With our exit from the European Union, fluctuating currencies, varying tax regimes and the threat of Coronavirus to the touring business, accountants have their work cut out, especially as touring is the main generator of income for most artistes. Claire Bicknell reports
Touring presents a range of financial complexities, from countries having different regulations on areas such as withholding tax, through to volatile currencies fluctuating due to world events.
Thankfully behind-the-scenes, and sometimes even on the tour bus, are expert accountants who can navigate these matters and help smooth the ride.
“We act for a variety of live artistes, ranging from young bands who have signed their first record deal and performing promotional shows in small venues to the largest established bands who are touring internationally,” says Colin Young, director of CC Young & Co.
“A passion for the music industry is key to us. Essential qualities are a calm and confident approach when working under pressure, building trust and confidence with artiste and management, and being responsive and proactive.”
Young started the firm in 1998 and it has grown to nearly 60 members of staff and two offices in London and Sweden.
As well as touring and business management, it has departments specialising in independent record labels and publishing companies, royalty analysis and royalty audit, producers and writers, and support for management companies, film, TV, fine art, promoters and other media sectors.
“We provide full business management services, including pre-tour planning to review and provide guidance on budgets and cashflow requirements, raising of sales invoices and the collection of income, authorisation of purchase invoices and the payment of creditors, and the mitigation of withholding tax at the front-end when agreeing the fee structure with promoters, and the utilisation at the back-end when preparing the tax returns,” says Young.
“We also arrange insurances for all touring needs, which includes travel, combined liability, cash, equipment, terrorism and cancellation insurance, operate the Concert Live Services in conjunction with PRS, calculate and pay label override and management commission, and ensure an accurate and timely distribution of profits to the band, after tax.”
The company has invested in personalised software, as well as utilising cloud-based systems.
“We wanted a better overview of all of our clients on tour so we invested in software which can track every client and every show performed worldwide,” says Young. “We can view them all on a map, so if there is a problem such as typhoons in Japan or coronavirus in Italy, we can tell in less than 30 seconds how many of our 300+ clients will be affected and provide faster, targeted advice for them.
“Improvements in cloud-based accounting systems means that we can share direct financial information with clients too. It allows them much more freedom in terms of how much work they want to do themselves.”
Current hot topics include the potential impact of the Coronavirus.
“It’s a current topic for us in terms of what effect it will have on upcoming shows and European touring this summer,” says Young. “What financial impact will this have on the bands, and what does this mean for the festivals and attendees? Shows in Bologna have been cancelled – will the insurers pay?”
No more bags of receipts
Celebrating its 80th year, London-based Harris and Trotter works with artistes including Lewis Capaldi, Depeche Mode and Two Door Cinema Club.
“We offer business management services including book-keeping, management of the bank account, doing what is legally possible to reduce withholding taxes, raising invoices and making payments, dealing with insurances, checking settlement statements, and preparing tour accounts,” says partner Charlotte Harris.
“Our aim is to ensure the artistes make as much money as legally possibly from their touring, and to be part of a team that makes everything runs smoothly and successfully.”
The stealth checking and spotting of any financial discrepancies, and acting quickly, are all staples in the sector.
“Where overages are, or might be, due it’s important to check the settlement statement, and back up and ensure the artiste is being paid what they should be paid,” adds Harris.
“It doesn’t always follow that the bigger the venue, the bigger the profit as costs can escalate on big stages, so I’m involved in making sure there is a focus on the bottom-line profit,” says Harris.
She also highlights Coronavirus as a significant concern.
“Dealing with issues around the Coronavirus is a new one right now – you can’t get insurance to cover this now, and who knows where the next major outbreak might be.”
The firm is also looking to technological innovations which benefit tour accounting.
“The PRS app is great at checking rates in overseas countries,” states Harris. “We are also now using Receipts Bank which is an electronic tool for keeping receipt of expenses. This means the days of carrier bags of receipts are over!
“For as long as there is live music, there will always be a need for accountants working on the team. Whilst parts of the music industry have declined over the years, the live side is not part of that decline so it’s a bright and exciting future.”
MGR Touring is a division of MGR Weston Kay chartered accountants, based in London and provides the usual services for touring artistes, such as withholding tax, social security payments, and issues encountered in Europe and beyond.
Partner Ian Thomas runs the division alongside Gillian Park, with a member of the team also based in California.
“We file around 300 FEU [HMRC’s Foreign Entertainers Unit] applications a year for artistes of all shapes, sizes and genres,” says Thomas. “We become part of a client’s team for a tour, and they look to us to give them clarity as to what is needed.”
With the UK now having left the European Union (EU) and in the transition period until 31 December, the financial uncertainties of Brexit are another topic of concern for the sector.
“Whilst the basic right for tax dealt with by bilateral tax treaties won’t change in itself, other issues like National Insurance and social security will – it’s another piece of paper you’ll need like a visa,” says Thomas.
“There is paperwork common to EU countries and we won’t be part of that gang anymore. Will they adapt, or will a new system be needed?”
With a financial eye on the horizon, Thomas makes some predictions and also gives a word of warning.
“The tax situations we deal with will go through a bit of an upheaval over the next few years. Countries will always have different ways of doing things and that won’t change, but it may get even more fractured. Currencies will be more volatile.”
Ed Grossman, a consultant at Brackman Chopra, works with a range of artistes from North America and the UK.
“Clients want an accountant that is not only literate and numerate, but who has a good working knowledge of the live music industry and the business,” says Grossman. “They don’t want someone who hangs about backstage. These are qualities you won’t see in a textbook.
“They are looking for someone to handle the foreign obligations and cut through the masses of bureaucracy on the tax side, and tell them the outcome.”
Live music clients also differ in the amount of financial information they want from their accountants.
“In most instances they don’t want the gory details,” adds Grossman. “By and large, they are looking for the outcome; they know broadly what it will look like, and that’s what they pay me for.
“The basic rule is artistes are obliged to pay tax in the country in which they perform, as well as the tax in the country they live in. On stadium-sized tours, the likelihood is profit will be taxed at a higher rate. Tax differs across Europe, Belgium is similar to us, but nowhere else, and people like me would need to touch base with every promoter on the tour to agree the tax structure.”
Grossman is also concerned about the potential financial impact of the Coronavirus.
“With 80-85 percent of artistes’ revenue coming from touring, if you cut that out for a year then you’ve got a problem. Coronavirus worries me greatly. It could be a long-term problem, rather than a short to medium term issue.”
On the road support
BigStar Business Management was founded by CEO Nick Lawrence in 2017, with 95 per cent of its clients in the live music industry, including Happy Mondays, Tom Grennan and The Darkness.
With staff having expanded to 20, the company is planning to move to larger offices in London.
“I wanted to focus on an industry that is part of my DNA, and also to simplify a traditional model to take the anxiety out of accounting for clients,” says Lawrence. “We have business managers and accountants, and everyone employed here loves music. We’re always looking for great people too.
“It’s about simplicity, transparency and affordability. Clients are charged a monthly retainer or some choose a fixed price per show.”
BigStar utilises a cloud-based app called Xero which allows clients access to their financial information at their fingertips.
“We have an 18-year-old artiste who has signed a multi-six-figure advance and wants to see what’s going on via their phone, and it’s reassuring for mum and dad,” adds Lawrence.
“The younger generation want to be better informed; they want to see how much money they’ve got and how much they’re owed, and they want to see it on a dashboard.”
Supporting clients as an on the road tour accountant since 1999, director of Bullocks Touring Adrian Bullock counts Radiohead, Nick Cave and the Bad Seeds, Supergrass and Robbie Williams amongst his clients.
“Tour accountants need to be sociable, organised and ready for anything,” says Bullock. “The main areas dealt with are show settlements, withholding tax planning, insurances, budgeting, cash and currency control.
“The same principles apply whether it’s a small venues tour or a large scale stadium tour. In many ways smaller clients are more difficult to manage as there is, of course, limited budget and infrastructure, whereas on a stadium tour you normally have access to anyone and anything you need.”
The company also utilises cloud-based products on the road, helping to collate essential information no matter where you are in the world.
“They’re really great for keeping information on hand at all times, but reminds us how dependent on a decent Wi-fi signal we are,” adds Bullock.
Bullock agrees with his peers on the two main areas of current financial impact concern.
“Insurance, especially regarding Coronavirus, is a hot topic. Brexit also means complete and utter uncertainty – it appears that it’s a headlong charge to a hard Brexit, and I do not expect it to end well for our industry.”