Would you like to help your artiste reduce their tax bill whilst on tour or competing in the UK?
I have recently started doing more work again on reduced rate applications submitted to the Foreign Entertainers Unit at HMRC. Along with many other countries, in the UK income arising to non UK entertainers and sportspeople is subject to Withholding Income Tax at 20% (22% before 5 April 2008). This is charged even if the artiste provides their services through a corporation.
Under the terms of most UK double tax treaties there is a clause excluding the services of entertainers and sportspeople from the “independent services” provision. This means they are taxable here even if they are not tax resident in the UK and do not have a permanent establishment or place of business here.
However many people are still not aware that it is possible to approach the Revenue authorities beforehand to agree that the withholding is based on the projected profit rather than the gross income. This will usually mean that the artiste has no further income tax to pay and probably will not be asked to complete a UK tax return.
The artiste will usually obtain tax credit for the FEU UK deducted through his or her overseas tax return. However under many countries’ domestic tax legislation the tax payer is required to mitigate his or her liability as far as possible otherwise they will only get credit for the tax that was due in the UK not just the possibly higher amount they actually did pay on gross turnover. It is not enough therefore just to pay the tax and expect to get credit for it back in the home country. Relief may be restricted.
I have over ten years experience in this area with major and upcoming artistes and would pleased to help any clients legitimately reduce their UK tax liabilities.