Venues new payment method - Invoice instead of 'signing off' - advice

Evil_Olive

My husband is a musician with a local band. The band is a Collective Jam Band with about 20 floating members, between 5-10 members will play at each gig, depending on the nature of it. It's an amateur band that makes very little (no ) money - anything they are paid is generally swallowed (and some) by travel and equipment or rehearsal space related expenses (yes, they keep receipts). It's just a hobby band really and paperwork-wise they like to keep things as simple as possible.

Previously, venues have usually paid in cash on the night, one member (lets call him the 'collecting member' - not necessarily the same person each time) will 'sign off' receipt of the cash on behalf of the band on the venue's paperwork for their accounts and then each member that played that night will 'sign off' a chitty for their individual share of that cash and this chitty is kept by the collecting member so that he isn't saddled with the tax liability for the whole lot.

They've been offered a residency at a local pub, 1 large & 2 small gigs a month guaranteed for the next year, great, but the venue is a chain pub and it's company policy to only pay bands through a third party entertainment payment facilitating company (eventsuk.co.uk). The collecting member would have to register with the website, giving his own name/address/ID and bank details for an account all fees would be paid into. The collecting member would invoice EventsUK for each gig and then the pub would pay the money plus a commission to EventsUK who would then pay the band by BACS (The band pays no commission) and the collecting member would have to take it out of his account and divvy it up. A bit long winded and ridiculous but a lot of chain pubs are starting to use this method so I guess they'll have to get used to it if they want the gigs. Trouble is that this ties the same member down to 'signing off' as it were, on ALL the money EVERY time and this is quite a lot of money over the year.

The members are worried that whoever signs up to be the permanent collecting member will be more at risk of looking like he is earning all the money himself with all the registering and invoicing and money going into his bank account etc, or that he is employing the other musicians with all the obligations that brings, and that just having a sign-off chitty won't be enough of a safeguard for him tax-wise - if it ever was.
The form the collecting member uses to register, doesn't really provide for more than one person to be named as 'the artist' - there's a copy of it here: http://eventuk.co.uk/wp-content/uploads/2015/03/eventuk_artist_agreement.pdf.zip
I'm looking for advice as to whether there's a way of filling this in which will be the safest for the collecting member.
The pub has to pay a commission on each transaction so getting all band members to register, submit individual invoices & get paid separately probably won't go down well, especially as their individual shares are often only £20 per person on the small gigs.

There's a copy of an invoice template provided on the EventUK site here: http://eventuk.co.uk/wp-content/uploads/2015/03/eventuk_artist_invoice.pdf.zip
although I don't think the band are obliged to use it, the instructions say Invoices must be addressed to Event UK and emailed to [EMAIL="accounts@eventuk.co.uk"]accounts@eventuk.co.uk[/EMAIL] and must contain the following information:
Definition of service
Venue / location of performance
Date of performance
Fee (being the fee that you expect to be paid)
Would it be acceptable just to have the band name on the invoice rather than individual members as they are different for each gig.

It's a great venue with a ready-made music loving audience and will be loads of fun so they really want the gigs but no one wants to sign up to do all the financial stuff because of the perceived risk. In the end my husband said "for gods sake, I'll do it" to stop the bickering/whining (no one whines like a bunch of musicians!) but he wants to know how to protect himself.

Does anybody have any advice on this at all or, indeed, whether the method they already use for cash is any use anyway - very grateful. I've emailed EventsUK to ask their advice too but of course it's in their interest that we sign up and it's the venue that is their 'customer' really so not sure whether I could totally trust what they might say.

If this should be in the small business forum let me know & I'll move - it's not really a business so I wasn't sure.

TheCyclingProgrammer

I'm not an accountant, but I think the sensible approach to this would be:

* All members must register themselves as self employed
* One member of the band who is the closest thing to being the band leader or manager should sign the agreement with EventsUK. They would also be self employed.
* That member invoices EventsUK.
* Other members invoice the band manager for their time.
* Each member is responsible for their own tax. The band leader would be taxed on his profit which would at the least be all band earnings less what he's paid other members.
* Each band member is responsible for providing their own equipment (which they can potentially offset against their earnings).

I wouldn't worry too much about the manager potentially being seen as en employer. If the band members can choose what gigs to play when they want, provide their own equipment and are not under any direction or control by the manager then it would be clearly seen as a self employment role IMO.

CKhalvashi

I'll give a full response to this later, when I've been able to speak to one of my office staff (I'm in, person I need to speak to isn't).

Evil_Olive

Thanks, TheCyclingProgrammer, unfortunately that's just the sort of route they don't want to go down, it's just a 'self funding hobby' I think I've seen it called, it makes a loss and will continue to do so in perpetuity. They all have normal jobs paid via PAYE and don't want to get into anything more complicated than that, they do it for fun and if they have to start registering as self employed etc when they're not, it will stop being 'just fun'. I genuinely think that they'll just blow this particular gig off if that's the case, despite it's attractions.
Will check back to see if you come up with anything CKhalvashi - cheers in advance.

CKhalvashi

Out office manager mentions that it may be worth setting up a joint business account, ensuring that all expenses are meticulously accounted for and seeing what the end result of that is at the end of the tax year re need to register self-employed.

It can be set up as 'Elive Oil'sOH and AnotherBand Member t/a BandName', with relevant paperwork between them re how the profit/loss will be split, preferably per event.

Noone would need to registered until end of September in the second year of the 'business', so this would give enough time to work out whether everything is making a loss, thus continuing as a hobby or not.

I'm not an accountant either (nor is the office manager, who has given the advice based on past experience), but have a good few years in the general music industry area.

Evil_Olive

Thanks guys, think they'll probably just blow it off then. I know there's no way they will want to go through all the hassle of saying they're self employed or declaring the band to be a business when they aren't/it isn't. And no one wants to open a special bank account because then someone will have to be appointed to administer it etc. & the group is way too nebulous and shifting for something like that.

There's no question about it not being a hobby. It's definitely just a hobby. They've been doing it for nearly 20 years with various members coming and going at different times. A lot of the time they play for free or just beer

I'd be extremely surprised if there's ever been any profit for any of them in all that time and there's no intention to change that. I can't speak for the others, but hubby keeps pretty meticulous, if simple, records already. Counts up & stores all receipts at the end of each month plus any chittys he has from sharing out cash. Records his mileage to & from gigs, all payments he's recieved from gigs and how much his share was etc I just had a look at the book he keeps for writing in the resulting figures. For each of the last 3 years he's spent around £1000-1500 more than he's been paid for playing and he hasn't even had to replace any major items of equipment over that particular time period. I think it's always been about the same, none of them do all the gigs, they share about and the biggest payment I found in the book was £50 as his share of a gig where only 5 of them played at a £250 gig. Mostly Hubby tends get between £50-90 a month from it maximum and I know he spends at least £60 of that on his share of the rehearsal studio hire Add on petrol, strings, valves, plectrums etc etc and you can forget it. Let alone if he needs to replace amp or guitar.

This wouldn't change if they took these new gigs. Depending on how many of the members wanted to turn up and play on a given night each person would only be getting around £20 for the small gigs and £40 for the large one and that wouldn't be in addition to other gigs, it would be instead of them. These would probably be the only actually paid gigs they would do over that year bar the odd one or two others. They wanted them because a 'residency' like this is 'comfy' - they haven't got to go looking for gigs for a whole year

I still can't quite believe that, should the taxman decide to check that no one in the band is avoiding taxes, there isn't a simple way to ensure that we have in place whatever paperwork the taxman would need to show that the £500 per month doesn't all belong to one person just because he happened to collect it and share it out - it's nuts!
Is some variation on the existing 'chitty' method they use at the moment no good for that then?

CKhalvashi

The only way to do it would be through a business bank account.

This doesn't mean they're claiming to be self-employed/running a business, just to provide a way to distribute expenses evenly and fairly, whilst noting that the money doesn't belong to any one person.

jamesd

The simple method is that business bank account. He's already keeping the other records needed.

Bank accounts are just simple ways to segregate money, set up a new one whenever that's useful.

Evil_Olive

Cheers guys, I'll put it to them. I had a business account once for a short time but that was back in the early 90s. There was a monthly fee just to have the account and fees were charged on every item that went in or out of it with a monthly minimum. Are they still like that, because that could be a problem with such small amounts.
Does it have to be a 'Business Account' or are there such things as accounts for hobby groups of this type as that might be less scary sounding to them....

CKhalvashi

Evil_Olive wrote: »

Cheers guys, I'll put it to them. I had a business account once for a short time but that was back in the early 90s. There was a monthly fee just to have the account and fees were charged on every item that went in or out of it with a monthly minimum. Are they still like that, because that could be a problem with such small amounts.
Does it have to be a 'Business Account' or are there such things as accounts for hobby groups of this type as that might be less scary sounding to them....

The best thing to do is speak to the bank of your choice, I think. My bank offers 18 months free banking at the moment, however we make a fair number of payments and it very rarely averages to more than about £10 a month over the year, through an e-payments plan.

After the 18 months (or however long depending on whatever bank you choose), you are of course free to switch to another bank for whatever switching offer there is at the time. If I was dealing with cash or cheques frequently, I'd do this, however there seems very little point for what I (and probably your OH) want to use the bank account for, especially if you're happy with the service.