• April 2020

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    6   7   8   9   1011121
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    202122232425263
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    • 6th - Start of 2020-2021 tax year
    • 19th - HMRC cheque payments due
    • 22nd - HMRC BACS payments due
    • 13th - Easter Monday (E,W,NI)
    • 10th - Good Friday (E, W, NI, S)
  • May 2020

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    ----1   2   3   4
    4   5   6   7   8   9   105
    111213141516176
    181920212223247
    252627282930318
    • 8th - May Bank Holiday (E,W,NI,S)
    • 19th - HMRC cheque payments due
    • 22nd - HMRC BACS payments due
    • 25th - Spring Bank Holiday (E,W,NI,S)
    • 31st - Employee P60s due
  • June 2020

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    • 19th - HMRC cheque payments due
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  • July 2020

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    • 6th - Forms P11D, P11D(b) and P9D due
    • 6th - Form 42 Due
    • 12th - Battle of the Boyne - Bank Holiday (NI)
    • 19th - HMRC cheque payments due
    • 19th - Payment of 2019/20 Class 1A NIC due
    • 22nd - HMRC BACS payments due
    • 31st - Payment of 2019/20 Class 2 NIC due
  • August 2020

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    • 3rd - Summer Bank Holiday (S)
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    • 31st - Summer Bank Holiday (E,W,NI)
  • September 2020

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    -1   2   3   4   5   6   22
    7   8   9   1011121323
    1415161718192024
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  • October 2020

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    5   6   7   8   9   101127
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    • 5th - Personal Income Tax Statement
    • 19th - HMRC cheque payments due
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    • 31st - Paper Self Assessment Tax Return Deadline
  • November 2020

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    • 19th - HMRC cheque payments due
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    • 30th - St. Andrew's Day (S)
  • December 2020

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    • 19th - HMRC cheque payments due
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    • 25th - Christmas Day
    • 26th - Boxing Day
  • January 2021

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  • February 2021

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    8   9   101112131445
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  • March 2021

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    293031----52
    • 17th - St. Patrick's Day (NI)
    • 19th - HMRC cheque payments due
    • 22nd - HMRC BACS payments due
UK Tax Week

   06 Jul - 12 Jul

41

 

IR35 - What does it mean for production?

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Summary

Following the government's announcement that the reforms to the off-payroll tax rules (IR35)-due to be introduced in April this year-will be postponed until 2021 following the global escalation of Covid-19.

IR35 - What does it mean for production?

 

The Government has announced that the reforms to the off-payroll tax rules (IR35), due to be introduced in April this year, will be postponed until 2021 to alleviate pressure on businesses and individuals whilst they grapple with the financial and operational impact of Covid-19.

 

This gives welcome time to understand how your production's PAYE processes will be affected by the HMRC's proposed changes for workers providing services to a private sector company through an intermediary.

 

Members of Wiggin's Cross Media - Off-Payroll Working Group have been assessing the implications. The Group, chaired by Ceri Stoner (partner, Wiggin) includes Sargent-Disc director Dr. Laurence Sargent and Tim Gillett director, Tax Advisory, Saffrey Champness. Laurence says, 'The Group looked at the potential impact of the proposed extension of IR35 legislation on production from the perspective of the unique way in which people and companies are contracted to provide services for the UK film and TV industry. HMRC has listened to the feedback and adopted aspects of the assessment process.'

 

What is IR35?


The off-payroll working rules (IR35) introduced in 2000, can apply to workers providing services through their own personal service company (PSC), a partnership, or a managed service company.

 

The Government's reforms for private sector companies are intended to improve compliance with the existing rules by moving the tax assessment and payment responsibilities from the contractor to the end client, which in most cases in the sector would be the production company. These follow similar measures introduced in the public sector in 2017. These reforms are now due to be introduced on 6 April 2021.

 

'The legislation aims to even the playing field between the public and private sector and to increase tax compliance, by taxing those who carry out work in a way deemed by HMRC to be analogous to that of an employee, the same as if they were actual employee.' says Stoner.

 

'Only medium and large private-sector bodies that meet two of three criteria will have to implement the IR35 legislation. They must have more than 50 employees, an annual turnover of more than £10.2m or a balance sheet of £5.1m, or more, importantly, if a company is owned by a larger firm, the test will apply at group level' says Gillett.

 

Stoner continues: 'It will be the production company's legal duty to determine whether an individual contracted through a third party is 'in fact' an employee for tax purposes. They will need to review their intermediary service relationships and have robust procedures in place to determine which individuals should be paid through their PAYE system'.She adds,'I would advise the production company to maintain a record of their assessment with a clear explanation justifying why a contractor has been categorised as an employee - or, if HMRC's online CEST tool was used to determine status, they should keep a copy of the result and the question and answer audit trail generated.From April 2021, an individual working through a loan out in receipt of an employment status assessment (known as a status determination statement) can challenge the decision of the production company. The production company is then legally obliged to provide a considered response to the contractor within 45 days.'

 

Cost Implications


Under the new rules, the production company will be responsible for any unpaid employment tax, any potential penalties from HMRC and, if applicable, the apprenticeship levy.'They will not be responsible for holiday pay, deducting student loan repayments, statutory payments or auto-enrolment pensions for those engaged through an intermediary/limited company. The individual worker will continue to be employed by the intermediary - with that entity retaining responsibility for those payments,' explains Tim Gillett.

 

Assessment Tools

 

The HMRC Employment Status Manual provides guidance to help contracting companies to determine the status of individual workers - https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm0500.

 

HMRC has agreed that some behind the camera roles have self-employed status provided the individual meets certain criteria. Similarly IR35 will not apply to these roles if services are supplied through a third party. These roles and their criteria were updated last December following engagement with the industry, including Wiggin's and Deloitte's respective media groups. These roles are now in the live pages of HMRC's guidance - Appendix 1 (ESM4118) detailed here - http://www.hmrc.gov.uk/gds/esm/attachments/roles_normally_treated_as_self_employed_formerly_appendix_1.pdf .

 

Under the updated guidelines, the criteria listed in Column A or Column B of Appendix 1 must be fulfilled.  For roles marked with an asterisk * in Column B, the engagement is on a "specific production" for a finite period and replaces the previous nine month rule.  A "specific production" means either:

  • a feature film, single drama, single documentary, commercial or music video, or
  • a single programme or series of programmes, at a specific interval for a fixed term.

 

Each time a programme or series is recommissioned, an individuals' employment status should be reviewed, prompting the question Is this a new or separate agreement or an overarching, longer term arrangement?

Where a role is not included within Appendix 1:

  • Individuals who work in a succession of short term engagements with a large number of clients can apply for a Letter of Authority (known as a 'Lorimer Letter') from HMRC to satisfy contracting companies that they are not employees.

 

Alternatively:

 

If circumstances change, the contracting body should look at the whole picture once more and apply HMRC's general guidance.

 

This article is for general information purposes. It is not addressed to any specific parties and does not constitute advice (legal or otherwise) to any person.

 

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