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Tax returns: A music-industry survival guide

It’s up there with quitting smoking and joining a gym: at the start of January every year, millions of Britons pledge to avoid leaving their tax return until the last minute.

A large proportion of music-industry professionals are self-employed, so for many of you this grim January ritual will be all too familiar.

But with the 31 January deadline approaching fast, if you still haven’t started your self-assessment tax return you’ll need to get your skates on.

If you file your return after the deadline you will face an instant £100 penalty, with further fines and interest charges the longer you delay.

While no-one enjoys tax returns – even accountants – they are a legal requirement, and the means by which HMRC works out how much tax you should pay on your income.

Those involved in playing or putting on live music tend to have lots of separate bits of income which they need to record on their annual tax return, so their returns can be more fiddly than most.

But they can also reduce their tax bill substantially – or even get a tax refund – by offsetting their expenses. These expenses can include everything from musical instruments to travel costs, costumes, hair and make-up.

Here’s a quick survival guide to help you get your tax return done on time and claim the expenses to which you’re entitled.

The basics
You must complete your tax return by midnight on 31 January. It’s likely to take several hours to do, so don’t leave it until the last day – this is a recipe for missing the deadline, or having to rush things and making a mistake.

Before you start, track down the information you’ll need. This includes:

Those in the live music business tend to have lots of separate bits of income which they need to record on their annual tax return, so their returns can be more fiddly than most

It’s also useful to have to hand details of:

If you haven’t filed a self assessment tax return online before, you must sign up to use HMRC online servicesMake sure you have your self-assessment reference number to hand before you start. It’s a 10-digit number called a unique taxpayer reference (UTR).

If you’ve used the self-assessment service before, you won’t need to activate your account again. But it’s worth checking well before the deadline that you know your user ID and password. If you’ve lost them, you can get a new one – but don’t leave looking for them until deadline day!

Getting down to business
Start by giving details of any work you did as an employee – your payslips and P60 will show your gross earnings and how much tax you paid.

Because you have already have been taxed on this income through PAYE, you won’t be taxed on it again – but you must still declare it.

If you don’t have a P60, your March 2016 payslip will give you much of what you need, as it should show your salary in that job for the tax year to that point, along with how much tax was withheld from your earnings.

Next you’ll need to declare any work you did for which you were paid as a freelancer, such as one-off gigs, sessions or private music lessons.

If you have payslips or invoices for this work, great. If you don’t, your bank statements will give you much of the same information – though you may need to do some detective work if you were paid by cheque.

Your bank statements will also contain other things you may need to include, such as how much you paid in pension contributions, charitable donations and so on. Even if these are small amounts, make sure you include them as doing so can bring down your tax liability.

Don’t forget to declare any other income you might have received – such as rent on a property you own or interest from savings and investments.

Your bank statements will often show how much interest you received over the preceding year, but if you have mislaid them, a simple telephone call or check of your online statements should give you the relevant information.

Expenses can range from the obvious – travel expenses and the cost of buying or servicing musical instruments and staging – to the less so, such as costumes, hair and make-up

Blessed relief
Make sure you claim all the tax relief you are entitled to. This could include many of the expenses you incurred while working freelance.

It can range from the obvious – travel expenses and the cost of buying or servicing musical instruments and staging – to the less so, such as costumes, hair and make-up.

It can also include the cost of research you carry out for your work – such as buying sheet music, streaming or downloading music – as well as any training you undertake to improve your professional skills, and your membership dues if you’re in the Musicians’ Union.

Ideally you’ll have receipts for all these things, so you’ll be able to put in exact figures. But if you can’t find exact figures you can put in estimates. Ensure the figures you give are as accurate as possible and note on the form that they are ‘provisional’.

HMRC will deduct these costs – deemed ‘allowable expenses’ from your tax liability. This will reduce your tax bill, and if you had a job for which you paid tax already, may even earn you a tax rebate!

This perk is particularly valuable for those starting out on a musical career, who tend to have a salaried job – either full or part-time – in addition to their freelance earnings from music. If your allowable expenses exceed your freelance earnings, you could receive a cheque from the taxman!

Working out which expenses you can claim for can be tricky, so you should consider taking expert advice from a chartered accountant. Their help could save you much more in tax than the cost of their fee.

Any questions
For more general queries, you can call HMRC’s self-assessment helpline on 0300 200 3310. Make sure you have your National Insurance number UTR to hand when you phone, and be prepared to wait – the phone lines get very busy at this time of year!

 


Alistair Bambridge is a partner at Bambridge Accountants.

HMRC investigates secondary ticketers’ taxes

British tax collection agency Her Majesty’s Revenue and Customs (HMRC) is reportedly investigating the tax affairs of several secondary ticketing sites operating in the UK.

The news comes on the recommendation of Culture, Media and Sport Committee – the select committee that recently heard evidence from managers, artists and ticketing companies in a session on ‘ticket abuse’ – which recommended last month that HMRC look into the “under-reporting of income by known touts”.

In a statement to the BBC, the agency says: “HMRC will always act where we believe individuals and businesses are not declaring their income correctly or paying the tax that they owe.”

Four secondary ticketing companies – StubHub, Viagogo, Get Me In! and Seatwave – are already under investigation by the Competition and Markets Authority for alleged breaches of consumer protection legislation.

 


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UK parliament recommends fresh ticketing inquiry

The British parliament’s Culture Media and Sport (CMS) Committee, which yesterday heard evidence from managers, artists and ticketing companies in a session on ‘ticket abuse’, has recommended a fresh investigation into “the whole area of ticketing” in response to “far-ranging and disturbing factors in the market”.

In a statement, issued this morning, the committee says it was “aware of the distortion of the ticketing markets caused by the use of technology (bots and software) to ‘harvest’ large numbers of tickets as soon as they went on general sale”, but that evidence from those opposed to the current resale market – and unsatisfactory responses from the ticketing companies represented – “led us to conclude that a fuller investigation of the whole area of ticketing is needed”.

The session brought to light “clear indications of too-close relationships between those selling tickets on the primary market and sellers on the secondary market,” reads the statement, which also criticises’ “witnesses’ failure to give satisfactory answers to the committee’s questions about where companies’ main profits are made, the possibility of even Chinese walls between parts of the same company and the willingness of the ticket selling companies to even try to identify, let alone bar, large-scale ticket touts and fraudulent sellers”.

A roundtable discussion, headed by secretary of state for culture, media and sport Karen Bradley and previously only announced as taking place “before Christmas”, will be held at the end of November.

“We will decide how best to take the issues forward once we know the outcome of this,” says the committee, “and in light of the conclusion of a Competition and Marketing Authority [sic] investigation, expected shortly, into whether ticket companies are complying with the law.

“This is fantastic news for all UK music fans and those who have campaigned so long for action …Yesterday, the dysfunctional market and bad practices of the big four secondary ticketing websites were laid bare”

“In the meantime, we will be writing to the secretary of state urging her to study the evidence given to us about the under-reporting of income by known touts and to raise this with HMRC [Her Majesty’s Revenue and Customs] as an area which warrants their investigation.”

Despite the committee being unimpressed by the ticketing company witnesses – StubHub was, said MPs, “not doing anything to check who [the people selling tickets on your site] are”, while Ticketmaster UK’s Chris Edmonds was told “you are not helping yourselves”, in response to his admission that tickets for Phil Collins’ upcoming UK tour, for which resale is prohibited, are listed on Ticketmaster/Live Nation-owned Get Me In! – all present agreed on the need to ban the use of ticket bots. “We intend to table an amendment on the report stage of the Digital Economy Bill later this month to effect this,” says the committee.

A spokesman for the FanFair Alliance welcomed the news. “This is fantastic news for all UK music fans and those who have campaigned so long for action,” he says in a statement.

“Yesterday, the dysfunctional market and bad practices of the Big Four secondary ticketing websites were laid bare before members of the Culture Media and Sport Committee. We anticipate that a fuller investigation of this market will lead to much-needed reform. The FanFair Alliance fully supports further actions into the fraudulent activities of online ticket touts and the industrial abuse of this market, as well as an amendment to the Digital Economy Bill to ban the misuse of bots.”

 


Nigel Adams, the MP for Selby and Ainsty, who sits on the Culture Media and Sport Committee, tells IQ today he doesn’t expect the government to respond to the Waterson report until after the roundtable discussion later this month.

When asked if he shares Ian McAndrew’s view that primary ticketing companies passing to the secondary market are violating existing consumer legislation, Adams says that “may well be the case” and will be discussed with Bradley.

He also calls more transparency from promoters and ticketers into how many tickets are actually available to the general public.

 

 


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