Recorded music, music publishing
Music accountancy expert, Nick Lawrence has picked up on one aspect of the new UK Budget that might just deserve the attention of the larger music industry businesses. The UK Spring Budget included one change, relating to withholding tax which may have particular relevance for the worldwide music industry and connected creative sectors even though it is a result of the tax avoidance schemes set up by the likes of Facebook, Google and others. Now a series of transactions that take place between the two companies involving royalties, where one of the main aims is to effectively transfer profit from the higher to the lower tax jurisdiction will now result in withholding tax applied at the full relevant UK tax rate. Once the 2016 Budget becomes law (July 2016), if royalty payments are clearly and obviously made between the two UK businesses, even if the contract for the transactions is made between the UK-based and the overseas company, the payments will now fall under UK tax rules and be taxed at the appropriate UK rate. Music Business Worldwide says the most important message for any music business of a significant size – where royalties, trade names or trademarks are involved – to be aware, and extremely clear as to why profits are being transferred between themselves and (connected or un-connected) companies based overseas and that “a lack of transparency is almost certain to bring down the wrath of HMRC on both organisations.