Corporation Tax Act 2009 section 1217BD

When costs are taken to be incurred

Section 1217BD establishes the rules for determining when costs relating to a video game are treated as incurred for the purposes of the video games tax relief.

• Costs are treated as incurred when they are reflected in the state of completion of the work in progress, not simply when a payment is made
• Advance payments are disregarded until the related work is actually done; deferred payments are recognised only to the extent work has been completed
• A cost can only be treated as incurred where there is an unconditional obligation to pay the amount in question
• Where the obligation to pay is linked to income being earned from the video game, the cost is only recognised once a corresponding amount of income has been brought into account