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How to deal with IR35 for production companies

How to deal with IR35 for production companies

by Wishu
19 May 2021
The 6th April 2021 brought some changes to IR35 and this affects production companies in the fashion, film and TV industries. 
 
Firstly, the nine-month rule has been completely removed. Previously, IR35 guidance stated that “The following workers may be regarded as self-employed, provided they are engaged on a temporary, casual or freelance basis, as long as they are engaged for a one-off production or for less than nine months on a series or programme strand (HMRC may agree to a longer period than nine months in exceptional circumstances)”.
Since the 6th April however, there is no set time period. 
 
So, who can call themselves self-employed when it comes to production companies? 
Typically, the self-employed engagement is on a specific production for a finite period; and/or in the case of re-engagements where an engager rehires an individual in respect of further engagements relating to any specific production, it qualifies as a discrete engagement.
 
The full list of Appendix 1 roles outlines the behind the camera roles which can be accepted as self-employed. The full list is available here.


For behind camera individuals who do not meet the criteria in the list of roles normally accepted as self-employed, and where the engager has determined their status as employment, HMRC will permit NI only deductions to be made provided that:
  • the individual is engaged for a period of seven days or less, and
  • there are no predetermined arrangements in place for the individual to be engaged frequently or at regular intervals (for example if the individual is to provide their services for the first week of every month).
 
Like with any other business, 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.
However, if the production company doesn’t meet the following criteria it is then the responsibility of the intermediary service; 
  • They have more than 50 employees
  • They make an annual turnover of more than £10.2m
  • They produce a balance sheet of £5.1m or more.
If the production company meets this criteria, they are then expected to be responsible for unpaid tax, potential penalties from HMRC and, if applicable, the apprenticeship levy. Holiday entitlement, student loan repayments and auto-enrolment remain the responsibility of the intermediary that employs the individual.
If circumstances change, the contracting body should look at the whole picture once more and apply HMRC’s general guidance.


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