Andrew Hubbard

Written by: Andrew Hubbard

Andrew Hubbard

Consultant

To be, or not to be self-employed. That is the question

Recent research into Shakespeare’s original manuscript has revealed that there is a word missing from the printed text of Hamlet’s soliloquy: the true reading is ‘to be, or not to be self-employed. That is the question’.

The proper tax status of actors has been a problem for centuries and a recent tribunal case, involving the actor Robert Glenister, shows that the problem is far from being resolved.

Most actors are engaged under employment contracts but a small number of stars are accepted by HMRC as being self-employed.

Employers’ National Insurance contributions are however payable in respect of their earnings on the basis that they are deemed to be in employment for NIC purposes: this is largely to ensure that they have access to contributory benefits while they are ‘resting’. 

So far, so good. But what about actors who provide their services via a personal service company? (A case I suppose of Romeo Ltd and Juliet Plc!). The familiar IR35 rules apply to charge PAYE and NIC where an individual, who would be regarded as an employee if he provided his services directly, provides them through a service company. 

But IR35 doesn’t apply where somebody’s services would otherwise have been provided on a self-employed basis. So, a self-employed actor operating through a service company would appear to be outside IR35. He certainly is for PAYE purposes. But what about NIC? Does the deeming provision for NIC also extend to personal service companies? This is at the heart of the dispute here. 

The interaction of the various regulations is mind-bogglingly complex, but the tribunal ultimately decided that Mr Glenister’s personal service company did have to account for NIC under the deeming provisions. Something like £150,000 will become due. This was a test case and a number of other actors may be affected by the decision, although we don’t know their identities at the moment.

This is a highly technical area of the law and it shows the complications which arise when two completely different sets of deeming provisions crash into each other. I wouldn’t be surprised to see an appeal here, because there does seem to me to be considerable strength in the taxpayer’s argument.

As the Bard (almost) said: ‘the course of tax litigation never did run smooth’.

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