Grand Theft Auto is now owned by the American company Take-Two Interactive. It started life as DMA Design in Dundee then developed by Rockstar North and Rockstar Games.

Last year their profits doubled to £8.3billion. The game is the most over 280 million copies worldwide and made the company £1bn over three days when it first went on sale in 2013. Unsurprisingly, their highest level of management have had bonuses totalling $3.4m over the last ten years.

This is the most popular computer game ever made by a very successful company. So perhaps it’s no surprise that they have received a large VTGR investment. But, for those of you that have already applied for the tax credit, maybe you’re wondering how they fulfilled the “cultural contribution” criteria.

How much Video Games Tax Relief have Rockstar Games actually received?

Over the last five years, the developers of Grand Theft Auto have received £42.3m in VGTR. We know this because a group called Tax Watch investigated the public financial records of the company and published their findings last month.

Not only have they receive this astonishing tax break, but they have not paid any UK Corporation Tax in the last decade. Actually shocking. They are not tax evaders or avoiders. They have followed legal procedures to declare profits through their American owned Take-Two Initiative, rather than its British subsidiaries.

Director of TaxWatch, George Turner, said: “It is outrageous that the UK taxpayer is being asked to shell out tens of millions of pounds in subsidy to the developers of Grand Theft Auto, when at the time that the game’s developers put in their tax credit application Grand Theft Auto V had already generated several billion dollars in sales and profits. This is a drive-by assault on the British taxpayer and corporate welfare scrounging at its very worst. The Video Games Tax Relief was designed to help developers of games with a cultural content that would struggle to sell in the international market. The fact that such a large amount of that relief is going to the developers of Grand Theft Auto clearly shows that the relief is not working as intended.”

Does Grand Theft Auto actually meet the criteria for VGTR?

This question is being asked by Tax Watch as part of their request that HMRC investigate Rockstar North Limited.

Even if you’re not a gamer, most people have heard about the controversy around the game. It is set in the criminal underworld of an imaginary American city called Los Santos, based on Los Angeles. Players commit crimes to advance through the game, from murder to the eponymous car theft. This has created a lot of discussion about the game’s morality, since it was released.

Digging a bit deeper here, it does bring into question how they passed the Cultural Contribution test. Its four sections are: Cultural content, Cultural contribution, Cultural hubs, Cultural practitioners.

The definition of Cultural Contribution includes “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.”

The only reasonable conclusion is that Grand Theft Auto earned all the necessary 16 points in the Cultural Hubs and Cultural Practitioners sections. These refer to how much money was invested in the UK and EEA countries during production and how many employees are from Britain and other EEA countries. It cannot have been awarded any points for representing a positive view of British culture as it is not set in the UK.

What do the BFI say?

The British Film Institute are responsible for administering the VGTR Cultural contribution test. After a Freedom of Information request from Tax Watch, the BFI have refused to give any information about their test results for Grand Theft Auto, saying it wouldn’t be in the public interest.

Tax Watch’s response from researcher Alex Dunnagan: “It is ridiculous for the BFI to say that it is not in the public interest to reveal how they have come to the conclusion that GTA V is culturally British.

The decision by the BFI resulted in tens of millions of pounds of public money being used to subsidise the most financially successful game in history – with subsidy being granted after it had already made billions in revenues for the US multinational behind the title. It is only right that the public is able to scrutinise decisions like this, and to understand how their money is being spent.”

The BFI are now considering their decision after an appeal from Tax Watch.

What do HMRC say about this VGTR claim?

HMRC cannot comment on individual cases, even just to confirm if they are being investigated. This is simply following correct procedure, even if it is a touch frustrating from our perspective. Given the lack of Corporation Tax payments, as well as the enormous VGTR payments, we can only hope that they have opened a case file.

Do you qualify for VGTR?

If your company develops video games, we’ll help you submit your VGTR claim. It is a great tax relief, when properly applied to legitimate applicants. It’s a bit fiddly, but don’t let a bit of admin put you off this substantial investment in your next creation. Give us a call and we’ll get you through the whole process.

Jamie Smith