HMRC is ruthlessly targeting performers, putting £100 billion creative economy at risk

We are gravely concerned that HMRC is conducting a co-ordinated attack against our members.

The union is under siege in defending its members on many fronts against the ruthless approach of the tax authorities.

The latest assault is a recent tax case that Equity has lost on behalf of a group of performers. These well-loved artists have enriched the lives of countless people and promoted the cultural reputation of the UK across the globe.

Instead of being celebrated for their contribution to the local culture and global reputation of the UK, these self-employed professionals are being pursued for National Insurance contributions, including paying for employers’ secondary contributions.

Whilst HMRC has accepted that this is not an issue of income tax avoidance, they nonetheless now stand ready to unleash their tax officials on our members.

It is a common misconception that well-known performers are wealthy enough to be able to afford having the carpet wrenched from beneath them.

However, performers do have career highs and lows like everyone else and whilst their fame often remains, their level of income often does not. For the Equity members involved, the threat of losing their homes is now very real and the stress of this case has affected their careers.

The implications of HMRC’s approach will not simply affect high profile performers, but all of those struggling to make a living pursuing their dream of entertaining the public.

HMRC’s attitude towards the creative community is fast becoming a crisis. We have written to the government to seek an urgent meeting to discuss why our members are being targeted in this way. The tax authorities need to realise that this union will never be bullied into submission, and will continue to challenge them in the defence of our members.

Our members represent the UK internationally as leaders in their field and make a huge contribution to the £100 billion the country receives yearly through the creative economy. They are often the faces that the world first thinks of when they think of the UK – we should value them as ambassadors, not seek to destroy their careers.

Christine Payne
General Secretary
Equity

 

Background

What is the case about?

Since 2011, a number of our high-profile members have been involved in an ongoing tax enquiry involving the alleged non-payment of Class 1 national insurance. The dispute revolves around the use of the Categorisation of Earners Regulations (“Cat Regs”) to impose a Class 1 NIC liability under the Intermediaries legislation for those operating through personal service companies in the period prior to 2014 when the Cat Regs were repealed in so far as they applied to entertainers. The dispute has been litigated through the mechanism of an informal test case in the Tax Tribunal and, following an appeal, reached the Upper Tax Tribunal on 11th March with many other performers awaiting the outcome of the lead case. Judgement was released on 9th April and the judges found in favour of HMRC’s argument. The sums involved are very considerable indeed and apart from the financial penalty members stand to suffer potentially huge reputational damage.

We have throughout backed our members in challenging the approach of HMRC to this case and we continue to believe that it runs contrary to the spirit of what was agreed with HMRC (or Inland Revenue as it then was) and DCMS (formerly the Department for English Heritage) during the period leading up to the enactment of the Categorisations of Earners regulations amendments relating to entertainers in 1998 and 2003. Parliament never intended the Cat Regs to do anything other than assist low paid entertainers access contributory benefits.

Why did Equity take this case?
We supported our members because we believed there were legal arguments that could be used to combat HMRC’s approach. We thought it particularly unfair that members would be liable for huge sums of secondary employer’s NICS (something like 75% of the total alleged to be owed in many cases) where such a level of liability could not possibly have arisen had they contracted directly.

How many people will it affect?
The Test Case group is around 60 members, but we know there were many more who were awaiting the judgement. The overall approach of HMRC is something that could affect our entire membership.

Can you provide the names of the people involved?
No, Equity will not be revealing any of the names of the people involved.

Why is HMRC targeting Equity members?
We are concerned that HMRC is targeting the entertainment sector and applying its powers in such a way that will make it much harder for members to continue in the profession and will have knock-on effects on investment in the entertainment sector. This is because we feel the HMRC are failing to understand how the majority of our members work.

What will happen next?
Equity is seeking an urgent meeting with the Department for Digital, Culture, Media & Sport on this case and other matters related to the HMRC. In terms of the test case participants we expect the tax authorities to now pursue them for large sums of money. For the Equity members involved, the threat of losing their homes is now very real and the stress of this case has affected their careers. The union will continue to give all the support it can to those affected by the Test Case decision.