Orchestras face a crisis in U.K.

Charlotte Higgins© Guardian Newspapers Limited 2004

London: British orchestras face a �33 million tax bill that, if collected, could "kill them all off in one fell swoop" according to one orchestra insider. "The problem is so gigantic that literally everyone would go bust," said another source.

In the case of the Philharmonia Orchestra, for instance, it could mean an extra �500,000 tax a year, plus arrears backdated to 2000. In the case of the London Symphony Orchestra, the back-payments would amount to �8 million. The liability for the tax bill is understood to have come "out of the blue". Orchestras are holding emergency meetings with the authorities.

The tax bill concerns employers' national insurance contributions. Many orchestras have, since their founding, been formed entirely of freelance musicians. Thus, orchestras have hitherto paid lower national insurance contributions than employers would for regular, salaried workers. But in 1998 the Government changed regulations for "entertainers" in order to benefit actors, also customarily freelancers. The idea was that their employers would pay higher levels of national insurance. The actors would then be able to claim jobseekers' allowance while "resting," the benefit being funded by the contributions.

An HMRC official recently completed an inquiry into five sample orchestras to assess the potential impact. At a meeting with orchestras' representatives on October 20, the HMRC said that making the full payments would result in four out of the five going into liquidation. The orchestras assessed were the LSO, City of Birmingham Symphony Orchestra, Orchestra of the Age of Enlightenment, and the orchestras of English Touring Opera and Welsh National Opera.

``The Inland Revenue acknowledges the fact that faced with backdated demands ... at least 80% of orchestral companies could close,'' reads a leaked letter from the Association of British Orchestras. However, HMRC has a policy of collecting on an ``ability to pay'' basis, and would not demand payments.

A spokesman for the Arts Council England said there had been "a very constructive discussion with the HMRC," and that they "are reassured that the Government understands the problem."

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