Anyone who has listened to Philippe give one of his popular “How to survive the UK tax system” talks may well remember him explaining how to ensure you are classified as self-employed rather than employed.  The main advantage of the former being that business expenses are allowed to be used to reach the taxable profit, rather than an extremely restricted amount of expenses being allowable for tax purposes, limited to virtually only agents’ commission for employees.  HMRC has been encouraged by Equity, after three years of “complex but constructive discussions” to recognise the subtleties that these industries have which mean that bog-standard badges of trade just do not apply to these creative industries.  For example, an actor hired to carry out a role, cannot simply “substitute” themselves whereas a musician will often use a deputy during a show’s run.  Substitution is one of the criteria HMRC uses to work out if an individual is self-employed or not.  HMRC has accepted that an actor hired to carry out a particular role is indeed self-employed because they meet many of the other criteria of being self-employed.  On the other hand a performer taken on for a period of time to perform an unspecified variety of roles is likely to be treated as an employee; HMRC’s fall back example of this seems to be a ballerina in a dance company.

HMRC said “HMRC has issued new guidance to help actors and other performers, as well as their engagers, get their tax right and to promote a better understanding of how employment status in the industry affects tax. HMRC worked collaboratively with Equity and other representative bodies and engagers to produce this guidance in the interests of transparency and clarity at what is of course an incredibly worrying time for everyone who makes their living in live entertainment.  In this spirit, the guidance also provides insights into HMRC’s view of how employment status rules affect the taxes of stage management, theatre designers, directors and choreographers.”

Fingers crossed this marks the end of “LP10” or “Lorimer” letters.  Well done to Equity for keeping the pressure up on HMRC despite all the communication issues the pandemic must have brought.