An accountant tried to magic up a £1 million tax saving for the actor who played Harry Potter’s best friend Ron Weasley in the movie franchise – but failed to convince the tax man that the move was legal.
Actor Rupert Grint was reported to have been paid £24 million for his role, and in a bid to save him income tax, his accountant switched his accounting year end dates from July 1 to April 5 for the 2010 and 2011 tax years.
Technically, that means his tax year lasted for 20 months in 2010 and income earned in 2011 was shifted back into the earlier tax period.
This reduced the amount of tax due by £1 million because a large proportion of his earnings moved tax year before a 50% income tax rate was introduced in 2010-11. The top rate of income tax for the earlier year was 40%.
But the accountant’s spell failed to work on HM Revenue and Customs (HMRC), which objected to the tactic.
Grint appealed against HMRC’s ruling and the matter went to the First Tier Tax Tribunal, where a judge also rejected the actor’s claim.
The basis of the case was HMRC agreed Grint could change his accounting period, but his accountant had failed to carry out the process correctly because Grint’s personal tax return was not a set of accounts.
Definition of accounts
Judge Mosedale agreed and said: “However, this is all irrelevant because even if I am wrong, and the tax return would be seen as accounts by the accountancy profession, I find as a matter of law that they are not the accounts within the meaning of the legislation at issue in this case.”
HMRC point out that Section 8 Tax Management Act makes a distinction between ‘accounts’ and a ‘tax return’ suggesting that they could not be one and the same thing.
Much of the argument before the tribunal was technical, with Grint trying to explain that a tax return was a set of accounts.
The tribunal heard that Grint was only 12 years old when he first played Weasley and relied on his father and accountant to manage his finances.