Yet another massive global company legally avoids paying UK Corporation Tax – for ten years. Not only that, but Grand Theft Auto owners have also claimed millions in Video Games Tax Relief from HMRC.

How do we know this information?

An “investigative think tank” called TaxWatch UK has dug into Take-Two’s earnings reports, information from Companies House and other relevant financials and reached these conclusions about their UK tax position.

Who is the company behind Grand Theft Auto?

Grand Theft Auto is developed by Rockstar North, part of Rockstar Games and their parent company is Take-Two Interactive. The game itself is made by the brothers Sam and Dan Houser. Despite the games creation, development and massive sales in the UK, the company directs its profit through American offices, thereby legally avoiding UK Corporation Tax.

What kind of figures are we looking at?

Grand Theft Auto generates one of the highest profit margins of any product in the entertainment genre. In 2013, it took £1billion in just the first three days of its release. To date, it has sold over 100 million copies. Grand Theft Auto online also makes hundreds of millions of pounds from global sales.

TaxWatch UK’s report gives an estimated operating profit for Rockstar Games of £4bn, from 2013 to 2019. This is the period in which they brought both Grand Theft Auto V and Red Dead Redemption 2 to market.

As reported by The Guardian, Take-Two Interactive, the parent company, is a global operation worth $13.1bn. As well as Take-Two Interactive, they also own 2K Games.

How much UK Corporation Tax have they paid?

Between 2009 and 2018, they have paid a total of £0.00 in UK Corporation Tax. Had they declared any profits in the UK, they would have been liable to pay Corporation Tax at a rate of 19%. That’s a lot of money for the Treasury to miss out on.

How much Video Games Tax Relief have they claimed?

Video Games Tax Relief (VGTR) is part of the Research and Development tax relief regulations. They have claimed £42m in VGTR since it started in 2014. Not all of this has yet been received, but in 2018 they did get a £26.9m in VGTR, which was £13.1m more than the previous tax year. These astonishing amounts comprise nearly one fifth of the entire amount paid to businesses through the VGTR scheme.

How have they qualified for VGTR?

Well, there is a point of discussion here that’s generating a lot of interest. Any company applying for VGTR must make sure that their product passes the Cultural Test. This is administered by the British Film Institute and is designed to determine if the product is British enough to be eligible for the tax relief. “The cultural test is a points-based test where the project needs 16 of a possible 31 points to pass.”

There are four parts to the test, with different weighting of points.

  • Cultural content (up to 16 points): this looks at if the game is all, or partly, set in the UK or EEA, has characters from the UK or EEA, has British subject matter or has voice over in English.
  • Cultural contribution (up to 4 points): “Video games play an important role in contributing to the promotion, development and enhancement of British culture. Section B (Cultural Contribution) in particular seeks to identify those video games which make a significant Cultural Contribution over and above the cultural content assessed in the four categories in Section A. Section B will be assessed under three key categories: Cultural Creativity, Cultural Heritage and Cultural Diversity.”
  • Cultural hubs (up to 3 points): Based on how much money has been spent in the UK while producing the game.
  • Cultural practitioners (up to 8 points): More points allocated the more British or EEA citizens hired during production.

For those who have never played, Grand Theft Auto is certificated 18 and the online blurb says: “Los Santos: a sprawling sun-soaked metropolis full of self-help gurus, starlets and fading celebrities, once the envy of the Western world, now struggling to stay afloat in an era of economic uncertainty and cheap reality TV.

Amidst the turmoil, three very different criminals plot their own chances of survival and success: Franklin, a street hustler looking for real opportunities and serious money; Michael, a professional ex-con whose retirement is a lot less rosy than he hoped it would be; and Trevor, a violent maniac driven by the chance of a cheap high and the next big score. Running out of options, the crew risks everything in a series of daring and dangerous heists that could set them up for life.”

Players of the game win points by committing crimes from stealing cars to torture and the whole franchise is set in different, slightly disguised American cities. So it’s difficult to see how they got any points in the first two categories of the Cultural Test.

At the very least, HMRC may find it wise to re-examine their Cultural Test results to ensure they are happy with the rubber stamp on these particular games.

What’s next?

Well, Take-Two Interactive and its subsidiaries have not done anything illegal. TaxWatch UK concludes:

“Grand Theft Auto has been referred to by some as a “Great British Export”.16 However, a brief look at the accounts of the UK based developer of the game, with its slender profits, would not lead one to that conclusion. Rather than a picture of success, the accounts of the developers of the game, Rockstar North, show that the company has earned so little that they have been eligible to claim tax credits from the government.

The situation is absurd. The large amounts of subsidy that Rockstar North has been able to claim from the UK government demonstrates that the Video Games Tax Credit system is not working as intended. The government should hold an immediate review into its effectiveness.

Furthermore there are serious questions over how the company has been treated for tax purposes in the UK.

Take-Two appears to believe that it is reasonable that close to 100% of the profit should flow to their US based parent companies and senior management, whilst almost no profit flows back to the UK companies involved in either making or selling the game. We do not believe that this division of profits can be justified under the so-called “arm’s length” standard found in international tax law.

There is no evidence that HMRC have challenged this set-up or that Take-Two or any of the individuals named in this report has acted illegally. However, it is open for HMRC to challenge the allocation of profit under the transfer pricing system and we urge them to investigate this case urgently.”


There is no public statement available from either Rockstar North, Take-Two Interactive or HMRC. Although we are fully aware that HMRC are not able to comment on any individual cases, whether they are a focus of an investigation or not.