LONDON, UK – British actor Rupert Grint, best known for his role as Ron Weasley in the Harry Potter series, has been ordered to pay £1.8 million (approximately $2.3 million) to His Majesty’s Revenue and Customs (HMRC) after losing a legal battle over tax classifications.
The case revolved around his 2012 tax return, where Grint allegedly misclassified income from residual payments as capital assets to benefit from a lower tax rate.
Grint, now 36, reportedly attempted to reclassify £4.5 million earned from Harry Potter DVD sales, streaming rights, TV syndication, and other sources as capital gains rather than income.
Capital gains in the UK are taxed at a lower rate compared to income tax, a strategy infamously known as the “Beatles clause,” a reference to a similar approach tried by The Beatles in the 1960s.
In 2011, Grint formed Clay 10 Limited and sold his residual rights to the company as capital.
While this move aimed to reduce his tax liability, Judge Harriet Morgan ruled that the residual earnings “derived substantially the whole of its value from the activities of Mr. Grint” and should be taxed as income.
Throughout the proceedings, Grint claimed he had little involvement in his financial affairs, trusting his father, Nigel, and professional accountants to manage his finances.
Judge Morgan acknowledged Grint’s lack of direct involvement but maintained that he was still responsible for the tax misclassification.
This marks the second major tax dispute Grint has lost against HMRC. In 2019, he was denied a £1 million tax refund related to another case.
Grint’s financial strategies have drawn significant scrutiny, particularly given the substantial wealth he amassed during his decade-long role in the Harry Potter franchise, which reportedly earned him around £24 million ($30 million).
The strategy employed by Grint’s financial team mirrored a loophole famously attempted by The Beatles, who formed a company in the 1960s to sell the rights to their music as capital assets, thus incurring capital gains tax instead of the higher income tax.
HMRC successfully argued that Grint’s approach similarly sought to exploit this tax advantage improperly.
Grint’s financial dealings have been a subject of contention, with his company, Clay 10 Limited, showing over £27 million ($34 million) in equity as of March 2023.
The tribunal’s decision underscores the importance of accurate tax classifications, even for celebrities relying on professional advice.
Despite his legal setbacks, Grint continues to thrive in his acting career, appearing in projects such as Servant, Knock at the Cabin, and Guillermo del Toro’s Cabinet of Curiosities.
However, the tax rulings serve as a cautionary tale for high-earning individuals navigating complex financial structures.
Grint has not publicly commented on the ruling, and his representatives have yet to respond to media inquiries.
