First Gig - National Insurance

[6ccj6 0]

Hi All,

We done our first DJ at New Year and we got paid. We gave an invoice to the client and kept a receipt. The IR said work one year, keep all the receipts and then hand them in with a form at the end of the year. So we now have 3 receipts in our portfolio. But now the client from New Year wants our NI number. Is this correct procedure? Should I give them it? They said it was to prove that they paid and employed us for one night.

Any help would be appreciated because the people I called at the tax office didn't seem interested.

Thanks

[YourBigEvent 0]

Shouldn't be a problem, it is another way to stop cowboys. I'll bet it is a national company you are dealing with !

[Dukesy 0]

Interesting question.

I'm not an expert but was the BACS payment method used?

There is the possibility that if you were 'contracted' by a large company:-

 

Companies may do routine systematic checking of payroll against NICs records.

It helps them provide a better quality of data on 'End of Year Returns' to the Inland Revenue.

Any discrepancy has to be accounted for and this could be a reason why they want your NI number?

(The information submitted by the company is supposed to be destroyed after six months by the Inland Revenue.)

 

The reason should be clearly explained to you by the company under their own Data Protection procedures.

 

Have they asked for any of the following information too (if it is not on the invoice receipt you submitted):

 

* Surname

* Forename(s)

* Title

* Date of Birth

* Address

* Postcode

* NI Category letter

 

However the following may be of help:

 

 

More than one job

If a worker has

 

* more than one job, or

* works for a number of different people for a few days or weeks at a time,

it is necessary to answer the questions for each job.

 

If the worker provides services to many people, and does not work regularly for one person to the exclusion of others, this may affect whether the work for each is as an employee, or as a self-employed person.

 

Just because a worker is self-employed in one job, doesn’t necessarily mean he or she will be self-employed in another job. Equally, if a worker is employed in one job, he or she could be self-employed in another.

 

A worker could even be an employee and self-employed at the same time. For example, he or she could

 

* be employed as a part-time shop assistant and spend the rest of their time running their own business from home, or

* work full-time as an employee at a company, and run a part-time business in the evening or weekends.

 

The worker may have a number of casual or part-time activities, and may be an employee in some and self-employed in others. It all depends on the facts.

 

Special Cases

 

Tax and NICs law does contain some special rules that apply to certain categories of worker in certain circumstances. These include –

 

* agency workers

* divers and diving supervisors

* office and other cleaners

* employment of person by spouse

* employment of person by relative in private dwelling house

* lecturers, teachers, instructors etc

* entertainers

* examiners, moderators, invigilators

* returning officers, counting officers and their staff

* workers who supply their services through an intermediary

 

 

 

Tax and NICs

 

Tax is charged on employment income and “employment” includes -

 

(a) any employment under a contract of service,

(b) any employment under a contract of apprenticeship, and

© any employment in the service of the crown.

 

Income from an office is also charged as employment income.

 

Class 1 (and class 1A) contributions are payable by employed earners (and by employers) and class 2 and 4 contributions are payable by self-employed earners.

 

An employed earner is a person who is gainfully employed in Great Britain or Northern Ireland either under a contract of service, or in an office with income chargeable to income tax as employment income.

 

A worker’s employment status, that is whether they are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement. The tax and National Insurance contributions (NICs) rules do, however, contain some special rules that apply to certain categories of worker in certain circumstances.

 

If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor. If you are an engager, it is your responsibility to correctly determine the employment status of your workers.

 

A worker’s employment status will determine the charge to tax on income from that employment or self-employment. It will also determine the class of NICs, which are to be paid.

 

The NICs treatment of entertainers has been different from that which applies for tax. The DSS/Contributions Agency’s (“CA”) traditional view was that, generally, entertainers were employed under contracts of service and so liable to pay Class 1 NICs. However, they recognised that all cases had to be considered on their own facts.

 

As a result of the McCowen and West cases, the DSS/CA concluded that its treatment was no longer sustainable and that entertainers should generally be regarded as self- employed. This raised the question of refunds of wrongly paid Class 1 NICs for past periods.

 

As an interim measure Ministers decided that they would introduce regulations which would treat the majority of entertainers as employed earners. The regulations, which came into effect on 17 July 1998, provide that entertainers who are not employed

 

* under a contract of service; or

* in an office with emoluments chargeable to tax under Schedule E/as employment income,

 

are treated as employed earners provided their remuneration consists wholly or mainly of salary (see ESM4146). If it does not, they retain their self-employed status.

 

Regulation 1(2) defines an entertainer as meaning

 

’a person who is employed as an actor, singer or musician, or in any similar performing capacity’.

 

However, a number of individuals and their engagers may seek refunds of Class 1 National Insurance contributions on the basis that self employment is the correct status for National Insurance purposes, and that past Class 1 contributions (up to 17 July 1998) were paid in error. Where you receive enquiries about this you should refer them to:

 

NICO

Refunds Group

Room BP2001(engagers) or BP1001(individuals)

Benton Park View

Newcastle Upon Tyne

NE98 1YX

 

Sourced from:

ESM4145 - Particular occupations: entertainers - NICs treatment (17 July 1998 to 5 April 2003)

SS (Categorisation of Earners) Regulations 1978 (SI 1978 No.1689) Regulation 1(2), paragraph 5A in Part I of Schedule 1, and paragraph 10 in Schedule 3

 

 

Employer’s obligations (worker’s employment status)

 

It is a general requirement that those wishing to take on workers consider the terms and conditions of a particular engagement to determine whether the worker is an employee or self-employed. If these requirements are not met it creates unfair competition between those businesses that meet their responsibilities and those that do not. It also creates unfairness where, for instance, two workers engaged on the same project and performing the same tasks for separate businesses are not paying the same tax and NICs due to the incorrect classification of one of them.

 

You can ask your local Status Inspector for an opinion as to the employment status of your workers.

Worker’s obligations (own employment status)

 

Alternatively you can obtain a HMRC ‘view’ of the employment status of your workers by using the Employment Status Indicator (ESI) Tool. However, this will provide a general guide only which would not be binding on HMRC.

Top

 

Worker’s obligations (own employment status)

 

Your employment status for tax and NICs purposes will depend on the terms and conditions of your contract with the engager.

 

If you work under a contract of service (employment), the employer will be responsible for operating PAYE and accounting for tax and NICs.

 

However, if you work under a contract for services (self-employed), you will be responsible for registering as self-employed and for completing a Self Assessment.

 

You can obtain a HMRC ‘view’ of your employment status by using the Employment Status Indicator (ESI) Tool. However, this will provide a general guide only which would not be binding on HMRC.

 

 

 

[DJ Marky Marc 0]

I think there has been a change in the rules as every Pub type venue and all the agents I work for are now requiring that the DJs prove who they are with pass port where they live with a bill or something and also provide a valid NI number...

 

the only way round this is to be a registerd ltd company and invoice the venue ...

 

DJs are going to have a rough time over the next couple of years as the TAX man wants his part and the beniefits people are paying out too much to people who think DJing for cash is not something they need to tell them...

 

So glad I hired an acounant

[Dukesy 0]

This may also affect those who work via an intermediary then....

Interestingly Mikeee has been mentioning for a while about IR35 'being enforced' on occupations such as entertainers.

Tax avoidance is a criminal offence and worse, in my books (pardon the pun) than ripping your own legally purchased CDs to a digital format but then that's another subject to rear its ugly head another day!

[Paul Smith 0]

I think there has been a change in the rules as every Pub type venue and all the agents I work for are now requiring that the DJs prove who they are with pass port where they live with a bill or something and also provide a valid NI number...

 

Not a bad thing because a lot of those who undercharge are able to do so because they don't declare the earnings or pay tax & NI (allegedly). Add on the requirements for PLI & PAT and I think that the days of the beer money DJ are numbered.

[music box 0]

Yes Paul I agree with you and with your above post.

 

I think I have mentioned this before, look at the Taxi trade, to get round the law when it change the cowboys

called themselves mini cab drivers, which went on for a few years, then the law changed again, although not in all areas it is now very expensive to set this type of business up and if caught with out the correct insurances etc. if you are caught with all the relevent paperwork, plates etc it's prison sentences in most area's.

 

 

So the cowboy's in this trade will very soon find it very hard to be used at functions, I have been saying for a long time be prepared for the changes, they ain't far away. The Government will need every penny it get hold of and they know it, so they will be hitting everything they can even at local government areas so they dont have to pass so much on, down the line in all areas.

 

Anyway food for thought.

 

Pete

 

 

 

 

 

[digitaldistortion 0]

Not a bad thing because a lot of those who undercharge are able to do so because they don't declare the earnings or pay tax & NI (allegedly). Add on the requirements for PLI & PAT and I think that the days of the beer money DJ are numbered.

 

 

I'd like to think so.....but you know as well as I do that the overwhelming number of gigs will still be 'under the table'. Not necessarily to avoid any form of regulation, but because these pubs, clubs, parties etc. run on a cash basis!

 

So, there's still plenty of scope for the so-called beer money DJ!

 

[UKHero 0]

Sadly it wont stop DJ Beer Money they just give a false NI Number use a mobile to take bookings etc...

 

I have my Tax Refference code on all my invoices so that any company can check who I am with the IR...

 

Many companies in the corporate market request this now so I just included it.... Also go see an accountant now not in 12 months time ask around find one that has been recomended also dont go for one who works from home but has a registered office.. I was stung man y years back by a work from home Accountant...

 

 

Going to see one now will help you loads they will help set up your National insurance etc for self employment and help you registere as self employed..

 

Nik

[Dukesy 0]

Not a bad thing because a lot of those who undercharge are able to do so because they don't declare the earnings or pay tax & NI (allegedly). Add on the requirements for PLI & PAT and I think that the days of the beer money DJ are numbered.

Sadly, the profession we profess to love and enjoy is ruined by a minority who wish to work for beer money and in reported cases here in an 'unprofessional' manor yet little can be done when so many individuals work alone and do not wish to work towards bettering the profession from within before we as an industry can start to change the perception to others.

So, if the likes of the IR move forward with ideas which directly affect our industry, we have to ask our selves some serious questions such as should we be embracing and thanking them for getting rid of the deadwood and rot or should we be looking at ways of working with them and other organisations and official bodies to discuss ways of making things more simple and improved for overall betterment of our business, or should we be adopting measures to educate one another to the possibility that sometime, sooner or later there will be an undesirable purge that will finish off what we have come to know as UK mobile djing????

All loop holes are being closed down - slowly but steadily....

BUT

Professional DJs need not fear if the are legit and above board.

The 'beer money' brigade will be left by the wayside along with the rest who do not sing from the same song sheet....

Big stick tactics from the likes of the IR are scary for the business now as there have been changes in their departments and of course exchange of information (cross referencing) has gained technological advances. The big stick can yield a hefty financial consequence and even extensive stays at Her Majesty's leisure if the rules are / remain bent....and not just for the venues!!!!

Therefore when an individual gives false information you can bet your life that individual has had their card marked. Investigation today is far superior than to that of 20 years ago.

 

[music box 0]

As for the beer money quote.

 

All areas are changing and yes it will change, look at the local jobs cash in hand that used to be about,

How many of them are there, yes they are a few and there are areas that you can get away with it to a point.

But if you are caught, the amount you have to pay can be colossal, it soon mounts up.

 

Have a look around and see how many pubs are disappearing, clubs going under etc.

 

The entertainment area is changing everyone has to show good records, so getting an accountant these day's is very good idea, be ahead of this it's what the industry needs and as needed for a long long time.

 

I can see house parties getting bigger and more frequent and these will be cash in hand etc.

So Mr. Cowboy will have small market but he would be welcome to that market any way.

 

 

Pete

 

 

 

 

 

 

 

 

 

 

[6ccj6 0]

OK, thanks guys.

The gig in question was for a pub.

 

We both have jobs but they want my NI number and not my mates because he actually works there.

We were thinking of registering the business in his name as he only works part time. So that will change now.

 

 

[UKHero 0]

Be carefull about who you registere the business to you might be friends today but not tomorrow form a partnership and have everything done in the open....

 

Its best where the IR are concerned to be upfront and honest....

 

Nik

[Andy Westcott 0]

I agree.

Don't forget to register for tax and N.I. as soon as possible - 3 months is the latest you can leave it, but there's no reason not to do it now.

 

I can't see any reason why not to tell them your NI number either. If you are legit, it's not an issue.

[6ccj6 0]

We were told to work a year and collect all receipts and invoices and then call them back, so we haven't registered for tax or NI yet - how do we do this? Bear in mind we are nearly 1 month in to our business and we do want to this the right way.

Also, when I give them my NI number (instead of my partner who is on a lower salary) how will this affect my tax/salary with my full time job? (They won't except my partners NI number as he already works for the pub who we done the disco for). This is very complicated!)

Thanks for the help by the way.

 

[UKHero 0]

We were told to work a year and collect all receipts and invoices and then call them back, so we haven't registered for tax or NI yet - how do we do this? Bear in mind we are nearly 1 month in to our business and we do want to this the right way.

Also, when I give them my NI number (instead of my partner who is on a lower salary) how will this affect my tax/salary with my full time job? (They won't except my partners NI number as he already works for the pub who we done the disco for). This is very complicated!)

Thanks for the help by the way.

 

 

All the questions you are asking really need to be directed to a tax expert.... Please please please get yourself an accountant now it is the best thing to do but as before make sure you get a good one who is a chartered accountant and works from a registered office address....

 

 

Nik

 

[music box 0]

Yup agree with Uk here Get your self an accountant and let him advise you.

 

Thats the first thing you should do and right away, then once you have instructed him,

 

after his advise he will sort all of that out for you. Each case is different they understand it backwards it's thier job thats why you pay them etc.

 

Can't stress it enough get one now.

 

Cheers

 

Pete

[Jimbo55 0]

ANY money you earn has to declared to the tax man. From this you may deduct any costs you may incur earning that income, Equipment, etc. Capital expenditure will be spread out over a number of tears IE 25% this year and so on. Consumables. IE Fuel, Glow sticks, smoke fluid, insurance, memberships (SEDA etc) have a full allowance.

 

The venue may require proof of your NI number as proof that money has been paid and not pocketed by staff and the tax will know where to look for that payment. They may then check your tax return to see if you have declared it on your return.

 

NEVER EVER accept cash without an invoice or some proof of the amount. NEVER EVER assume that because you were paid cash there will be no record.

 

It goes like this..

 

The local Tax officer goes to your venue to do an audit. He or she has disagreed with the submission from the accountant. The tax officer finds a few discrepancies and decides that someone is lying. The venue then gets hit with a huge tax bill. The venue then has to prove that either it has not had the income or has proof of the out going payments. The venue drops your name. You get a visit. The Tax officer does not believe you that you only did one event for the venue that year and a few unpaid parties for friends. You then get hit by a huge demand. You may have been telling the truth. Now you have to prove it. They WILL assume the highest income. You will usually loose all right to anything tax deductible. ALL income will be taxed. You may also lose your personal allowance. (rare)

 

How do I know .. It happened to me 18 yrs or so ago. It got followed up with the VAT man. £7,000 in fines and tax. Twice as much as I actually owed in tax. Tax £3500 and a £3500 fine.

[6ccj6 0]

Oh no I'm starting to worry now.

Is my next step now to get an accountant?

How much is the initial cost of an accountant?

How do i register us as a business? How do i register for tax?

 

[music box 0]

Why you worring?

 

Costing for a partnership approx £200 fpr the year I in our area but again shop around.

 

Then as I said before the accountanbt will deal with all items including tax etc.

 

Give him all the details, including ALL reciepts he will no what you can or cant get away with.

 

Nothing to worry about ok

 

Pete

[Dukesy 0]

If you want free public liability - join the Musicians Union as it is a membership benefit and will cover you for £10,000,000. You can also get free insurance cover (limited).

There are other excellent reasons to join.

visit www.musiciansunion.org.uk for further info.

 

Another benefit. Some services (i.e.accountants) offer discounts to members of the MU.

Example accountancy fees vary between £150 - £275+

 

You will get good advice from them.

 

If you are unsure of anything else, why not contact your local business link where you can meet an advisor.

 

[ChrisPointon 0]

If you have only been in business for a month then you absolutely have nothing to worry about.

 

All of the above points are valid, but they probably appear more scarey than they are intended to be.

 

First you need to inform the tax man that you have started a business. Do this sooner rather than later, because if you leave it for too long then you will be liable for an immediate £100 penalty.

 

Start keeping records of your income and expenditure (Your expenses / what you spend running the business) some examples of what you can claim for are listed above.

 

Keep receipts for everything you buy, number them, and keep a record of them in an accounts book which you can get from any stationary supplier. You can keep basic and easy track of your expenditure like this....

 

Receipt No Date Product / Service Supplier Amount

 

1 4/7/06 Diesel Peartree services £30.00

2 7/7/06 Bulbs Acme Disco Supplies £13.45

 

etc etc etc

 

 

To keep track of your income, it is a good idea to send clients booking forms which state your fee clearly on the same slip which the customer signs and returns to you then you can number it and log it in a record book, just like your expenses.

 

Its also a good idea to open a business bank account in "your name T/A your business name". So if your name is Joe Bloggs and your company name is Bloggs Disco the account will say

 

Joe Bloggs T/A Bloggs Disco

 

This is handy and convenient because with *Most* banks it allows you to bank cheques in either the name of "Joe Bloggs" or "Bloggs Disco" which is useful as clients often make the (wrong) assumptions tongue out icon

 

Make sure that you pay any cheques and left over cash into your business bank account, so that you have full traceability through your bank statements. A debit card is also a useful addition to your business account as it means that you automatically have a receipt issued not only at the point of sale for the purchase but the transaction will also be logged on your bank account statement - less (paper)work for you :Thumbup: - but only use it for legitimate business expenditure.

 

Unless you are turning over more than £60,000 a year in income, then you don't need to worry about registering for VAT.

 

When the time has come to pay your first years tax, the amount of tax that you are liable to pay, is based on profit. This is worked out on the basis of income - expenses

 

So if you made £3000 and spent £2000 then your profit for that year will be £1000

 

So you will be taxed on the £1000 profit.

 

The amount you actually pay is based on your existing employment circumstances. If you are self employed (ie the disco is your ONLY business and income) then you can earn a small amount tax free (I think its around £4600 or £5000) this means that if you make less than that figure you pay no tax.

 

If you have a full time job or any other self employed activities then you probably wont get any tax allowance and will pay tax on every penny of profit that your disco earns.

 

As Dan said above, both the Musicians Union and also the FSB (Federation of Small Businesses) are useful to join, because they all have qualified people to give accounts advice, and help in dealing with the Inland Revenue. I also believe that they offer discounts on Accountancy Services and in the case of the FSB - excellent deals on business banking.

 

Either way, if your business becomes popular and you get plenty of work and money coming in, then it will probably be better for you to engage the services of an accountant, and whilst this will mean that you still have to keep receipts and paperwork for your income / expenditure, it will pay for itself in the long run as the accountant should save you money on tax, and also handle the hassle of completing and submitting your annual self assessment form on your behalf.