I suspect most commercial theatre producers aren’t big Grand Theft Auto fans, but I wonder whether some of them might have paused over a story in the Sunday Times last weekend about the hit video game.
Rockstar North, the Edinburgh-based company behind the controversial global hit, found itself in the firing line over its tax affairs.
Under the headline ‘Grand Theft Auto’s £42m ‘heist’ on the taxpayer’, the story detailed the legal but ethically questionable practice undertaken by the company of “paying no UK corporation tax but claiming millions of pounds in public subsidy for the game’s contribution to British cultural life”.
The company is the latest in a string of organisations to have been targeted by Tax Watch, which describes itself as “an investigative think tank which aims to broaden public participation in the debate on tax”. The main thrust of its work has been around the legal practice of tax avoidance (rather than tax evasion, which is illegal) by multinational companies – especially tech firms, which often make large revenues from customers in the UK but pay minimal tax here by channelling profits through overseas parent companies.
Its decision to focus on Rockstar North marks an interesting development, because the ethical argument against tax avoidance is strengthened by the fact that the company is receiving subsidy (of a kind) through the Video Games Tax Relief, in the form of tax credits, while also allegedly paying no corporation tax (for which the system is designed to be a relief).
But what does this have to do with theatre? Well, the Video Games Tax Relief is one of the government’s Creative Industry Tax Reliefs; another is the Theatre Tax Relief. While there are some differences between the two schemes, they operate broadly in the same way. More importantly, the ethical arguments against a theatre producer claiming tax credits while paying no corporation tax in the UK would be similar.
In fact, bearing in mind the link that the UK’s commercial theatre sector often highlights (quite correctly) between the ongoing success of the West End and talent development in the subsidised sector, one might think that the ethical case against tax avoidance would be even stronger in theatre than the video games industry, which does not have a major funded sector.
So far, theatre has avoided this kind of investigation, but producers might like to take a moment to ask themselves (and their accountants) whether their own tax affairs would stand up to a similar level of scrutiny.
Alistair Smith is the editor of The Stage. Read his weekly column at thestage.co.uk/author/alistair-smith