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Proposed Brexit merch tax will ‘harm grassroots sector’

Industry organisations raise alarm over regulations that would see musicians pay import duty and VAT in advance on all tour merchandise in event of no-deal Brexit

By Anna Grace on 30 Aug 2019

Is a no-deal Brexit the end of the line for grassroots touring?

Is a no-deal Brexit the end of the line for grassroots touring?


image © Duncan Hull

UK artists travelling to Europe will have to pre-pay import duty and value-added tax (VAT) on all merchandise they bring on tour with them in the event of a no-deal Brexit, according to new UK government guidelines.

European artists entering the UK would similarly have to pay taxes in advance for any merchandise they planned to sell while touring.

Under the regulations, artists would have to complete a long administrative process before embarking on tour with merchandise.

“If you bring goods into or take goods out of the UK in your baggage or a small motor vehicle, and you intend to use them for business, you must declare your goods and pay import duty and VAT before you move them across the border,” reads newly updated government no-deal guidance.

Industry professionals have raised concerns over the impact that such regulations would have on grassroots musicians.

According to Kelly Wood of the Musicians’ Union, the changes represent a “significant problem for touring musicians”.

“It’s a fundamental lack of understanding of the economics of grassroots touring”

“Merchandising  is essential for artists, as it can help to balance the books on tours with tight profit margins,” Wood tells IQ. “It’s also an essential ongoing part of an artist’s branding, which can help to grow a fan base and launch and sustain a career.”

Merchandise sales have boomed in recent years, with music merch sales worth nearly US$3.5 billion in 2018.

Merchandise is especially important for the grassroots sector, accounting for an estimated 30–40% of income generated by emerging artists touring in Europe.

“It’s a fundamental lack of understanding of the economics of grassroots touring to imagine that this process is remotely deliverable by new and emerging artists, either practically or economically,” says Mark Davyd of Music Venue Trust (MVT).

“One t-shirt sale is equivalent to 5,000 streams on Spotify, and band merchandise is the most direct way of supporting new and emerging artists,” says Davyd, adding: “We strongly urge the government to think again.”

“Artists are already having to piece together complex travel arrangements, itineraries, contracts and budgets”

The new regulations requires artists to apply for an EORI number, calculate the correct tariff, weigh goods, work out the value of the merchandise and decide on how to declare the goods to customs officials.

“The level of administration that these changes involve will prove problematic to artists who are already having to piece together complex travel arrangements, itineraries, contracts and budgets,” explains Wood.

The taxes on merchandise are not the only additional fees predicted to negatively affect musicians in the case of a no-deal Brexit. The UK’s Incorporated Society of Musicians has calculated that artists will face extra costs of up to £1,000 per year for customs documents, visas, medical insurance and more.

Industry associations, including UK Music and the Musicians’ Union, have repeatedly pushed for a ‘touring passport’ which would allow musicians and their crews to move freely post-Brexit.

 


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