This brief explains how HMRC will apply the Social Security (Categorisation of Earners) Regulations 1978 to entertainers following the Upper Tribunal decision in the case of ITV Services Ltd v HMRC.

The brief confirms HMRC's position following the case where the tribunal found against ITV and upheld the decision of the First Tier Tribunal that the actors’ contracts provided for remuneration by way of salary and there was therefore liability for Class 1 National Insurance contributions on all the remuneration payable under the contract types.

The aforementioned Regulations relating to entertainers were introduced to provide earnings-related contributory benefit protection to entertainers. At the time of their introduction it was accepted that a small number of highly-paid celebrity entertainers referred to by the entertainment industry as “Key Talent” or “Marquee Talent”, would be excluded because they did not need earnings-related contributory benefit protection.

HMRC believed that the wording of the Regulations in 1998, as amended in 2003, excluded certain entertainers not paid by way of salary (as defined in the Regulations) and that one such group was those entertainers termed “Key Talent”. However, in HMRC's opinion it has become clear that many entertainers termed “Key Talent” are engaged contractually under terms which bring them within the ambit of the Regulations.

HMRC also believed that the majority of musicians not engaged directly under employment contracts were excluded from the Regulations because they were not paid by way of salary. The decision in this case now clarifies that musicians’ contracts (which HMRC previously believed to be outside the ambit of the Regulations, and where it had in some cases given a written opinion to that effect), are in fact within the Regulations.

Brief 19/12 is available in full at http://www.hmrc.gov.uk/briefs/national-insurance/brief1912.htm