13 June 2019
The HMRC are wilfully undermining the incredible success story of the UK’s creative industries. Our industries made a record £100 billion contribution to the UK economy in 2017, generating 5.5% of the UK economy, and accounting for 1 in 11 jobs – more jobs than in the financial services.
This success story is now under attack by HMRC. Tax officials are trying to demolish the consensus that was reached with the industry in a ruthless grab for revenue that appears to be driven by forces that do not understand our sector.
We recently lost a Test Case in the Upper Tax Tribunal. This was a complicated case involving high profile Equity members that had been going on since 2011. HMRC are trying to recover large sums of national insurance including employers’ national insurance from these members – members who HMRC have always accepted are self-employed for tax.
They did this by exploiting a loophole created by a conflict between two sets of regulations – one of which was a set of categorisation regulations set up expressly to enable our members to claim contributory benefits. We believe this approach to be totally unethical and contrary to the spirit and purpose of the legislation concerned.
The case has caused great stress to many of the members concerned – with some now at risk of losing their homes or being declared bankrupt. I really want to thank our member Robert Glenister for agreeing to be the lead in this test case. He put his head above the parapet on behalf of all the members concerned.
However, this is only part of what’s been happening with HMRC – the effect of their approach is spreading and – if we don’t stop it – it has the potential to affect all our members and all those who provide work to the industry in TV, film, theatre, radio; across the business.
Since November 2017 our Tax and Welfare team have been working closely with SOLT and UK Theatre to try and agree new tax guidance for actors and performers, which includes other workers – stage management, directors, designers and choreographers and role players.
This was intensive work, but by September last year it looked like we had achieved agreed wording with HMRC and it just needed to be signed off by its legal team. It was good guidance because it generally preserved the current self-employed tax status of our members while recognising their status as workers for employment rights. After months of delays by HMRC, on 5 April this year we received their final draft of the guidance and it was completely different from what had been agreed in September.
The new guidance is a complete bodge and a disaster.
It gives lots of weight to factors that simply don’t apply to many of our members, such as the ability to substitute or provide equipment, and it totally omits the importance of collaboration and the creative input of performers, which is so much a part of the established consensus.
If this new guidance becomes official, engagers would have no choice but to put most of you on to PAYE – not just in film or TV but also in theatre – and all the advantages of your dual status would be lost.
All engagers would face spiralling costs and administrative complications, which would put new production at risk. HMRC are on the verge of being out of control, so –
what are we going to do about it?
I am now making representations across government about the damage this guidance would have on the industry and we have been in contact at the highest level with HMRC. But we need the engagers to get on board – BBC, ITV, SKY, Netflix – as well as trade associations like the BFI, BFC, PACT, SOLT, UK Theatre, and ITC. To change this injustice we need their full support.
There will be more lobbying in the weeks and months to come and we will need your support with this.