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TV production companies face rise in NICs

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24th Feb 2012
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Changes to actors' national insurance liability could place a financial burden on television production companies, Grant Thornton said.

Grant Thornton and the Producers Alliance for Cinema and Television (PACT) - the trade association for TV, film and web production companies - are calling for the taxman to give clearer guidance on actors' National Insurance contributions (NICs). They also want production companies to tell them about their comments and experiences on this tax matter.

The tax treatment of production companies has been under the spotlight since 2010 when ITV lost a tax tribunal with the HMRC (ITV Services Limited and the commissioners for HMRC, TC 00836) over whether the actors it hires are employees.

Actors are often treated as self-employed for income tax purposes. In order to provide access to social security benefits, changes were made nearly 10 years ago to treat certain actors as employees for NIC purposes.

However, this change did not include the group of actors known as “key talent” who are in regular work and are often highly paid actors such as soap stars, presenters and top celebrities, Grant Thornton said. These individuals continued to be treated as self-employed for both income tax and NIC.

Since the ITV tribunal production companies have had to pay NICs for actors and entertainers on contracts involving any element of salary. HMRC published a briefing document in March last year which said that the findings of the ITV case would be applied with immediate effect to new or renewed contracts.

Now, HMRC is seeking to collect NIC retrospectively, Grant Thornton said.

“Production companies may find themselves liable for contributions back-dated for up to six years on key talent contracts, and with employers' NIC running at a historic rate of 12.8% of amounts paid, the overall cost for production companies could be significant,” Grant Thornton said.

Production companies will be liable not only for their contribution as an employer, but also for the employees' NIC, which would normally have been deducted from payments made to actors but which may not be recoverable from actors and entertainers where their contracts have ended or have been renewed, Grant Thornton said.

Grant Thornton and PACT want HMRC to:

  • Confirm that it will be following the guidance in the HMRC Brief 2010/11 and will not take retrospective action with regard to contracts of a type that were accepted by HMRC as falling outside the scope of the special NIC regulations
  • Clarify the type of contracts HMRC accepts as being outside the regulations

Barry Kimm, head of production services at PACT, said: “We are asking production companies to combine forces and share with us their comments, experiences and examples of contracts which HMRC has approved in the last six years. In collecting this evidence the industry can work together with HMRC to ensure the appropriate amount of NIC is recovered and guidelines are set in a transparent and fair manner."

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By dstickl
24th Feb 2012 16:08

IR35 applies to 'the group of actors known as “key talent” ' ?

Surely IR35 applies to 'the group of actors known as “key talent” ' , doesn't it, IF the actors are working through limited companies, because they're obviously offering personal service that can't be substituted, and they're controlled under the direction of Producers and Directors etc?

IF this is the case, THEN would any brave member of 'the group of actors known as “key talent” '  care to support my suggested narrowing of the focus of that "Fiscal Horror" of IR35, in next month's March 2012 Budget, of: Replace the words "by 5%" in ITEPA 2003 Part 2 Chapter 8 Section 54 (1) Step 1 with the following: "by a monetary amount that is the greater of either (a) the VAT registration threshold for a worker who did not work for a period of at least three hundred and sixty six calendar days after the date his or her previous contract for service ended or (b) five per cent for all other workers." ?

After all, once we get Joanna Lumley and/or her delightful colleagues on board, success of sensible change to IR35 should be assured !!

 

Note to the "Sun on Sunday": This would make a great story for your launch, involving as it does:

* Stars from stage and screen!

* The Rule of Law allegedly flouted at and from the top of HMG!

* Workers allegedly exploited due to the actions of big business in allegedly brushing off the original intent of F2M!

* Politicians in the Coalition continuing to support Labour's "Fiscal Horror" of IR35 in February 2012 - even though the Conservative Party and the LibDem Party had previously issued Manifestos to deal with IR35! 

* The run up to March Budget 2012!

 

What more does a Red Top Editor want??

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