Jurisdiction(s):
United Kingdom

Sales of occupation income: FTT applies s.779 ITA 2007 to incorporation proceeds; avoidance object established; closure notice valid despite s.778 reference (Rupert Grint v HMRC)

Published on: 03 December 2024

Published by a LexisNexis Tax expert

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Rupert Grint v HMRC [2024] UKFTT 956 (TC).

In 2011, a decade after filming began on the first Harry Potter film, Clay 10 Ltd was incorporated to supply Mr Grint’s acting services. Mr Grint was the only shareholder, while his father, who was also his manager, acted as the sole director. The company received the actor’s existing and future rights, together with business information and goodwill, for consideration of £8.5m. That consideration was left outstanding on a shareholder loan account, with £4.5m treated as consideration for goodwill, records and rights. In his 2011–12 tax return, Mr Grint returned that sum as a capital gain and claimed entrepreneurs’ relief. HMRC opened an enquiry and, by closure notice, charged the £4.5m to income tax rather than capital gains tax, on the basis that the ‘sale of occupation income’ provisions in Chapter 4 of Part 13 of the Income Tax Act 2007 (ITA 2007) applied. The closure notice stated that the return had been amended ‘by treating the capital amount you obtained on the sale of your business as income arising under ITA 2007, s 778.’ In...

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