theatre production

[niddev]

I have a small theatre production that I put on every year during the summer for three weeks. It has got very popular and last summer the taking were £77000. Most of my expenses are actors wages so there is not much VAT to recover. I do not want to have to charge VAT on my ticket sales as this will involve a 20% increase in prices and the public will not accept this in such difficult times. To absorb the Vat in my present prices would mean making a loss. Do I have to register for VAT because my turnover has exceeded £73000. Any advise would be most welcome.

 

[David Griffiths]

Your turnover exceeded the VAT limit last year - surely you should have registered then?

 

[niddev]

I didnt realise that we had taken that much because some of the takings were sponsorship which we received later. Obviously at the time of the production we did not know what our sales would be over the three week period but we did better than expected. This year our sales of tickets and sponsor ship may well be below the Vat threshold.

 

[Scalloway]

Sponsorship may not be liable to VAT. Have a read of this

http://customs.hmrc.gov.uk/channels...HMCE_CL_000937&propertyType=document#P31_2244

 

[niddev]

Thanks for the thought but sadly we gave hospitality, tickets etc.

 

[paulears]

The rules on actors also changed recently - with HMRC now treating self-employed actors as self-employed for tax purposes, but thanks to the actor's union Equity, they are now required to pay class 1 NI and you the employers contribution, even though you probably have not considered them as employees. I'm a production manager, and over the Christmas panto season, it cost many of the cast (those who were not a limited company) nearly a thousand pounds, and the production company a considerable amount too. This coupled with your VAT problem means I'd personally get proper advice. My accountants had trouble getting the confirmation from HMRC, but in the end, it was confirmed that these NI payments were required. You may fall into the same category and might have a large outstanding NI payment you're not aware of, due? VAT on ticket sales is a fairly common problem, but I'm surprised you don't have expenditure that has VAT content. It won't offset it that much - but you must have all sorts of expenditure?

 

[da8iwr]

http://www.hmrc.gov.uk/vat/start/register/register-late.htm

You must register for VAT if your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £73,000, or you expect it to go over that figure in the next 30 days alone.

 

[niddev]

Interesting one about NIC class 1 on self employed actors. As I understand it this does not apply where the actors were engaged to perform a specific role in a specific programme, engaged for a specific period of engagement and recieved a single total inclusive fee. Am I correct ? Otherwise we might be in trouble.

 

[paulears]

Sadly not. The particular case in point was pantomime. Artistes contracted for a specific production, with pre-determined start and end points, on a fixed fee "for the job". In every case, these particular people have what is know as a key artiste contract, rather than a supporting artiste contract, and invoice for the full contract price, which is then paid out in weekly part-payments. Historically, the production company (one of the very big ones) ha always done this for the people on the posters - and no deductions for tax or national insurance were deducted. The only exception this year was for those who trade as "Fred Smith Ltd". The supporting cast always had tax and NI as appropriate. Those who supplied UTRs would not have tax deducted, those without them would.

It cost the production company significant sums. Top turns frequently are limited companies, but by no means the majority. It also causes some book-keeping issues - in my own case, I raise an invoice for £X, but the payments don't clear the total. So you have to create a balancing payment for the unpaid proportion, which for simple people like myself, gets very confusing - and worst of all, because I've never claimed benefits, and hopefully never will, it really is wasted money. Ironically, just a day or two after hearing the bad news, Equity came to give a presentation to members of the cast who are not members, and they used this as an example of one of their triumphs - much to the annoyance of members of the cast who had seen in effect, a pay cut as the result of it.

My accountant was told repeatedly, this was a mistake, until she spoke to somebody who knew the exception to the rule, and confirmed it for her. The really annoying feature is that you could have a member of Stage Management on virtually the same contract total, who doesn't have the Class 1 deductions - my own son, doing his first work for the company, gave me his invoice to pass on to the office, and didn't get the deductions, while I did - and due to illness in others in the cast, spent far more time on stage than I did! So annoying!

I suppose the real problem is that most accountants are not experienced in this particular industry where self-employment is so common, yet up until now, we've had none of the special rules the construction industry, for example, have. My own sister is a tax inspector, and she'd not heard of this one, only to check and find it was indeed firmly in place!

 

[niddev]

Thanks for your reply. I have looked at this a bit more and found something on the ICAEW website that says that this is about a case with ITV who were employing actors on contract and not deducting class 1 NIC. ITV was required to account for NIC on most contracts because the payments included an element of salary. However it did not apply where actors were " engaged to perform a specific role in a specific programme, egaged for a specific period and received a single total inclusive fee".So I guess you can get round it, especially if it is not a standard equity contract.

 

[paulears]

The HMRC link ishttp://www.hmrc.gov.uk/briefs/national-insurance/brief1011.htm here.

My production company had over twenty productions over Christmas and unexpectedly needed to pay the employers contributions, so you can imagine this was a significant sum.

If it didn't apply to performers in theatre, as opposed to TV, I am certain the production company would have taken advice and saved the money. I think you should talk to Equity, and HMRC, because getting it wrong will be very expensive.

I heard the TV explanation too, but that was just additional justification to the special rule HMRC applied.


The HMRC explanation isn't exactly easy to understand, but would seem to apply to any actor who has their time bought by the production company - which is practically always the case when you engage an actor!