Taxman bags £7m from Baggins and Co

FRODO BAGGINS may have evaded the all-seeing Eye of Sauron in J.R.R. Tolkien’s Lord Of The Rings trilogy, but the writer’s descendants haven’t been able to escape the attention of the taxman.

Following a ten-year wrangle over the spoils from Hollywood adaptations of the novelist’s classics, the Tolkien estate has agreed to pay more than £7million to HM Revenue & Customs. The dispute is understood to involve an out-of-court settlement in 2008 with New Line Cinema, the producers of the Lord Of The Rings and Hobbit film trilogies. The estate’s six directors include Tolkien’s sole surviving child, Priscilla, and his grandchildren Simon, Michael and Baillie.

Last night, a spokesman for the estate said: ‘There was a difference of opinion between HMRC and the estate over the correct tax treatment of a particular receipt and the estate was advised by leading tax counsel in this regard.

‘HMRC maintained its position on this matter – although it delayed for several years in reaching its final conclusions – at which point the estate resolved to accept the relevant demand rather than enter into litigation with HMRC.’

HMRC and New Line Cinema declined to comment.