An arrangement may be made in writing between the Foreign Entertainers Unit and other interested parties such as the payer, the entertainer or other recipient. This arrangement allows the payer to deduct an amount which is less than the basic rate of tax. (For more information see A Guide to Paying Foreign Entertainers).
You can make an application for a Reduced Tax Payment on form FEU8 (103K PDF). The form has been redesigned and is now accompanied by guidance notes. This form is in Portable Document Format (PDF). To be able to view and print out the form, you must have Adobe Reader installed on your computer.
An arrangement may be made to move responsibility to withhold to a particular point in a payment chain by means of a "middleman" arrangement. Some activities may give rise to a chain of payments. For example, money for a concert may flow from a venue to a promoter then to the artiste. Every payer in the chain must deduct tax as required by law.
Payers can ask for an arrangement which moves the withholding point further down the chain so that payments between specified payers can be made without deduction of tax. This can only be done with the Foreign Entertainers Unit's approval (see Newsletter 8 for details of a simplified middleman scheme).
A concert is arranged at a hall. The venue owners control the box office and pay over the ticket proceeds less a percentage deduction to the concert promoter. He deducts his costs before paying and agreed amount to the artiste.
If the concert promoter makes a 'Middleman' application the Unit may agree to Nil withholding on the venue payments leaving the promoter as the withholding point. The promoter will then have to deduct tax at basic rate on his or her payment or a reduced amount if an artiste's application has been made and agreed in a lower sum.
The Unit will ask for certain information in support of any "Middleman" application you make, for example, a copy of any contract, dates of appearances, and probably a copy of the budget. If you are submitting a "Middleman" application for the first time the Unit will be happy to advise you on the procedure and level of information required.
It is possible to make an artiste reduced tax payment arrangement so that the payer deducts an amount which corresponds as closely as possible to the entertainer's final liability on the payment. An artiste application can be made by the individual(s) concerned or by anyone authorised to make the application on their behalf, e.g. a payer or agent. However, the application must cover the whole of any current activity in the UK: it cannot be made for part of a UK tour.
If the application is not accepted tax must be withheld at the basic rate on all payments. If you are making a reduced tax payment you must return the details and account for the tax withheld by filling in the return form FEU1.
See also the section on Applying for an Arrangement in A Guide to Paying Foreign Entertainers.
Remember an application should be made in writing not later than 30 days before the payment is due to be made.
Where applications are made late or do not contain sufficient relevant detail on which to base a meaningful agreement the Foreign Entertainers Unit will try to be as helpful as possible to reach an agreement in time. But a late application supported by insufficient information may have to be refused if there is insufficient time to address the position.
As well as getting your application in on time you should supply all the relevant information with the application to ensure agreement can be reached quickly. Standard requirements are:
1. Details of all anticipated UK source income from or connected with the relevant activity. This should include not only any guaranteed performance fees but also any income from secondary or ancillary sources such as venue merchandising, income from TV/video/radio rights, sponsorship income and any support or contribution received to supplement income or subsidise expenditure.
2. Verification for each source of income in the form of a copy of the contract or agreement under which each source arises.
3. A schedule setting out the dates covered by the UK activity, indicating the venues and the anticipated chain of payments.
Where the UK activity represents part of a larger activity, eg a concert tour covering various countries or a film involving work in different territories, the nature and extent of activities in each country or territory should be clarified.
4. An itemised schedule of all expenses being claimed as appropriate to the UK activity. Each category of expenditure should indicate the basis on which the figures have been arrived at, with particular reference to the following factors:-
a) where professional commissions [manager, agent etc] are charged on a percentage basis, the name of the individual/organisation should be shown together with confirmation of the base to which the percentage commission is applied;
b) where payments are being made to accompanying entertainers, business companions, crew etc, a full schedule of those individuals and their business functions as well as of the payments being made in connection with the UK activity will be required;
c) evidence should be provided in support of major items of expenditure [for example, in a concert tour the major production costs including - sound, lights, bus/truck hire, equipment rental etc];
d) where expenditure is common to the UK and other territories, the basis of any apportionment to the UK should be explained;
e) where a group of entertainers is involved, the names of the individuals should be supplied, together with an indication of the manner in which the net UK income should be apportioned between them;
f) a computation of the anticipated UK liability should be provided [to include the liability of any accompanying non-resident entertainers].
Some accountants/agents give advance notice of the fact that they will be making a detailed application on behalf of a particular entertainer or group of entertainers. There is no provision for such advance notices in the legislation and, as they are not applications as such, FEU's view is that they serve no useful purpose. While we cannot, of course, prevent the issue of such advance notifications, they fulfil no function within the application procedure. We will not take any action in response to them and they will not be considered to safeguard the time limit envisaged in Regulation 5.