Section 1217DC | Terminal losses

(1)This section applies if—

(a)a company (“company A”) is the video games development company in relation to a qualifying video game,

(b)company A ceases to carry on its separate trade in relation to that video game (“trade X”) (see section 1217B), and

(c)if company A had not ceased to carry on trade X, it could have carried forward an amount under section 45, 45A or 45B of CTA 2010 to be set against profits of ... a later period (“the terminal loss”).

(2)If on cessation of trade X company A—

(a)is the video games development company in relation to another qualifying video game, and

(b)is carrying on its separate trade in relation to that video game (“trade Y”),

it may (on making a claim) make an election under subsection (3).

(3)The election is to have the terminal loss (or a part of it) treated—

(a)in a case where the loss could have been carried forward under section 45 of CTA 2010 had trade X not ceased, as if it were a loss carried forward under that section to be set against the profits of trade Y of the first accounting period beginning after the cessation and so on, and

(b)in a case where the loss could have been carried forward under section 45A or 45B of CTA 2010 had trade X not ceased, as if it were a loss made in trade Y which has been carried forward under section 45B of that Act to the first accounting period beginning after the cessation.

(4)Subsection (5) applies if on cessation of trade X—

(a)there is another company (“company B”) that is the video games development company in relation to a qualifying video game,

(b)company B is carrying on its separate trade in relation to that video game (“trade Z”), and

(c)company B is in the same group as company A for the purposes of Part 5 of CTA 2010 (group relief).

(5)Company A may surrender the terminal loss (or a part of it) to company B.

(6)On the making of a claim by company B the amount surrendered is treated—

(a)in a case where the amount could have been carried forward under section 45 of CTA 2010 had trade X not ceased, as if it were a loss carried forward under that section to be set against the profits of trade Z of the first accounting period beginning after the cessation and so on, and

(b)in a case where the amount could have been carried forward under section 45A or 45B of CTA 2010 had trade X not ceased, as if it were a loss made in trade Z which has been carried forward under section 45B of that Act to the first accounting period beginning after the cessation.

(7)The Treasury may, in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6), make provision by regulations corresponding, subject to such adaptations or other modifications as appear to them to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief).

(7A)A deduction under section 45 or 45B of CTA 2010 which is made in reliance on this section is to be ignored for the purposes of section 269ZB of that Act (restriction on deductions from trading profits).

(8)“Qualifying video game” means a video game in relation to which the conditions for video games tax relief are met (see 1217C(2)).