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Taxation (Performers)

Volume 175: debated on Monday 2 July 1990

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To ask the Chancellor of the Exchequer (1) on what authority the Inland Revenue has decided to distinguish between established performers/artists who are being taxed under schedule D and new performers/artists who are to be taxed under schedule E;(2) with whom the Inland Revenue has agreed a gradual transition to the schedule E treatment of performers.

[holding answer 5 June 1990]: The Inland Revenue has a duty to implement tax law. The change in the tax treatment of certain performers/artists is based on decisions made in the courts. The arrangements to put their tax treatment on to the correct basis over a transitional period were made by the Inland Revenue, with decision at the latest available date and at each quarter since 31 December 1987; what is the average time taken from receipt of application to taking a decision on each application; and if he will make a statement.

[holding answer 26 June 1990]: The available information about outstanding cases relates to applications in the nationality division caseworking groups and is in the table. In addition, on 31 December 1987, there were an estimated 210,000 applications in Lunar house that had not reached caseworking groups, and these were transferred to the nationality division over the course of the next 18 months.the approval of Treasury Ministers, under its powers for the general "care and management of the income tax in the Taxes Management Act 1970.These arrangements have been discussed, over an extended period, with representatives of all sides of the theatre industry and take into account their concern that an abrupt change to schedule E for all those involved could be disruptive to the industry, and, in some cases, cause hardship.

To ask the Chancellor of the Exchequer (1) what relative consideration the Inland Revenue has given to the cases of Fall v. Hitchen and Davies v. Braithwaite, in deciding whether schedule E was the correct schedule of charge for income tax for performers and artists undertaking theatrical engagements;(2) on what legal authority the Inland Revenue based its claim that generally performers and artists undertaking theatrical engagements under standard contracts are, in law, employees.

[holding answer 5 June 1990]: I understand that the Inland Revenue's view on the taxation position of theatrical performers working under standard contracts is based on legal advice they have received relating to the 1972 Fall v Hitchen High Court case, which indicated that a typical standard contract of engagement, based on terms agreed between Equity and theatre managements, was a contract of employment, and a number of subsequent Court decisions on the general issue of whether people are employees or self-employed. The Revenue has explained its views on these issues to the theatre industry on several occasions in the past.In Fall

v Hitchen the High Court considered, and distinguished, the earlier judgment in Davis v Braithwaite. I understand that the Revenue took both cases, and other relevant cases, fully into account in forming their views on the correct tax treatment of theatrical performers.