During the United Kingdom's March 2012 Budget it looked like plans for tax breaks for video games developers were a lock, but a European Commission (EC) investigation that was announced today has put their future in doubt. The European Commission announced today that it plans to investigate the proposals, and questions whether there is an obvious market failure in the UK games industry.

Specifically the EC is seeking answers to four key questions related to the UK games tax relief plan:

Tax relief for the video games industry in the United Kingdom has been delayed because the European Commission was not able to approve the Cultural Test provisions of the plan, according to this GamesIndustry International report. The Cultural Test requires those applying for tax credits to promote the culture of the UK in various ways.

UK games industry trade groups UKIE and TIGA expressed their disappointment in the news, but were optimistic that the government would continue to be committed to tax breaks for games developers.

When a publisher leaves a studio high and dry in the United Kingdom, industry trade body Tiga thinks that such abandoned projects should be eligible for tax relief. Tiga CEO Richard Wilson said that publishers have in the past left some studios in the UK “high and dry” by demanding large development teams for extended periods to then cancel a project with little or no notice at all.

As news of the Sandy Hook Elementary shootings in Newtown, Connecticut were coming to light on December 14, the finishing touches were being put on a deal with the Nevada Economic Development Board and Take-Two Interactive (see Vegas Inc. for the details). This week that deal is being questioned by the media in the state.