3785

I don’t read the SC Reddit, but I can totally believe it’s cultish and unpleasant to read. I once took a peek at the RSI General forum and ran away pretty quickly. I don’t get that anymore than the glee at every hint of drama.

Games can be polarising. SC pushes the boundaries though.

Wendelius

3786

It may be “normal” or OK to get an advance on your anticipated tax breaks, but the last time I worked at a company that was doing that instead of just taking them when you normally get them was doing it because they had no cash flow and required the money now. That was 38 Studios and it was a desperation move for them at the time.

Maybe it’s different for these guys though.

3787

It sounds like a payday loan thing for corps. I would love to see these guys finish this project, but I’m not giving them any money until it is complete and released.

3788

I’ve worked at a high-level in a number of software firms that have frequently used development tax credits of one stripe or another and have been intimately involved in all stages of the credit process. While it’s easy to claim “not normal” on one of these credit advances, the reality is that: A) the development credit is budgeted as a line-item (and expected as such), and B) governments are notorious for not delivering these credits on-time (I’ve received these cheques 18 months late in some cases). The result is that it’s unfortunately common to lean on some form credit facility to bridge the gap until the delayed credit is received. I’m not saying that’s the case here, but having spent significant time literally biting my nails over a delayed credit, this doesn’t strike me as abnormal. IF, that is, that CGI’s version of this being a development credit bridge is accurate.

That said, I still think SC/SQ42 is screwed. I just don’t think this is necessarily the sign people are taking it as.

3789

HMRC are incredibly efficient.

3790

I don’t get why a game company that has taken in ~ $150M would care at all about some minor tax break unless they have been spending the money as fast, or faster, than it came in?

3791

I’m not really sure where to start if this is directed at my quote.

I spent several years working at a very large development firm on Fenchurch in the city and had a very different experience from what you describe. They may be efficient once a decision has been made (I can’t comment on that), but in my experience audits and reviews are common (particularly when the claim is large) and the denial/appeal process can be protracted (even when one year’s filing differs from a previous year’s filing only by a few dollars).

I’m not really commenting on CGI’s financial position beyond saying that counting on credits is absolutely part of the development landscape and that having to take a loan on a delayed credit is equally normal. I just thought I’d bring some light to the subject using my personal experiences.

3792

Because they aren’t minor at all: In the past they were good for up to 48p per £ of eligible expenses and even today I think they’re still north of 25p – admittedly it’s been a few years since I last worked in the UK.

If you’re dropping 10M/yr on eligible development, that’s a 2.5-5M credit, depending.

Edit: There is (or was) some drop in rebate beyond a few million pounds of eligible expense, but I don’t recall it off-hand. Sorry :(

3793

The CSI and SC Reddit forums LOL

3794

Ah, I’ve never had any dealings with HMRC in relation to grants. The company I work for has a smallish office outside Guildford (software multinational with EMEA sales headquarters in Ireland for obvious reasons). HMRC has always been incredibly efficient in my experience from that perspective. Apologies if that isn’t the case in terms of the development credit.

It’s capped at a maximum of 20% of total core expenditure by the way. Unaware of any limit!

3795

Yeah, that was never an issue for us as we had a huge glut of non-eligible folk who drove our costs way up. I really don’t miss those days – I understand claiming credits is standard practice, but it always left me feeling a little dirty.

3796

Foundry 42 Ltd received £3,319,220 from HMRC in 2016, I looked up their financials. They received £3.1million the year before and £800k the year before that.

I guess for me the question is, why do they need the income 6 months earlier, when for the last 4 years they haven’t?

3797

And why do they need them so badly that they’re willing to put the entire company up as collateral?

3798

Taking their response at face value, because for the last four years the UK didn’t pull out of the EU causing stelrling to lose 15% of its value.

3799

Incidentally, the tax-credit advance explanation does help explain why the margin is so low.

3800

That actually is relatively standard in secured business loans in the UK. Their financials do say that they already owed between £2-£3 million to other creditors who didn’t require a charge, so why are they seeking loans with such security now?

@Ginger_Yellow The change in the exchange rate is immaterial going forward, whatever hit there was to be taken already has been taken. Again, this loan isn’t to replace any of the funding currently being provided to CIG UK, it’s simply displacing when it occurs. As such, it provides zero safety from exchange rate movements.

It isn’t reducing CIGs dependence on funding from other currencies, its just changing when it receives its tax break while also having to pay interest.

If I get paid €1000, £400 and $800 per month and a once yearly lump sum of £8000, and I take out a loan of £8,000 so that I receive said £8,000 in April rather than October, i’m still receiving the same amounts per month, in the same currencies. It makes absolutely no difference to the basket of currencies I receive my continuous income in.

3801

This. I can’t help notice that he ignores the fact that he rips off his investors (at least 2x I think!) but gets all riled up when he perceives that someone figured out a better method. He’s just jealous that someone does it better than him, proving that they are in fact smarter. And he just cannot stand anyone else being “smart”. =)

3802

This is one if the biggest sociological experiments to ever grace our hobby. How could one not marvel at the occasional drama and rubberneck a little? This has one of the most contentious funding models in gaming so a lot of people throughout the industry are curious to see how it plays out and what the repercussions will be and if they will impact their corners of the market for good or ill.

At this point we are all Vladimir and Estragon waiting near the tree for Godot. Godot will not be coming tonight but surely tomorrow. Might as well converse.

3803

I don’t know the details, but it does sound like you are over simplifying the financials. I don’t think they are doing this because they are stupid, I suspect there was a cost/benefit analysis to it. Financial people get paid to do all these things, and the motivations are related to a myriad of issues beyond just paying simple interest on a loan.

Perhaps they realized they could take a loan, get the money early, and not run currency risk or additional taxes and fees when moving money to pay for the UK operations from the US, because there are always additional taxes and fees when moving money.

It seems to make sense to me they would get UK monies to pay UK bills and there could be savings from that.

As far as setting up SQ42 as collateral, I suspect they see the risk of default as very low. But if they are in deep panic right now to keep their doors open, then we will know very soon.

3804

Not to mention if they think the GBP will be devalued as Brexit talks go long it makes sense to try and delay exchanging the foreign currency into GBP just to pay bills.