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Show me the accounts

Features
18 March 2019

As touring becomes an ever-more important part of a successful artiste’s career, having an expert accountant on board is absolutely essential. It’s not just the varying rates of local income tax, even across the European Union, there are sales tax issues, performance royalty calculations to watch and currency fluctuations to monitor.  Claire Bicknell reports.

International touring comes with its own range of financial complexities, with many artistes operating as formidable businesses in their own right.

Each country played will have its own regulations in areas such as income tax for foreign workers, so having an expert accountant is essential.

Some effectively act as business managers for their clients, which is more common in the US, and will consult on all financial areas.

“Clients are looking for timely and accurate payment of suppliers, calculations of label override, management commission and profit to the band on a periodic basis,” says CC Young & Co director Colin Young.

“Effective withholding [income] tax mitigation at the front-end when arranging contractual matters with the promoter, an effective business structure and the utilisation of the withholding tax at the back-end when preparing the tax returns [for HMRC] are all key.”

Young started the firm in 1998, and the company now employs 60 staff. It has departments specialising in tour accounts and services to promoters management companies, record labels, producers and writers.

“Our touring division alone now extends to 40 employees,” says Young. “We act for both young bands who have signed their first record deal performing promotional shows in pubs and clubs, as well as the largest established bands performing international shows.

“For those at theatre and arena level, we will be more involved in the collection of public performance revenue [PRS] for the songwriter and we will undertake more detailed reconciliation of the promoter settlement sheet on the night.”

The company provides full business management services for clients, with Young highlighting artiste withholding tax, PRS and tour finances as just some of the key financial issues that need to be dealt with.

PRS operates a ‘Concert Live’ reporting service in the UK, which Young states is the firm’s preferred option.

“By giving 40 days’ notice before the first show date, the system becomes operational. Instead of PRS applying a levy of 20 per cent, a fixed fee of £125 per show is charged instead. With an audience of 2,300 as an example, the fixed fee is the cheaper alternative.

“This arrangement provides a valuable income source for the support bands. The revenue is now split 80 per cent to the headline artiste and 20 per cent to the support artiste. For the lucky artiste supporting Ed Sheeran at stadium shows, this would be enormous,” adds Young.

It’s a business

Ed Grossman, a consultant at Brackman Chopra, represents a range of artistes from North America who are touring Europe and the UK.

“Services don’t differ for larger or smaller clients,” says Grossman. “The larger they are, the more they recognise they are a business. Smaller artistes may not have embraced this fact yet.

“Clients like to work with accountants who can step up and deliver without interfering;  those that keep out of the way and liaise with management, agents and promoters in order that the artiste complies with tax and other financial obligations, and where possible, we save them some tax.”

Some artistes may want to know the ins and outs of their touring finances, but Grossman states it’s simply not practical for many to be fully involved.

“They’ve got their work to do. It may be they want to as it’s their money that’s being played with, but they just haven’t got the time.”

He says the future is bright for live music accountancy services, even with Brexit on the horizon.

“No-one knows at the moment what Brexit may bring, but while there are still beans, they need to be counted. And there are a lot more beans to be counted now than 15 years ago.”


Taxing issues

Harris & Trotter partner Charlotte Harris agrees the industry is buoyant and accountancy services need to reflect this.

“The live music industry is growing year on year and the accounting will need to follow this, and ensure the right money goes to the artistes. Having a good music accountant in place is a wise investment as it can save you much more than their fees.”

Established nearly 80 years ago, the firm works with artistes including Depeche Mode, Rita Ora, Years & Years and Ellie Goulding.

“We offer book-keeping, tour accounting and overall accounting services,” says Harris. “Clients are looking for someone they can trust and who deals with so much touring work that they are experienced to know what’s what.

“Without that experience, you don’t know what’s right and what’s wrong, and unfortunately not everyone out there is as honest as they should be.

“It’s always interesting when promoters from the same country tell you their withholding taxes are different rates,” Harris notes.

One of the biggest financial issues in touring is the foreign earners income tax charges by countries, which can vary from nothing to more than 30 per cent of gross revenue.

“Withholding tax is ever-changing and always important, so many clients now require you to file year-end tax returns in the countries, just because you have performed there.

“In the US, they deduct 30 per cent tax on income unless you submit a CWA [Central Withholding Agreement] at least 45 days before the first show date,” Harris explains.

“When the IRS was shut down over January this year, they wouldn’t accept any of the applications that needed to be submitted during that time – this then had a knock-on effect on cashflow for tours. If you were performing in the US in February, that could mean suffering 30 per cent US tax on income, which will likely not be refunded for another 18 months or so.”

The latest financial tools and technology also make financial issues easier on the road, whether it’s uploading receipts or monitoring spend.

“Centtrip is a great touring card that helps tour managers and accountants keep on top of tour spending, and get better deals on credit card charges,” adds Harris.

Early loop

With over 30 years’ experience, SRLV works with clients across the live industry, including artistes, managers and booking agents.

“We offer a wide range of services including full business management bookkeeping – raising invoices, paying the bills – and tour support,” says director Grant Court. “We make sure clients get the correct tour support monies in and do as much as we can to mitigate withholding tax, and at the end of the tour that the right forms and correct withholding certificates are in.”

“We advise clients to link in with us as early as possible, so we’re in the loop with the manager and booking agent and accessing shared information online so we can see the schedules as they come up and as they change. Everyone is then aware of what tax needs to be prepared.”

Court points out that some countries, such as Spain, are tightening up even further on withholding tax legislation.

“A band won’t expect it if they’ve been going to a country for a number of years, and then it changes,” he says. “We don’t think Brexit will change withholding taxes, and we don’t see the rates changing.

“What clients will need to look at is the value of the pound and the cost of going to a particular country; if it is not affordable, they’ll have to weigh up if it’s worth going there.”

“In the short term if a budget needs to be prepared now for a tour or dates in six months’ time, clients might want to lock in currency exchange rates early.”

Court updates clients on financial matters “as much as they want” and can give online access to accounting information.

“It’s easy to share stuff on the cloud and clients can access data from QuickBooks Online and Sage if they would like to. We don’t want to overwhelm them with information and each will have their own preferences about how often they want updating, whether it’s once a year or every three months.”

On the road

Bullocks Touring director Adrian Bullock has been an on-the-road tour accountant since 1999, and works with artistes including Arctic Monkeys, Radiohead, Nick Cave and Robbie Williams.

“Clients can make plc [public limited company] money in a short space of time, so it is beneficial to have someone with them who is dedicated to that job,” says Bullock. “Being on the road with the client gives peace of mind and also adds that extra layer as a financial port of call. I’m a one stop shop for all finance enquiries on a tour.

“It’s getting easier to deal with finances on the road. Dropbox keeps us all going. There’s a lot more information shared through the cloud and it reduces a lot of the paper that used to be lugged about.”

Bullock agrees that financial circumstances and legislation in countries need to be to be carefully considered in advance of touring.

“Different withholding taxes means that in some countries a chunk of your fee will be deducted. Without planning, this means a tour could lose a lot of money. You have to ask is it worth going to that country? Some will be impossible to make a profit on.

“There’s a lot changing across Europe and South America,” adds Bullock. “The economy is struggling badly in South America, and keep an eye out on Argentina. Across Europe, Italy is becoming an even worse bureaucratic nightmare by the minute.”

Last out, first in

Mike Donovan of MD Touring Accounting is a touring accountant who was Motorhead’s business manager for nearly 20 years. Other clients have included James Brown, Johnny Cash and Brian Wilson.

“When I was on the road, you’d be the last person up until the middle of the night to settle a show, then you’d try and get some sleep on the bus and be the first in the next day trying to set up an office at the venue,” says Donovan.

“I occasionally do go out on tour now for a day or so, but my on the road days are very much over.”

Donovan agrees that across Europe, financial legislation is still challenging.

“Nowhere gets a great deal easier around Europe. And with Brexit looming, who knows? The next few weeks will tell. Currency exchange rates fluctuate anyway and are affected by outside considerations.”

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