Updated for 2013.
With Workline’s origin in the Film and TV Industries we thought we’d return to the infamous HMRC ‘Film, Television and Production Industry Guidance Notes’, that provide advice on how to determine the correct employment status of workers in these industries.
Issued originally in 2003 and revised in 2011 and 2012, the guidance notes provide advice “with regard to the application of PAYE and National Insurance Contributions to non-permanent, casual and freelance workers in the Film, Television and Production Industries” and contain the all-important list of WHO can legitimately be freelance in these industries.
Deciding a worker’s status is crucial for both the individual and their Employer as besides the implications for tax and National Insurance it’s the only way to determine what employment rights an individual has.
The Guidance talks in detail about:
- How Employers should operate PAYE and what individuals can be excluded from having PAYE deducted
- The Tax Treatment of Expenses Payments (we won’t cover this here but you can read the details in the Guidance Notes)
- National Insurance Contributions and VAT
- Payments to Service Companies
- The list of “accepted self-employed grades” (this list has not changed since 2003)
- Updated HMRC contact addresses / phone numbers for all PAYE and self-assessment queries (for Employers and individuals) in the industry (see below)
The Guidance says the following individuals can be excluded from PAYE deductions, in the Film, TV and Production Industries:
- Those non-permanent, casual or freelance staff working in the “accepted self-employed grades” (see summary below). The HMRC accept that the terms of their engagement will not normally constitute a contract of employment and they will be treated as self-employed for National Insurance Contributions as well (so must organise their own NIC’s).
- Those individuals who have been issued with a ‘Letter of Authority’ by the HMRC, where the HMRC believe that where the “overall pattern of a worker’s activity comprises a large number of separate, short engagements, a worker may be regarded as self-employed” although these workers generally will not be on the “accepted self-employed grades” list. These ‘Letters of Authority’ are only issued by the Film & Production Industry Unit in Washington, Tyne or Wear, or the Television Broadcasting Unit in Manchester, to the individual, and have an expiry date. There are 2 types of letters issued – a ‘Specific Letter’ and a ‘Special Letter’ – for more details see the Guidance Notes. They will be treated as self-employed for National Insurance Contributions as well (so must organise their own NIC’s).
- Those entitled to work under the “Seven Day” Rule – the HMRC recognise that many workers in the industry have short engagements with a succession of different employers which may cause excessive deductions of Income Tax from their pay. So, Workers who are employed for under 7 days, need not have PAYE taken off their payments (this must be for a period of 6 consecutive days or less which includes weekends and rest days), although normal Employee National Insurance Contributions must still be paid. This rule cannot be applied where it is known the worker is to be re-engaged frequently and regularly.
Guidance on Service Companies
Where individuals have set up service companies (Limited Companies) or partnerships to provide their services to production companies, the production company can make payments to the service company, instead of to the workers, so avoiding deduction of PAYE or National Insurance Contributions.
The IR35 legislation which tackles tax and National Insurance avoidance through the incorrect use of service companies gives obligations to the individual and not to the Employer, so the Employer can continue to make payments gross; as long as there is a valid contract with the Employer and the service company for the provision of the worker’s services.
If, however, the workers services are provided under the “accepted self-employed” grades list or they would have a “Letter of Authority” (both as above), then gross payments to the service company are allowed regardless.
The HMRC have an IR35 Customer Services Unit in Northampton – telephone 0845 303 3535 or e-mail IR35@hmrc.gov.uk
Guidance on VAT
The Guidance notes say the within the industry the “HMRC accept that any VAT registration requirement will follow from the status decision made from the Guidance Notes”. This means that individuals will be liable to register and account for VAT if their income exceeds the VAT registration limit (or they register for VAT voluntarily) provided that:
- The individual is engaged in the “accepted self-employed grades” or
- They hold a “Special Letter of Authority”
The “accepted self-employed grades” are (this is a summary of the whole list which is at Appendix 1 of the Guidance Notes):
N.B. The HMRC say that when deciding whether PAYE is to be applied or not you should consider only the ‘grade’ in which the worker is currently engaged.
|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 * (feature film, single drama or documentary) or for less than 9 months ** on a series or programme strand (the HMRC may agree to a longer period than 9 months in exceptional circumstances).||Any specific requirements that must be fulfilled to be regarded as self-employed|
|* If the worker is to be engaged on a seperate production following the completion of the one-off production, then where this is known at the outset of the 2nd production, PAYE should be considered from the commencement of the 2nd production. If this happens after a break, where it can be shown that the worker was seeking or worked elsewhere then the worker can be treated as self-employed. Note – a break is a natural break rather than a contrived one such as Christmas holiday or annual vacation.** If the worker is engaged for 9 months on a series and a second series is commissioned then as the series are linked the worker can continue to be treated as self employed on the second series.|
|Animation Production Coordinator|
|Associate Producer||They must not be engaged primarily for general research|
|Director of Photography|
|First Assistant Director|
|Post Production Supervisor|
|Producer / Line Producer|
|Producer Buyer or Designer|
|Production Manager / Production Supervisor|
|ScriptWriter||Excluding reporting scripts|
|Senior Floor Manager|
|Senior Special Effects Technician|
|Stylists||For film or photographic styling|
|The following workers maybe regarded as self-employed regardless of the length of the engagement, as long as they engaged on a freelance basis||Any specific requirements that must be fulfilled to be regarded as self-employed|
|Assistant Art Director / Dressmaker / Graphic Artist and Graphic Designer / Script Reader / Animator / Archive Researcher / Digital Set Designer||Where the work is performed other than on the premises provided by the engager|
|Costume Designer / Assistant Costume Designer / Wardrobe Stylist or Supervisor / Costume Supervisor||Where the work is performed other than on the premises provided by the engager or the contract requires substantial provision of materials by the worker|
|Camera Operator / Gaffer / Grip / Sound Maintenance Engineer / Sound Mixer / Sound Recordist||Where the contract requires substantial provision of equipment by the worker|
|Continuity / Production Assistant / Script Supervisor||Where script breakdown is an integral part of the contract|
|Hairdresser / Make Up Artist||Where the contract requires substantial provision of equipment (standard make-up kit/wigs) by the individual or 50% or more of the work is performed other than on premises provided by the engager.|
|Lighting Camera person or Lighting Director||Where the individual has responsibility for designing lighting or photography|
|Location Manager / Production Accountant / Stage Manager||Where the contract requires provision of facilities or equipment by the worker (see note 5.5 of the Guidance notes for Location Manager)|
|Specialist Researcher||Where the worker has either an existing profession outside of the Industry or specialist knowledge of the programme content; and the worker is engaged for a specific project|
|Writer / Driver / Unit Manager||Writer – Excluding reporter./ Driver – Where the contract requires the driver to provide his own vehicle./ Unit Manager – Where the contract requires provision of facilities by the worker.|
The updated contact details for the HMRC are:
- General PAYE and self-assessment enquiries in the Film, Production & TV Broadcast Industry – 0845 300 0627.
- Enquiries relating to actors, 7 day rule, expenses, employment status of different grades, special letters in the Film and Production Industry – 0191 419 8800.
- Employment Status queries about workers engaged by Television Broadcasting Companies – 03000 532680.
If you are an Employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small and creative businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
Photo by Kevin Jaako