TIGA, the trade association representing the UK games industry, said today that the Government’s position against Games Tax Relief was becoming increasingly threadbare. TIGA made the comments following the news that a senior Treasury official has admitted that Games Tax Relief is not poorly targeted while a Government Minister has agreed that the tax break could drive inward investment into the UK. The comments were made by Edward Troup, Managing Director, Budget, Tax and Welfare, HM Treasury, and by Ed Vaizey MP, Minister for Culture, Communications and Creative Industries, during an evidence session undertaken by the Scottish Affairs Select Committee on October 20th 2010.
George Osborne MP, Chancellor of the Exchequer, dropped Games Tax Relief in the June Budget, claiming that it was ‘poorly targeted’.
However, in response to a question about whether Games Tax Relief was indeed ‘poorly targeted’, Treasury official Edward Troup said: “I am not sure I would say it was poorly targeted. It was targeted at the video games industry…I think it was perfectly designable if we had continued with it…I don’t want to overstate the problems because I am quite confident the Treasury and my colleagues in Revenue and Customs would, if given the chance and given the remit, be able to write a set of rules, as they have for the film industry, which define the relief. So I am sure we could do it.””
Ed Vaizey MP also stated that: “I lobbied indirectly and made my views known, but I wasn’t aware the Treasury regarded the tax break as poorly targeted.”” Ed Vaizey MP also acknowledged TIGA’s argument that Games Tax Relief could serve to attract inward investment, although he mistakenly suggested that it might not help indigenous British games businesses:
“What would a tax credit bring in terms of the video games industry? I think it is very important to be clear on a number of points. First of all, it could act as a stimulus to inward investment. It wouldn’t necessarily support, as it were, the indigenous British or, indeed, Scottish video games industry. It might attract foreign investment from foreign companies.”” In fact, Games Tax Relief would be available to all UK video game developers. Any UK games business liable to UK corporation tax which developed a game with a budget of at least £100,000 and which passed a cultural test could benefit from Games Tax Relief.
Ed Vaizey MP accepted that the issue of Games Tax Relief had not gone away: “It may be that we can revisit a video games tax break in the future. I heard Edward Troup mention a timescale of 20 years; it might be shorter than that. “I would never rule out potentially looking again at a tax credit or returning to the issue, as I say, as a potential option.””
In response to a question about why the film industry has a tax credit and the video games industry does not, Ed Vaizey MP said: “I think it is politics. I think an existing tax credit is in a stronger position than one that doesn’t exist.”” He added that the film tax credit was a “historical circumstance””.
Richard Wilson, TIGA CEO:
“The evidence given by a Treasury official and by Ed Vaizey to the Scottish Affairs Committee is very encouraging. A senior Treasury official has agreed that Games Tax Relief is perfectly designable and a Government minister has agreed that Games Tax Relief could drive inward investment. We will continue to make the case that Games Tax Relief is good for the video games sector and good for the economy””
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