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HMRC has recently issued a number of National Insurance demands to actors and performers who work through personal services companies.

The demands include arrears dating back to up to six years plus interest and penalty charges and have arisen as a result of a new interpretation of existing tax legislation. The IR35 rules have previously not applied to service companies used by actors and performers. This is because, following a decision involving ITV last year, actors are likely to be are treated as self employed for taxation purposes unless they are engaged for a specific performance. However, they have still been engaged as employees for National Insurance purposes, thus avoiding having to pay the latter on their earnings. It is not yet clear whether the current demands will set a precedent for further claims for arrears by HMRC.

HMRC has recently carried out a wider review of the IR35 rules, which govern the taxation of personal service companies and contractors. The rules were implemented in 2000 to prevent the use of personal service companies and other intermediaries as a sham to avoid employee tax and National Insurance liabilities. The Office of Tax Simplification’s interim report on the rules was published earlier this year, giving three options for their reform – to abolish the rules, to introduce new tests into them or to leave them as they are and improve their administration. The Government has opted for the latter option so it is more important than ever that contractors and those working through personal service companies ensure that they are not contravening the rules.


Written by Andrew Hodges

June 6, 2011 at 8:00 am

Posted in Comment, LinkedIn

Tagged with , ,

2 Responses

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  1. Great post it will help a lot for the investers

    Communist Blogs

    July 4, 2011 at 8:34 am

  2. National Insurance purposes, thus avoiding having to pay the latter on their earnings. Companies and other intermediaries avoid employee tax national insurance libilities……………
    Thank you for your information…………………..

    National insurance

    July 4, 2011 at 10:27 am

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