Case Study
The merits of claiming VGTR or R&D Tax Relief
Business Pains
We were introduced to the client, a BAFTA winning, digital agency with around 20 staff, after presenting at a VGTR seminar in their area, hosted by TIGA, the trade association for the Video Games industry. The client specialises in creating digital content for children. The introduction of Video Games Tax Relief was an opportunity to obtain tax relief, but they were unsure about the process of claiming and indeed whether they might be eligible to claim both the Video Games Tax Relief (VGTR) and R&D tax credits.
As time is always a critical element to a studio working on multiple digital projects throughout the year; they found the process of using an accountant previously on an R&D claim both time consuming and confusing and they simply did not have the time to do this type of work themselves. They were worried that two schemes would make the process doubly confusing and difficult, and they had also received conflicting advice about whether claiming both was even possible.
For the timeframe under review, the company had created dozens of HTML5 video games as well as conducting game engine and tool development so they were worried that any benefit would be outweighed by the time and effort needed to compile the claim.
Premise
MMP's technical experts quickly sprang into action, carrying out an in-depth analysis of the projects the company worked on.
We met at the start of the project to assess what work the client had undertaken would qualify for the R&D Tax Relief scheme, and what separate expenditure is best claimed under the VGTR scheme. A round table discussion with MMP guided the client through the complex eligibility criteria across each scheme and which approach would provide the most benefit to them. This meeting provided the necessary information for two workstreams to commence, with the service configured to match those workstreams. The R&D tax relief work requires a far higher level of technical expertise and judgement, while VGTR is very process driven.
MMP's team then obtained the necessary Cultural certificates from the BFI including providing the accountant's audit reports to certify the points being claimed. MMP also produced comprehensive R&DTR and VGTR reports (including BFI cultural test certificates for each eligible video game) to support the claims.
The team then worked with the client's accountants to ensure the claims were correctly entered into the tax computation and CT600 then followed up with HMRC to ensure swift tax credit payment.
MMP did all the heavy lifting allowing the client to focus on making video games. That meant, they didn't have to worry about responding to the BFI or understanding the intricacies of the eligibility criteria for either of the R&DTR or VGTR schemes.
Proof
After submission of the R&D and VGTR claims to HMRC, the company estimated that they would have needed to generate close to an additional £600k of sales in order to have comparable bottom line financial return from their claims. MMP's efficient methodology reassured the client who continues to claim with MMP for both schemes.
Busy studio? Lack of time and expertise. Let MMP do all the heavy lifting to maximise your benefit from R&D and Video Game Tax Relief.
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“ Both of us have really enjoyed working with your team on this and looking forward to doing this on a yearly basis.”
MMP work with innovative technology businesses across all sectors
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