Tax Clampdown on Life Models

RAM could be the winner in big employment shake-up

The recent report in the press that the Taxman would no longer accept life modelling as genuine self-employment, thus forcing models into casual PAYE (pay-as-you-earn) contracts, was a beautiful example of how the media can be ten or more years late with the news. In fact the story was the work of the London Borough of Wandsworth, one of the last employers of models to be brought into line by the Revenue. But the fuss, however belated, has at least given new impetus to RAM's campaign to have life modelling recognised as self-employment and it will be RAM, not Wandsworth, who will be the winners if we succeed.  Vic Stevens explains.

It is apparent from comments by some of the overseas visitors to our site that the idea of employment contracts for two or three hour sessions, with Income Tax deducted at source, is not the basis on which they are used to being employed. But many British employers of models, outside of the colleges, are also confused.  Let me make it clear from the outset that you cannot legally engage a model on a self-employed basis in the UK, and this has been the case for many years.  Of course, we all know that if the private art clubs, secondary schools, individual artists and private tutors were to stick to the law, the life art scene would callapse.  It is in the realms of tertiary, higher and adult education where the rules are applied, though not quite in every establishment - a few still manage to escape detection and a massive bill for all the tax assumed (often erroneously) not to have been paid by their models over the years.

It sometimes comes as a surprise to models and employers alike to learn that the founders of RAM supported and encouraged the Revenue in their original clampdown on cash-in-hand payment of models.  We did it in a somewhat covert fashion, as we knew it would have made us hugely unpopular at the time, but we had the best long-term interests of the profession at heart.  We could see that large numbers of unsuitable (incompetent, unreliable, uncommitted) people were offering their services as models and we were also fed up with the ridiculously low fees models were offered on the grounds that we could avoid paying tax.  However, RAM hardly existed at that time, and it seemed to us that the only way we could influence the situation was to help the Taxman to make it harder for the fly-by-nights to get work.

Unfortunately, problems soon surfaced.  The Taxman had not understood (and still doesn't understand) the modern decentralisation and total fragmentation of life modelling employment, especially in the big cities.  An attempt to impose the normal rules of PAYE employment on what remains essentially freelance and very casual work has led to a chaotic situation which is not at all beneficial to models, their employers or, indeed, the Taxman himself.

Each employer tries to administer the resulting system of what RAM calls the 'casual PAYE' system in a different way.  The slackest method encountered is to regard what is in effect an invoice (a simple claim form usually provided by the employer) as a PAYE contract in some strange way.  Income tax is deducted before the model is paid, and that's all there is to it.  At the other extreme there is the farce of having to apply formally for the job after you have already done it by filling in a long complicated job application and submitting it together with your CV, medical information and permission for a police check.  Eventually you get a letter bearing the joyous news that your application for the two-hour post of last month has been successful and inviting you to complete and sign a meaningless contract that gives you absolutely no employment rights. Some time (perhaps two months) after you have done that you will get paid, provided that that the wages and salaries department has not become completely bogged down in all this nonsense. If they have, you can give up the idea of ever getting the £15 minus tax off them.

In practice, most methods of administering casual PAYE fall somewhere between these two extremes, but the fact remains that at the end of the financial year a model working full-time can end up with a large bundle of P60s from his many contracts and this makes it quite likely that he or she will not bother to complete an Income Tax Return and will thus lose a lot of money owed by the Revenue in overpaid tax (always deducted at the maximum rate for casual employment, but partially recoverable).

RAM is currently pointing out to Inland revenue that times have changed since 1990.  Most models in London and quite a few elsewhere in the UK are now members of RAM and constitute, by and large, a much more stable workforce than used to be the case.  It would now be appropriate to allow RAM members to register as self-employed (as models, that is, not something else), to invoice employers and to keep accounts.  This would not be a return to cash-in-hand, to which RAM remains opposed, and would most definitely still be 'through the books'.

It would, however, make it much easier for models to manage their financial affairs.  It would also make things easier for those employers currently struggling with casual PAYE.  Of course, the implication of the latter is that there would be a dramatic increase in the number of employers with a policy of employing RAM members only (there are already quite a lot in London).

However, if a deal can be hammered out between RAM and the Taxman, resulting in the end of casual PAYE for most of our members, it might not be such good news as employers such as Wandsworth possibly imagine, since they would still not be able to get away with low fees in exchange for cash-in-hand.

Any progress made in talks with the Inland Revenue will be reported in Bare Facts Online