Are actors subject to IR35 legislation?

Accountants in London will be aware that HMRC has been targeting specific industries recently in a bid to boost the Treasury coffers.

It has been widely reported that the Revenue has targeted the restaurant trade in London, as well as people working in the plumbing and medical professions. Now it transpires that HMRC is sending backdated demands for National Insurance to leading actors working through their own personal service companies.

These actors have their own limited companies and draw up contracts with employers so they can provide their services. Anthony Pins, an accountant at Nyman Libson Paul says HMRC is trying to reinterpret existing IR35 legislation to increase tax revenue.

Last year, the Revenue won a tax tribunal case against ITV. Actors in ITV drama series were deemed to be employees for the purposes of taxation unless they were hired for a single performance in a specific programme. It was determined that ITV had to pay employers National Insurance Contributions on the earnings of its actors.

According to a brief from HMRC at the time, the only actors who are exempt from this ruling are those who have either entered into an “All Rights Agreement” or are hired for a one-off episode, production or programme. All other actors fall under the Entertainers Regulations.

Under IR35 rules, HMRC could reclaim many years of back taxes, plus penalties, if actors are found to be working through their own limited company solely for tax purposes.

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