Claiming VGEC: What Evidence Do You Need?

If you're developing video games in the UK, the Video Games Expenditure Credit (VGEC) is a valuable incentive that can help offset production costs and support your creative vision. But to successfully claim this relief, it’s not just about having a great game — you’ll need solid evidence to prove your eligibility and expenditure.

Whether you're a seasoned studio or an indie developer navigating VGEC for the first time, understanding what HMRC expects in terms of documentation can be the difference between a smooth claim and a stressful one.

What do you need to submit a claim?

The actual VGEC claim is made through your Corporation Tax Return (CT600) by filling out the appropriate boxes and forms.

From 1 April 2024, all claims must be accompanied by an additional information form (AIF). This must be submitted before or on the day of the submission of the CT600. The AIF must be submitted within 2 years from the end of your accounting period; each accounting period needs its own AIF.

The AIF requires the following information:

• VAT registration number
• PAYE reference number
• Foreign Entertainer’s Unit (FEU) reference number, if applicable
• the project or production name
• the start date of pre-production or active development
• the production status (ongoing, complete, abandoned)
• total expenditure for all productions
• total core costs for all productions
• amount of credit you’re claiming for each relief

Outside of the AIF, you must provide:

• a British cultural certificate from the British Film Institute (interim or final)
• statements of the amount of core expenditure, split between UK and non-UK costs
• a breakdown of expenditure by category

Extra detail might be required for larger projects.

What evidence is required in a compliance check?

VGDCs should have sufficient evidence to show that they meet the eligibility criteria, as well as to support the costs being claimed. In the event of an enquiry into your claim, you may be asked to provide this evidence, however it is not required when you actually submit your claim.

Companies need to demonstrate that they are involved in development; a contract identifying the company as a “production company” is not enough. Appropriate evidence for the company’s active role may include internal correspondence, invoices for the key subcontracted staff, or timesheets for internal staff.

Similarly, claimants should keep sufficient records of costs incurred. This is not only good accounting practice but important in the event of an enquiry from HMRC. Compliance checks from HMRC have been on the rise in other tax relief incentives in the UK and usually comprise requests for evidence.

Connected party costs

When a production company incurs costs through transactions with connected parties, those costs are excluded up to the amount of the connected party's profit—unless the transaction is priced at arm’s length (i.e., at a standard rate for the connected party).

Connected party transactions must be disclosed to HMRC. This disclosure is made through the additional information form for the period in which the expenditure is recorded.

Using the AIF, companies must:

• Declare whether the claim includes any expenditure on transactions with connected parties, confirming if amounts paid or owed to a connected party are included as qualifying expenditure.
• Provide the number of connected parties involved in such transactions.
• State the combined value of those transactions.

Additionally, companies must upload a document detailing all connected party transactions included in their claim. This document should include:

• The name of the connected party.
• The date of the transaction.
• The value of the transaction as included in the claim (either the arm’s length cost or the supplier's cost).
• A description of the goods or services provided.

Questions? Download our eBook!

We’ve written a comprehensive guide to all things VGEC, including qualification criteria, calculating your claim and submitting to HMRC. Our eBook is completely free, with detailed answers to all your questions.

Download your free copy here!

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