Musicians in court battle over NI

A case being heard in the Court of Appeal next month will determine whether a recent ruling that ended Class 1 National Insurance Contribution (NIC) exemption for freelance musicians should stand. Earlier this year ITV Services went to a tribunal to question whether their top performers should have to pay Class 1 NIC. The judge ruled that they did, and at the same time ruled that a 2004 agreement that freelance musicians were exempt from Class 1 was unsafe, and ordered its annulment. Previously, HMRC’s Guidelines On The Special NIC Rules For Entertainers, issued in April 2005, provided a specific exemption for session musicians, but HMRC is currently reviewing these guidelines in light of the Tribunal decision. If the appeal is unsuccessful, more musicians will be faced with having to pay an additional 12.5% to conform with Class 1 NI payments at the point their fees are paid, as is required from those in regular employment. The Musicians Benevolent Fund is calling for HMRC to take a more flexible approach. Chief Executive David Sulkin said: “Those of us in the business of championing and caring for musicians are very nervous about what will happen in the Court of Appeal in December when it considers the case of ITV Services v. HMRC… This new ‘sledge-hammer to crack a nut’ measure increases further the fragility of the music profession.”

http://www.hmrc.gov.uk/briefs/national-insurance/brief1912.htm