Employment status of promotional staff

[GeoffArcher]

I do the bookkeeping for a model agency, and i have doubts about the employment status of the models. The agency provides models in the following areas: promotions, events, hospitality, photographic, and dancers. The models are paid on a self employed basis and sign a contract stating they are liable for paying their own tax/nic. The models do not get paid until the client pays, so they do take risk. The models do not pay the agency fees for signing up, and the agency is not obliged to find work for them. Some Models will work for other agencies but can still undertake a reasonable amount of jobs in a year with this agency. Others will do very few jobs. The fee for the job is agreed in advance.

I know there are indicators of employment, but after considering them, I’m still uncertain if the models should be classed as employed or self employed. Any tax legislation I read, suggests to me, PAYE & NICs should be deducted.

Can anybody offer guidance? Thanks

[section 44]

There are risk factors but, on balance and based on what you have said, I would say self-employed.

[ensigntaxation]

Hi Mr Archer,

Hope you're well.

It would be unusual (though not completely impossible) for such an arrangement to lead to a finding of the model / dancer being an employee. Without any specific reasons to scrutinise, I would expect HMRC to be relatively chilled out about it as well.

Hope this is of some help. Let me know if any Qs

Cheers
Andy

[GeoffArcher]

Thanks for your replies chaps.

My concern is the majority of the promotional work carried out is "sales promotion on manufacturers’ stands at motor shows etc, or mingling with crowds at race meetings etc, or offering free samples to promote sales." To my untrained eye, this seems to be captured by Agency worker tax legislation, meaning PAYE & NICs are due?

I'm looking at the following text on HMRCs website (source link http://www.hmrc.gov.uk/manuals/esmmanual/ESM2012.htm )

ESM2012 - Agency workers: specific exemptions/excluded services

Section 47(2) ITEPA 2003

Some workers to whom the agency legislation would otherwise apply are specifically excepted. They are workers who render services:
1.as an actor, singer, musician or other entertainer; or
2.as a fashion, photographic or artist's model; or
3.wholly in the worker's own home or (periods to 5 April 2003)at premises which are neither under the control or management of the client nor premises at which the worker is required, by reason of the services, to render them, or (periods on or from 6 April 2003) wholly at other premises which are neither controlled or managed by the client nor prescribed by the nature of the services; or
4.up to 5 April 1998 only, as a subcontractor in the construction industry within Section 560 ICTA 1988 (but note that this exception did not apply for NICs purposes).

The exceptions at a. and b. above apply only where the services are provided as an actor, model etc. A person who is carrying on a profession as an actor or model is therefore within the legislation where the engagement involves, for example:
•carrying out demonstrations in supermarkets to promote the client’s product;
•merchandising to keep supermarkets’ shelves stocked with the client’s product;
•sales promotion on manufacturers’ stands at motor shows etc, or mingling with crowds at race meetings etc, or offering free samples to promote sales. Alternatively, some are engaged to visit shops in specified areas to encourage owners to stock the client’s products.

[Generix]

I used to work for a company that employed entertainers on a temp/contract basis, and I believe there was some sort of issue with the tax.

My recollection was that it related to such arrangements for foreigners or for work taking place outside the UK, i.e. some sort of ithholding tax for entertainers.

Might also apply to domestic arrangement too - never really bothered myself with looking into it as it didn't impact the VAT treatment.

[towat]

While in theory every case has to be looked at individually on it's own merits (Lorimer vs Hall), in practice certain industries do claim that it is standard practice in that industry to use self employed persons. Until HMRC decide to specifically attack a certain sector it would be difficult for an individual Inspector to challenge an industry-wide accepted practice.

[section 44]

Why would an inspector challenge the use of self-employed persons?

[robbob]

Why would an inspector challenge the use of self-employed persons?

Presumably to get their hands on the Ers and Ees that that would be payable on the "salary payments", there will probably also be slightly less opportunity for the "employees" to then claim tax deductions for items as an employee when compared to what they could claim as being self employed (eg capital allowances on cars etc)

One recent tribunal decision that went against HMRC is available via the link below although this appears to be concentrating on the right to substitution as being the main factor for their success.
http://www.bailii.org/uk/cases/UKFTT/TC/2010/TC00454.html

HMRC do provide a status tool checker, it may make sense to enter the appropriate details in here and keep proof if this indicates self employment - note HMRC tend to update this tool regularly so it may be worth doing annual checks.
http://www.hmrc.gov.uk/calcs/esi.htm

[section 44]

Employees purporting to be, but in fact not being, self-employed is one thing but there's no general prohibition on using self-employed persons.

[towat]

Employees purporting to be

Ok this is semantics, maybe I should have used the word "purported" in my post but I thought everyone knew this was an employment status query, after all it was mentioned in the first line of the OP.