Soap stars - The bubble bursts!

Soap stars - The bubble bursts!

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A high profile 'soap star' client of mine has had a claim for travel from home to the studio disallowed on the basis that they are contracted to the programme for a year and any work they do at home is purely incidental. The Inspector is also taking a rather dim view of the other 'normal' expenses claimed for an actor on the basis that the actor is, in essence, employed.

Has any one else been able to argue the Sam West case covers all engagements - even the long ones?

How about the refusal to allow travel costs on this basis?

All comments gladly welcomed!
Jonathan Ford

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By AnonymousUser
03rd Oct 2002 08:55

CLEAN CUT SOAP
Nick

It is relatively straightforward to create nominee shareholders, directors and company secretary.

As far as Companies House is concerned it is a question of filing the forms 288a with the details of the nominee director and company secretary. The share ownership is detailed on the annual return (assuming the first return). Alternatively a stock transfer form will need to be completed.

You do not need to advise Companies House of the fact that the new officers are nominees. The nominees in turn will need to declare that they are directors on their SA return and enter `nil` as salary with a note that the directorship is as nominee.

There is then the question of protecting your client which is the whole objective.

To retain anonimity the true owner must relinquish all registrations at Companies House. In other words it will appear to the public that the owners and directors are the nominees themselves.

This should be done with a new company as any changes will still reveal the previous owner.

This then needs to be legalised. This is done by the use of a deed of beneficial trust. One signed by the nominee shareholder and one signed by each director/company secretary.

This is not as complicated as it seems. We have drafted and use such documents in these cases which have been carefully scrutinised by lawyers and work perfectly well. The deeds protect the true owner as far as current and future ownership, control and direction of the company its income and assets are concerned.

I would also reiterate that accountants are as much at risk of litigation by failing to act in the best interest of their clients as acting and getting it wrong.

There is no need to be afraid of IR35. If there is a risk, identify the weak area and correct it. As stated, the scenario outlined has been scrutinised by lawyers and IRNICO. We have encountered no problems.

Incidentally the income for performers are performance fees, residuals or repeat fees paid to the Company not as a salary to the individual.

Hope that helps but feel free to contact me if you need further assistance.

GRAHAM ASSOCIATES (INTERNATIONAL) LTD
WWW.GRAHAM.SAGE24.COM


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By nick farrow
03rd Oct 2002 12:04

Many thanks Robert

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By nick farrow
02nd Oct 2002 19:48

nominee directors & shareholders
Robert
I am pleased at your comments re service companies for actors in film & tv as I have adopted the same strategy - athough in Jonathan's case I would be slightly unrelaxed about the potential NI bite of IR35 in respect of those actors "whose remuneration consists wholly or mainly of salary" (to quote from the Film industry guidance notes)

How do I find out about using nominee directors & shareholders - can I get a leaflet from companies house?

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By AnonymousUser
02nd Oct 2002 09:08

SOAP STARS - DONT LET THE BUBBLE BURST
Jonathan

We also act for high profile soap stars and also other entertainment professionals in theatre, tv, film and the music industry.

I find the Revenue`s stance unusual. I presume your client has a standard Equity contract with the production company. If so this is regarded as self employed for tax purposes yet employed for NI purposes.

Naturally it is not possible to comment on your specific case as all the elements are not known. Much will hinge on the contract between your client and the production company.

For future reference where performers operate through the medium of a limited liability company and the contract is then with that company for the services of the performer it makes the whole business expenses process easier. In addition, it eliminates the deduction of class 1 nic and payments on account and usually results in lower tax bills.

The use of a nominee shareholder, director and company secretary retains anonimity for the performer at Companies House.

As in all `enquiry` cases it is important to challenge the Revenue on every aspect of their contentions.

Good luck!


GRAHAM ASSOCIATES (INTERNATIONAL) LTD
www.graham.sage24.com

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By jford
02nd Oct 2002 14:28

Thanks Robert
Thanks for your comments. The Inspector is not challenging the self employed status - which is under a normal Equity contract. He is challenging where the client's business is based - given that the actor travels to the studio everyday for work. He is arguing that the place of work is therefore the studio and the home to studio element is not allowable. I'm struggling with an argument against this as it seems fair enough!

From your points about incorporation of an actor I would be concerned about the IR35 implication. I know that IR35 wasn't intended to catch out this sort of thing but, if you take a step back, the contacts between the company and the production company could be seen as IR35'able. Call me a coward but I wouldn't want to be the test case!

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By AnonymousUser
02nd Oct 2002 16:05

SLIPPERY SOAPS!
Jonathan

If the Inspector accepts your client`s self employed status there should be little problem with the business deductions.

If the Revenue is attempting to assert that your client is `quasi-employed` then they would have to consider that the work at the studio is a site based employment.

"Site-based employees are allowed to deduct in full the cost of travel from home to the site on which they work. This is because the site will not generally fall within the definition of a ‘permanent workplace’ in ICTA 1988, s. 198A(2) (as inserted by FA 1997, s. 62(2)) because it is a place attended for the purpose of ‘performing a task of limited duration’ or for some other temporary purpose (ICTA 1988, s. 198A(2))."

Returning to the incorporation point. This in turn secures a registered address. The IR35 point is dependent on the terms and obligations of the contract.

This is increasingly common amongst major artists and organisations, such as the BBC, will readily amend contracts to the company. We have had these scrutinised by the Revenue and there have been no problems.

Remember it can sometimes be more risky not to act than taking a bold step.

Regards

GRAHAM ASSOCIATES (INTERNATIONAL) LTD
www.graham.sage24.com

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