(Photo: Reuters)

Many rejoiced when chancellor George Osborne revealed in the 2012 budget that the gaming industry would receive a much wanted and needed boost by allowing tax breaks.

Nerds and economists alike breathed a sigh of relief that the concession would mean Britain could finally compete with other countries in the lucrative gaming industry and in turn create more jobs, more revenue and a flight of business into the beleaguered UK economy.

Great news! I hear you say, especially when developer giants, such as Konami, Activision and Microsoft have all pledged to open new UK offices, following the pivotal tax break announcement.

On the surface, it should mean that the UK will be able to improve on its somewhat pathetic ranking of sixth largest games maker in the world and back to its glory of third place from 2006.

However, as always, red tape and a spate of caveats look to threaten growth - even before it had a chance to be born again.

Depressingly, Richard Wilson, CEO of Tiga, the UK games developers industry association, revealed that developers applying for tax relief may run into a number of hurdles that they hadn't thought of before, especially if the UK follows its European cousins.

Currently, in Europe, state aid rules that with video games' tax relief, there must be a "cultural test".

As Tiga prepares to submit a proposal on how tax relief should be structured, apparently there are concerns that only games with "British cultural content will qualify" for tax breaks.

So what does that mean? What is termed as "British cultural content"? Most people naturally thought that if you are a UK-based developer, whether an upstart or a gaming behemoth, you would successfully receive tax relief.

Well, no.

Apparently, if a game is based on a national sport, such as football, a historical event or a British book you will be fine. So I assume along the same lines that a platform game eating eels and mash or riding a red double decker bus will also qualify.

Grand Theft Auto

Examples of Activision's Call of Duty games, which is based on shooting people in WWII also counts as "British cultural content," but a "science fiction game or an arcade or puzzle game with little narrative" will have problems getting approval, says Wilson.

Wilson also adds that he is hearing a lot of concerns and highlights examples, such as that one of the most successful games created in the UK, Grand Theft Auto, would find it hard to qualify for the tax relief because the setting, music, and synopsis is set in the US.

Considering that the latest instalment, Grand Theft Auto IV, sold 9.76m copies alone, it seems ridiculous that there would be a heap of red tape to stop games like this flourishing and bringing in more business to the UK.

The whole point of video games is that they provide pure escapism.

Yes, there is a place for educational games, sport simulators and of course asinine children's offerings that involve an animal of some kind, but if you look at the top-selling games , such as Darksiders, Dragon Quest and Mass Effect 3, it is the most fantastical, creative and removed-from-reality digital offerings that would provide more bang for your buck.

Imagine a developer trying to explain the "British cultural content" relevance for Bioshock or Resident Evil - although I suppose if you made the zombies wear busbys and turned the Cerberus into Staffordshire bull terriers it would tick the boxes.

Stifling creative content would also mean classic games from independent developers, such as Uplink, would not get the tax break they need to get off the ground.

For instance, Uplink was launched in 2001 as a PC game, where you assume the role of a hacker and through various hacking exercises amass money, software and gateway hardware to win the game.

It is technically quite simple, the gameplay is addictive and was developed on a modest budget. However, 11 years on it is still available on Valve's steam service, and rakes in the cash.

Of course, there have to be rules in place to govern the tax breaks but putting in arbitrary and stifling caveats would not only undermine gaming creativity and is frankly insulting but it would also mean that the government will shoot itself in the foot when it comes to nurturing talent, creating jobs and boosting incoming revenue.

If it means that all games coming out of the UK end up being about Harry Potter, football or WWII, then it seems like a fail to me.

Lianna Brinded is a senior business writer with IBTimes UK