The HM Revenue & Customs (HMRC) Risk and Intelligence Service has served entertainment agents with information notices requiring the submission of details surrounding payments they received, on behalf of their clients, during 2012/13. The entertainment agents represent actors, actresses, after dinner speakers, comedians and other creative performers.
The information notices were issued under Paragraph 1 of Schedule 23 FA 2011 in November 2013 and the details requested had to be returned to HMRC by 14 January 2014.
The details requested by HMRC applied to all payments the agent received which were for or belonged to another person (including individuals, partnerships and limited companies) for the period 6 April 2012 to 5 April 2013 inclusive.
In respect of each payment received, HMRC required the following particulars:
- The name of the person for whom payment was received
- The person’s address including postcode (‘care of’ addresses were not acceptable)
- The total amount of the gross payments received for that person for the year
- The currency code for the payment (e.g. GBP for Great British pounds)
- The period end date for the payments i.e. 5 April 2013
- A reference number from the agents accounting system to identify the record in case of any subsequent questions
- The entertainment agent’s company or organisation name.
The only payment information which did not have to be returned was where the total amount received by a performer was less than £1000 during the year or where the payment received was liable to PAYE.
The information notices warned the agents that failure to comply would attract an initial penalty of £300 and up to £60 a day for a continuing failure.
How will HMRC use the information?
HMRC initially wrote to the entertainment agents last summer to warn that the information notices were going to be served and reassured them that ‘This is not a check of your tax affairs.’ It can, therefore, be assumed that HMRC is risk assessing the income declared and expenditure claimed for by the performers themselves.
Once the risk assessment process has been completed, HMRC could decide to simply adopt enquiries into those returns considered to be potentially incorrect.
Alternatively, if the process suggests widespread errors, HMRC may decide to start a campaign to encourage voluntary disclosures of inaccuracies. HMRC is targeted to launch four campaigns every tax year and targets chosen to date include medical professionals, electricians, plumbers, online traders and fitness coaches.
A less likely option is for HMRC to use a Task Force approach. Task forces typically focus on geographical locations and involve multi-discipline teams from different Government agencies. Unless the risk assessment highlights a particular problem, for example in London, with actors falsely claiming benefit whilst working, the campaign approach would seem more inevitable.
However, it should be noted that HMRC has denied the entertainment industry is part of some sort of national activity.
When the initial letters were issued, I uploaded a blog post with the news https://abbeytaxblog.co.uk/2013/08/20/does-hmrc-have-the-entertainment-industry-in-its-sights/
Nick Huber, writing on AccountingWeb, asked HMRC to comment. The response received from HMRC said ‘We routinely ensure everyone pays the right tax and that includes anyone who has taxable income they haven’t told us about. We want to make sure no one builds up a tax debt that has to be paid off in the future.’
Make of that what you will!
Author: Guy Smith, Senior Tax Consultant on the ReSource Tax & VAT Consultancy Team.
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