Paying tax in a band

[gjones]

I sign as Elvis Presley.

[nobodysprefect]

Well, at least you folk aren't trying to do the Finnish thing!

Which is, try to rack up an income of about 1000 quid per month from gigging and not pay a cent in taxes... Because 'hey, if it's all in cash, we can't get caught!' or 'we'll just create an association, since their operations are exempt from tax!' to 'HEEYYY, if I do the billing myself, I don't have to pay the mandatory social security costs!'

All of which are wrong, but hope springs eternal, and there's nothing an expert can do to make the laypeople believe that they, indeed, have to pay taxes for their income like other self-employed folks.

[TimR]

I think the thing to remember is that it only takes one person to see you pocketing a wad of cash after a gig to make a call to the TAX office. Then you are stuck with trying to prove that you haven't made any money. The onus is on you to prove you didn't make any money rather than on them to prove you did. I think it's still one of those rare guilty until proven innocent areas of life.

The TAX office can look at your nice shiny toys, and villa in Spain and say well you only earn £x,000 from your day job and potentially you could earn £y,000 from gigging so you owe us £z,000. Pay up now! I think you get 30days or something ridiculously stupid like that.

Your best defence is to keep a gig diary of every gig you do and how much you get paid. Then you'll get an idea of how much you're earning pretty quickly. Keep all your reciepts and write them in the diary too. Think this is how the caught Al Capone, so be careful, if it does start mounting up, pay the TAX.

At least when they come knocking you have some evidence that you're not earning as much as they think.

I can't see the point of trying to claim back a couple of hundred quid on your PAYE tax, I would rather try to stay under the radar and spend my time earning more money then messing around dealing with the TAX office. Anyone tried calling them lately? Their telephone options list is horrendous.

Also, I always go into a back room or side coridoor when dealing with the money. I gave my drummer an earful once when he walked up to the stage at the end of a new years eve gig flashing around a couple of grand in used fivers and started counting it out and divvying it up in front of the people leaving the gig. Very Bad Form.

[BILL POSTERS]

[quote name='TimR' timestamp='1338022569' post='1668675']
I think the thing to remember is that it only takes one person to see you pocketing a wad of cash after a gig to make a call to the TAX office. Then you are stuck with trying to prove that you haven't made any money. The onus is on you to prove you didn't make any money rather than on them to prove you did. I think it's still one of those rare guilty until proven innocent areas of life.

The TAX office can look at your nice shiny toys, and villa in Spain and say well you only earn £x,000 from your day job and potentially you could earn £y,000 from gigging so you owe us £z,000. Pay up now! I think you get 30days or something ridiculously stupid like that.

Your best defence is to keep a gig diary of every gig you do and how much you get paid. Then you'll get an idea of how much you're earning pretty quickly. Keep all your reciepts and write them in the diary too. Think this is how the caught Al Capone, so be careful, if it does start mounting up, pay the TAX.

At least when they come knocking you have some evidence that you're not earning as much as they think.

I can't see the point of trying to claim back a couple of hundred quid on your PAYE tax, I would rather try to stay under the radar and spend my time earning more money then messing around dealing with the TAX office. Anyone tried calling them lately? Their telephone options list is horrendous.

Also, I always go into a back room or side coridoor when dealing with the money. I gave my drummer an earful once when he walked up to the stage at the end of a new years eve gig flashing around a couple of grand in used fivers and started counting it out and divvying it up in front of the people leaving the gig. Very Bad Form.
[/quote]

100% agree with all of this. it only takes one jealous punter.

[12stringbassist]

I was in a band and they all got a a ltter from HMRC demanding £4k each.
Spoke to guitarist from his new home sat on the bog, terrified.
Drummer sorted us all out. He had an accountant for his self employed stuff that he added the band to.

I used to send in a spreadsheet of earnings, mileage, phone calls, stage clothes, repairs, set-ups,
equipment costs, depreciation, etc etc etc. Had rebate on day job tax a few times.

Edited May 26, 2012 by 12stringbassist

[jakenewmanbass]

[quote name='Johnston' timestamp='1337893925' post='1667214']
If you do it right you can get a rebate from your day to day earnings.
[/quote]
this

having a self employment as well as a job makes a difference to allowances as your gigs are considered business, if as you say you don't make profit on gigs then you can show that as a net loss or break even, which can result in a tax rebate from your PAYE tax liability...

[musophilr]

Not much to add here - but if you keep proper records you will have the data that explains to the taxman why you shouldn't have to pay any tax on what you've earned.

BTW I've earned not much out of music in the last financial year, but not had much in the way of day jobs either and didn't start signing on until February. So they're going to ask "what have you been living on?". I can account for some of it in savings and some of it being bailed out by the Bank of Mum. So keeping records of your personal spending is also advisable in case they decide you've been peddling drugs or got some other income you haven't been declaring.

[bassace]

So I suppose that goes some way towards the definition of an expert musician - see other post. [i]Someone who can sort his tax affairs out.[/i]

[thepurpleblob]

I haven't read right through this but just in case somebody else hasn't said it... if you don't do anything then you run the risk of being assessed. If you only play for 100 quid between 5 every couple of months then I doubt the tax people are going to care about you. If you keep appearing in venue accounts and it turns out you play five times a week then you'd better be keeping proper accounts. Even if you make a thumping great loss, if you can't PROVE that then they will just send you a bill and there's bugger all you will be able to do about it.

[jonsebass]

Well, following on from this, ive setup a spreadsheet that details EVERYTHING i have to spend as day to day - strings, accessories, insurance, publicity, rehearsal, and then ive got gig spend - food, drinks (both alco and non alco), distance from home to studio to pub back to studio and back home - at 45p per mile as per hmrc business rates.

Then a total received minus total spent and a +/- and so far (since April 2012) - ive made a profit of £4.34. I cant do it since we started (2006) cos ive not got records.

[BILL POSTERS]

[quote name='bode' timestamp='1338143286' post='1670078']
Or one disgruntled ex-guitarist.

You don't need an expensive accountant, they don't want to see a box file of receipts in April! If you don't have the time, which is unlikely, you can always use a bookeeper. Set up a simple Excel document to record income and outgoings.

Claim for everything and that's the beauty. Do you spend 3 hours a day rehearsing in a bedroom? Electricity, heating, water, rent etc are all expenses related to your music business. Not to mention the strings and petrol.
[/quote]

Not sure if you can do this with a part time occupation. I'm sure sombody on here will know more.

If your wifes not working, she can do all your books polish your Basses, and answer the phone etc. And you can claim for her wages. long as you dont pay her enough to have to but a stamp theres little or no paperwork, and no checks to make sure you actually give her the cash..

[WalMan]

[quote name='BRANCINI' timestamp='1338147792' post='1670139']
Not sure if you can do this with a part time occupation. I'm sure sombody on here will know more.

If your wifes not working, she can do all your books polish your Basses, and answer the phone etc. And you can claim for her wages. long as you dont pay her enough to have to but a stamp theres little or no paperwork, and no checks to make sure you actually give her the cash..
[/quote]Well as ever, yes and no.

If all it is doing is creating a bigger loss then you can but you will not be able to set it off against other income (there was a tax tribunal case that said as much recently)

Also what you pay needs to be commensurate with the work done, and ideally there should be a trail to show payment actually made - difficult if you have a joint account but for preference that should be by a transfer so that you can prove the payment has been made.... and don't forget minimum wage legislation and a redundancy payment when you give up. But what price can you say is reasonable for the odd phone call, two lines on a spreadsheet and polishing two basses after a gig?

Use of home. Unless perhaps you teach from a room at home or have a r/h rookm the band uses then you will probably only be looking at the HMRC suggested rate of £3/week

Edited May 29, 2012 by WalMan

[oggiesnr]

If you're up front and keep good records the worst is that HMRC challenges your records and you may or may not owe them some money. The likelihood is they won't bother you so long as the way you live is in keeping with yur claimed income (I've had the VATman round twice, they've looked at the house and gone elsewhere)

If you get caught up by accident or design (either they're auditing a venue who claims they've paid you ten times what they paid you or the disgruntled punter) then you have to try and defend their figures which is harder. If the audited venue says they paid you £2000 rather than £200 then HMRC may ask you "How many gigs did you do last year?" Answer "50" they then calculate your band income at £100,000 which over the VAT limit so 20% is due plus income tax, they then backdate it over the several years you've been a band and you have a huge figure.

You may get away with it forever, but it's easier to be prepared.

Steve

[icastle]

[quote name='oggiesnr' timestamp='1338154507' post='1670258']
(I've had the VATman round twice, they've looked at the house and gone elsewhere)
[/quote]

If they came round here then they'd be giving [b]me[/b] money...