Traditionally the development of computer games has been an R&D intensive field where rival companies compete to develop the 'latest and greatest' graphics, gameplay and artificial intelligence (AI).
At RD Relief see large numbers of claims in this area. However, when claiming R&D Tax Credits, there is a distinction between developing new Technology and using existing Technology to create the graphics and gameplay.
The UK Department for Business, Energy & Industrial Strategy (BEIS) has defined the types of R&D projects that qualify for R&D Tax Credits. This definition covers a wide array of R&D types, but this briefing will help you determine the traits of computer games projects that are eligible and what costs could qualify. It is essential to read this briefing within the content of the broader R&D Eligibility Criteria.
Video games projects that seek to develop new AI algorithms, or extend underlying gaming engines/frameworks for enhanced graphics and other capabilities will typically be eligible as R&D for Tax Purposes. Also, where companies are trying to improve the performance, stability and or extensibility of the underlying Technology, this will be likely to be qualifying.
However, where a computer games project is using an existing games engine and configuring the graphics, gameplay and look and feel, this 'may' not be qualifying as a Technological Advance (as HMRC would see it more of business Advance through the configuration of existing Technology). In this case, it is often worth speaking to one of our R&D advisors to help map the work undertaken to the eligibility guidelines.
Numerous forms of Technological Uncertainty occur on computer games projects. For example, it may be uncertain how to develop the underlying gameplay algorithms, or how the complex model of the game environment can be held and processed by limited memory gaming devices.
As with other types of software development projects, any time to analyse the requirements of the game, and design the graphics of the interface is not includable. Time spent architecting, developing, testing and project managing the Technology which is required to overcome Technology Uncertainty can be included up to the point that it has ended. The end of the project is often when the game has been tested and is ready for release, but it may be earlier or later depending on the nature of the development. The development of new features can then introduce additional periods of R&D.
In this article, we explore the traits of one of the R&D Tax Relief claims for computer games that the RD Relief experts helped to support. The case study will inspect how the claim's grey areas of whether certain costs would qualify and which costs were includable as R&D for Tax Purposes should be simplified.