
the ‘Member Recruitment Award’ at the Trade Association Forum Best Practice
Awards 2010. In 2011, TIGA won a further
four awards at the Trade Association Forum Best Practice Awards, including
‘Trade Association of the Year’ for the second consecutive year. TIGA has been voted a finalist in the CMI
Management and Leadership Awards 2011 in the ‘Outstanding Organisation (SME)’
category. Dr Richard Wilson, TIGA CEO, has been voted a finalist in the
‘Outstanding Leader’ category. TIGA was
also named as a finalist in the 2010
Chartered Management Institute (CMI) National Management and Leadership Awards
in the category of ‘The Outstanding Organisation of the Year Award (SME)’. TIGA
is an ‘Investors in People’ accredited organisation.}

_{TIGA is the trade association representing the UK’s
games industry. Our vision is to make
the UK the best place in the world to do games business. Our mission is to
fight for the interests of game developers. To achieve our vision and mission
we focus on the delivery of three strategic objectives: effective political
representation, profile raising and helping our members commercially. This
means that TIGA members are effectively represented in the corridors of power,
their voice is heard in the media and they receive benefits that make a
material difference to their businesses, including a reduction in costs and
improved commercial opportunities.}

_{For further information, please contact Dr Richard
Wilson, TIGA CEO on: 07875 939 643, or email richard.wilson@tiga.org.}

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