Musician VAT charges

Mickery

Hi all, any help appreciated.

Is there a way to set up a band so that you don't have to charge VAT for gigs?

Say if each musician invoices the pub separately as a contractor or something?

So a four piece band would combine four individual invoices in one document.

Is this possible?

viztopia

that sounds like a clever way of doing it and in theory I don't see anything wrong with it unless the Revenue were to take the view that all the invoices were effectively coming from a band. The only downside I can see is that every musician would then have to prepare a tax return rather than the band as a unit. One thing to note is that you only have to register for vat if your income is going to be over €37,500 in any continuous 12 months and this would seem like a lot for a band that may only play at weekends?

Mickery

If the band is a limited company and the musicians are not employees of the company then I'm hoping this would be allowed. In this case each musician as an individual will submit their own tax returns anyway.

Alan Shore

But the pub will be VAT registered.

I can't see each member of the band issuing an invoice getting paid individually ect way too much paperwork.

I can't imagine Revenue accepting 4 individuals issuing invoices when it's clear that's it a band.

nompere

Revenue can compulsorily group register the four individuals, so the scheme is unlikely to work. Below is an extract from Revenue's notes at http://www.revenue.ie/en/about/foi/s16/value-added-tax/chpt-09/09-16.pdf?download=true

S. 8(8) allows the Revenue Commissioners to group register

• Two or more persons established in the State;
• Who are engaged in the supply of goods or services in the course or furtherance of business; and
• Who are closely bound by financial, economic and organisational links; and
• To do this where it seems necessary or appropriate for the efficient and effective administration, including collection, of VAT.
This allows the Revenue to compulsorily group register inter-linked persons who are manipulating the system

Mickery

Thanks for the responses.

Alan Shore wrote: »

But the pub will be VAT registered.

Ok, a pub should agree to pay the VAT charge. Another example would be a couple getting married and hiring the band to play.

nompere wrote: »

Revenue can compulsorily group register the four individuals

I guess the question is would they do this for a band?

The example given in the linked document involves a manipulation of the system where one entity is getting VAT repayments from the Revenue and the other is not charging VAT and making the appropriate returns (am I reading this correctly?),

"e.g. the scenario of the manufacturing company and the supplying/installing company operating in such a way that one company gets VAT repayments while the other reneges on paying it’s VAT liability".

This may apply if the band is a limited company and is claiming back VAT paid for equipment however if this is not the case then are the four individuals still liable for VAT and in danger of being grouped compulsorily?

Another point is that the individual members may change regularly.

dbran

Hi

It dosen't matter if the band is a limited company, partnership etc. It can still be grouped if they are all effectively operating as one financial unit. You are manipulating the system so you dont have to register for VAT when you should.

However, I think there is merit in the argument that each member is treated separately only if each band member can be swapped and interchanged ie if you dont like the look of the lead singer you use someone else or get another guitarist or keyboard player etc.

You should get a ruling on it from revenue to be sure that you dont get any surprises down the road. This could generate a huge VAT bill for somebody.

Kind Regards

dbran

Mickery

dbran wrote: »

Hi

It dosen't matter if the band is a limited company, partnership etc. It can still be grouped if they are all effectively operating as one financial unit. You are manipulating the system so you dont have to register for VAT when you should.

Well, as was mentioned above, you need a turnover of €37500 before you have to register so it would be a nice problem to have.

I'm trying to figure out how a high earning band or a band with a lot of members work it out. Are there a legal set of conditions where the band could be treated as individuals from a VAT perspective?

dbran wrote: »

However, I think there is merit in the argument that each member is treated separately only if each band member can be swapped and interchanged ie if you dont like the look of the lead singer you use someone else or get another guitarist or keyboard player etc.

Ok. It is a fact that many gigging bands have a constantly changing line up with stand ins, walk outs, late gig cramping etc. Backing vocals and brass sections are also sometimes added.

Each musician may also have side projects with other groups.

dbran wrote: »

You should get a ruling on it from revenue to be sure that you dont get any surprises down the road. This could generate a huge VAT bill for somebody.

Are these rulings published anywhere? They would make interesting reading.

They seem to love their examples on the Revenue site so what about this one: A couple hires a carpenter, a plumber and an electrician to get their bathroom done. Three individuals skilled in their trade using their particular tools to do the job. Is this a valid comparison to a guitarist, a drummer and a keyboardist?

A professional musician operating on a freelance basis with multiple groups should not have to charge VAT until their individual income reaches the threshold. I'd like to see a ruling on that.

dbran

Hi

No. The ruling would be specific to your circumstances only so it would not be published. In the same way that all the examples given on the revenue site are illustrating a concept or idea in tax and may not be applicable to you for a variety of reasons.

I'm thinking if you are all a group of session musicians who are put together on a bespoke once off basis to play at a wedding for example then each time you hire the band could be a totally different set of musicians playing based on who is available or required.

In this case there is a band in name only and you do not have a situation where you are "closely bound by financial, economic and organisational links" to the other musicians. So I would think it could be argued that the individuals should not be grouped to register for VAT.

However it would ultimately depend on the facts of your case alone. There can be a considerable grey area between one senario and another. The degree of swapping in and out would probably be critical here.

There is no point in arguing something when it isn't actually what is happening.

dbran

smeharg

It's a partnership. The partnership is the accountable person for VAT. Individual partners can come and go and being a member of the partnership doesn't preclude an individual from performing outside the partnership.

The band may have a different line-up from one performance to the next, but if there's any degree of continuity then the partnership would remain.