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Film and Television
Industry Guidance Notes The 2003 Edition of the Film and Television Industry Guidance Notes is now available. There are some interesting topics covered in the new edition including the following: The Inland Revenue have issued guidelines on the Special NIC Rules for Entertainers. New rules take effect from 6 April 2003. There are new criteria to determine whether an entertainer is to be treated as an employee and guidance how the new regulations will work across the entertainment industry; Broadly instead of a‚ wholly or mainly salary test, those entertainers whose remuneration includes any element of salary will be treated as employees. If subject to the regulations there will be liability for Class 1NICs on all earnings from the engagement. The new regulations are aimed at reflecting the NICs position of entertainers prior to July 1998, when there was a distinction between entertainers treated as self-employed and those treated as employed, based on the terms and conditions of their engagements. The majority of entertainers are engaged on the basis of payments of salary, but a small proportion of performers are paid a fee for an engagement not dependent on the time worked. Where the payment is a fee for the production, not a salary, and this would have to be made clear in the contract, the entertainer will remain self employed for NICs purposes and liable to Class 2 and Class 4 NICs. The intention is that these regulations will apply to film extras and walk-on parts. Key Talent artistes are excluded, as they will be contracted to appear in productions for which their remuneration is not directly calculated according to the period of weeks or months they are assigned to the production. Information is also given on the arrangements for enabling engagers and entertainers to claim refunds of Class 1 NICs paid in error as a consequence of the superseded regulation. If engagers have any questions about the status of their workers in the light of the new legislation or any individual wishes to query their status they should contact us. New Child Trust Funds The child Trust Fund will provide children born from September 2002 with an endowment of £250 at birth. An additional £250 will be available for children from low-income families. The proposal will allow up to £1000 to be added to the fund each year by family and friends. The fund cannot be accessed for 18 years. Revenue errors A new version of the guidance note on what to do to claim back professional fees incurred in sorting out mistakes made by the Inland Revenue has been issued. There are however no changes in two key areas namely the fee must not only be billed, but must actually be paid for accountant’s time in sorting out Revenue errors and the problems and time taken for people trying to sort out incorrect tax credit notices and payments are only referred to obliquely. Cycle to work days Following the announcement earlier this year, the Inland Revenue have removed the limit on the number of occasions that an employer can provide their employees with tax free meals or refreshments on designated cycle to work days. This change comes into effect from 25 June 2003. Most notices on value added tax (VAT) issued by the Commissioners of Customs and Excise set out their views as to the interpretation and administration of VAT law. In general, these notices are not part of the law, but there are exceptions Corporation Tax and intangible assets New rules for the taxation of companies' intangible assets were introduced in the Finance Act 2002. These rules give companies tax relief on their intangible assets, such as patents or trademarks, either in line with the treatment of assets in their accounts or, as an alternative, a deduction of 4 per cent of the value of an asset each year until it is fully written down. The new rules generally apply only to assets created, or acquired from unrelated parties, after 31 March 2002. Schemes exist which aim to bring other assets already in existence on 31 March 2002 into the new regime, to enable them to receive the 4 per cent relief per year. This would allow companies to transfer assets within a group but the same parties would still be unrelated for intangibles purposes. The transaction would bring the assets into the intangibles regime. These schemes are intended to enable a company to continue to receive tax relief for a period of 25 years. The Government has announced that amendments to these rules will be introduced in a New Clause in the Finance Bill. The New Clause will deny relief in all future accounting periods to such scheme assets, regardless of when transactions took place. They will not revisit past periods in which companies may have claimed relief. For companies' accounting periods, which began before, and end after 20 June 2003 the implementation date of the new clause, any relief that may be due under the law prior to its amendment will be apportioned across the period. Inheritance tax and reservation of benefits There are special rules on the taxation of lifetime gifts where the person making the gift (the donor) reserves or receives any material benefit from the gifted asset. These rules are intended to prevent the avoidance of the IHT charge on death through a lifetime gift aimed at reducing the value of the donor's estate for the purposes of the tax, without the donor having to give up enjoyment of the asset concerned. In its recent decision in the case of CIR v Eversden the Court of Appeal held that these special rules do not work when gifts by a married person are routed through a trust for their spouse. The Government is amending the existing provisions so that they will apply in these circumstances. The new provisions will disapply the current relief for gifts made on or after the 20 June 2003 where the property becomes settled property by virtue of the gift and the trusts of the settlement give an interest in possession to the donor's spouse, so that the gift is exempt from IHT by reason of the exemption for transfers between spouses and the rule which treats an interest in possession as equivalent to outright ownership. Provided that between the date of the gift and the donor's death the interest in possession comes to an end and when that interest in possession comes to an end, the beneficiary does not become beneficially entitled to the settled property, or another interest in possession in it. The original disposal by way of a gift will be treated, where relevant, as having been made immediately after the beneficiary's interest in possession ends, so that the circumstances before that time will not be considered in determining whether the gifted property is "property subject to a reservation" for IHT purposes. New Pension Scheme Rules The Government issued a Consultation Document in December 2002 proposing a simplification of the tax regime for pension schemes and the reduction from the existing eight schemes to one unified scheme. The Government has stated it is going to press ahead with the changes but it will have a further consultation this autumn on the detail of the new legislation. Legislation is to be introduced in 2004 but the Government has bowed to pressure and has put back by 12 months the introduction of the new regime which will now come into force with effect from 6 April 2005. Plant Hire The Revenue now accept that if plant or machinery is hired out with an operator this is to be treated as the provision of a service and not mere hire. So if the owner is a small or medium sized enterprise 40% first year allowances will be available. If the asset is to be predominantly provided with an operator but on some occasions it will be hired out on its own then first year allowances will also be available. The provision of building access services by the scaffolding industry amounts to a construction operation and is therefore more than mere hire. This does not apply to businesses that simply supply scaffolding poles etc. for use by others. This change does not affect claims to capital allowances that have been agreed for past periods in accordance with previous prevailing practice where those periods are now closed. However claims for open periods can presumably be revised. If you would like assistance in determining whether this change affects you please contact us. Customs Duty De minimis Limits It is proposed that Customs Duty not exceeding 10 Euros will be waved. This would apply to small consignments of goods imported into the UK from outside the EU and which are declared directly to home use and free circulation. The date of implementation will be notified at a later date, but Customs hope to have the waiver in place by the end of the year. Face Value Vouchers A new VAT Information Sheet has been published, which gives further guidance on all aspects of the VAT treatment of face value vouchers following changes introduced in Budget 2003. The changes took effect on 9 April 2003. If you would like a copy of the information sheet or wish to get further advice in this area please contact us. Prior to that date, VAT was only accounted for when the voucher was redeemed for goods or services and then usually only on the initial amount for which the voucher was sold. Face Value Vouchers are vouchers, tokens or stamps with a cash value stated on them or recorded in them. They must be supplied for a consideration and carry a right to receive goods or services without the necessity for further payment, although further payment may be made. Examples include gift vouchers, telephone cards, book tokens, and electronic top-up cards. They can be in either physical or electronic form. Refunds of VAT incurred by traders in other EU States and certificates of VAT registration When traders make their first claim in another Member State, they must include a certificate from their own tax authority showing that they are registered for VAT. In the UK that certificate is provided on form VAT66. Following an internal review of VAT procedures, the work of issuing VAT66 certificates has been transferred from Customs National Advice Service to Customs National Registration Service. With effect from 16th June 2003, requests for certificates should be made in writing to the National Registration Service. If you require assistance please contact us. VAT notices having the force of law An amended Notice has been published, changes have been made to update references to notices which have the force of law. |
