Corporation Tax Act 2010 section 357TF

Restriction on use of losses while video game in development

Section 357TF restricts how a Northern Ireland company can use losses arising from a video game trade while the video game is still in development, ensuring that Northern Ireland losses and mainstream losses are kept separate and can only be offset against the opposite type of profit.

• While a video game is in development, losses of the trade are split into Northern Ireland losses and mainstream losses, and these must be tracked separately.
• A Northern Ireland company cannot freely mix these two categories of loss — Northern Ireland losses can only be relieved against mainstream profits of the same period, and mainstream losses can only be relieved against Northern Ireland profits of the same period.
• Relief is available under the general trade loss relief rules (section 37 of CTA 2010), but only where the company has losses of one type and profits of the other type in the same pre-completion period.
• The pre-completion period means any accounting period during which the video game is still being developed, as defined in section 1217DA of CTA 2009.