Category: Fashion Show Production Companies

Fashion show production companies operate under financial pressure. Large budgets, varied income streams, and short-term staff contracts create complex tax and reporting obligations. When records sit across spreadsheets or disconnected systems, compliance risks increase quickly.

In this article, we explain how HMRC tax investigations for fashion show production companies are becoming more common, which tax areas face the highest risk, and what practical steps businesses should take now to prepare for VAT, PAYE, corporation tax, and employment status enquiries.

Compliance Environment and Key Rules in 2026

Digital record-keeping and Making Tax Digital

• VAT – All VAT‑registered businesses must keep digital records and submit returns using compatible software. This requirement has applied since April 2022 and extends to businesses below the VAT registration threshold.
• Income Tax – Self‑employed individuals and landlords with qualifying income over £50,000 must adopt Making Tax Digital for Income Tax from 6 April 2026; the threshold drops to £30,000 from April 2027. Production companies engaging self‑employed creatives may need to support contractors with digital record‑keeping or factor quarterly reporting into their planning.
• VAT registration thresholds – From 1 April 2024 the VAT registration threshold increased from £85,000 to £90,000. Companies whose turnover exceeds this limit must register and charge VAT; those below may remain outside the regime but still need to monitor turnover to avoid late registration penalties.

Payroll, PAYE and National Insurance

HMRC’s employer guide for 2025‑26 emphasises that employers must keep accurate PAYE and National Insurance records and make them available upon request. Employers must be prepared to demonstrate how deductions were calculated and must file payroll information online. Fashion show production companies that employ temporary staff for events should use compliant payroll software and retain documentation to avoid penalties during investigations.

These obligations form part of wider HMRC compliance requirements for fashion show production companies, particularly where temporary staff and event-based payroll arrangements are involved.

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Off‑Payroll Working (IR35)

Fashion show production companies often rely on freelancers and personal service companies for staging, lighting, and creative roles. These working arrangements fall under HMRC’s off-payroll working rules, commonly known as IR35.

The rules apply where services are provided through an intermediary, such as a personal service company, and the individual would be treated as an employee if engaged directly. In most private-sector cases, the production company must assess the worker’s employment status and issue a formal status determination statement.

Where IR35 applies, the business paying the contractor must deduct income tax and employee national insurance and account for employer national insurance and the apprenticeship levy. Incorrect status assessments remain a frequent reason for HMRC compliance checks, particularly in project-based industries like fashion show production.

HMRC’s Compliance Strategy and New Powers

HMRC’s Transformation Roadmap outlines plans to close the tax gap by investing in digital services, automation and artificial intelligence. New analytical tools will target deliberate non‑compliance, and HMRC is recruiting 5,500 compliance officers over the next five years. Draft legislation published in July 2025, effective from April 2026, will tackle non‑compliant umbrella companies and increase interest and penalties on overdue tax debts. HMRC is also expanding upstream interventions into VAT and corporation tax to help businesses submit accurate returns through real‑time risk assessment. Companies that rely on umbrella companies or complex labour supply chains must review their arrangements.

These developments increase the likelihood of HMRC tax investigations for fashion show production companies, particularly where labour supply chains and VAT reporting are complex.

VAT on Events and Cultural Exemptions

VAT treatment of admission charges can create uncertainty for event producers. HMRC guidance explains that VAT exemption on admission charges applies only to public bodies or eligible cultural organisations. Most commercial events do not meet these criteria.

For fashion shows and other commercial performances, admission charges usually attract standard-rated VAT at 20%. Production companies must therefore charge VAT on ticket sales and apply the correct VAT rate to sponsorship income and related services, such as hospitality or advertising. Incorrect VAT treatment remains a common reason for HMRC compliance checks in the events sector. Maintaining accurate records and applying the correct rates is central to VAT and payroll compliance for fashion show production companies, especially where ticket sales, sponsorship, and staffing overlap.

HMRC Tax Investigations for Fashion Show Production Companies: Common Triggers

HMRC selects cases using risk‑profiling and random checks. Triggers that often affect fashion show production companies include:

• Inconsistent or late filings – Late VAT returns, payroll submissions or corporation tax filings raise red flags. HMRC’s digital systems increasingly identify missed deadlines.
• Large or unusual VAT repayment claims – Claiming input tax on large production costs or overseas services can prompt queries, especially if turnover fluctuates sharply between seasons.
• Discrepancies between accounts and PAYE records – Differences between P11D benefits, payroll expenses and accounting records may lead to enquiries. HMRC’s employer guide notes that employers must keep PAYE and National Insurance records and provide evidence when asked.
• Use of contractors through personal service companies – Incorrect application of IR35 rules, missing status determination statements or reliance on non‑compliant umbrella companies can trigger off‑payroll investigations.
• Cash payments and temporary staff – Paying event staff in cash without proper records increases the risk of underreported PAYE and National Insurance.

Case Study: Fashion Show Producer Faces VAT and PAYE Enquiry

Scenario: A London‑based fashion show production company hired multiple contractors for a large show. Ticket sales were subject to standard‑rate VAT, but the company accounted for them incorrectly and reclaimed input VAT on entertainment expenses that were not allowable. Payroll for the temporary crew was processed manually, and some staff were treated as freelancers without IR35 assessments.

Issues Identified by HMRC:

• VAT returns showed inconsistent treatment of ticket sales and sponsorship income, highlighting weaknesses in VAT and payroll compliance for fashion show production companies operating at scale.
• Input VAT claims included blocked items such as client hospitality.
• PAYE records were incomplete; some workers were missing from payroll submissions.
• No status determination statements were issued for contractors supplying set design and lighting services.

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How Apex Accountants Helped:

• Conducted a VAT review, identified errors in ticket VAT treatment and adjusted past returns. We guided the client on cultural exemption rules, confirming that fashion shows do not qualify.
• Implemented cloud‑based bookkeeping and payroll software, creating digital records that aligned with Making Tax Digital requirements and HMRC’s online PAYE filing standards.
• Completed IR35 assessments using HMRC’s guidance and issued status determination statements, ensuring correct tax deductions.
• Represented the client during the HMRC enquiry, providing evidence of corrected returns and demonstrating improved controls. HMRC reduced penalties due to proactive disclosure and compliance improvements.

Outcome: The company avoided further penalties, maintained its reputation with sponsors and now benefits from real‑time visibility across VAT, payroll and contractor costs. By adopting digital systems early, it is prepared for MTD for Income Tax and other digital compliance requirements.

Preparing for 2026: Practical Steps for Fashion Show Production Companies

• Adopt digital accounting systems – Use compatible software to capture sales, expenses, payroll and VAT records. This supports MTD for VAT and income tax and provides evidence during investigations. Digital recordkeeping also reduces errors and administrative burdens.
• Review VAT registration and thresholds – Monitor turnover to determine when to register for VAT. The threshold increased to £90,000 from 1 April 2024; voluntary registration may still be beneficial to reclaim input tax on production costs.
• Understand cultural VAT exemptions – Unless you are a public or eligible cultural body, ticket sales are standard‑rated. Do not assume fashion shows qualify for cultural exemptions.
• Strengthen payroll and PAYE processes – Maintain detailed payroll records, use HMRC’s online filing system and keep evidence of calculations. For seasonal staff, set up payroll properly from the outset.
• Apply the off‑payroll working rules – Assess each contractor using HMRC’s IR35 guidance, issue status determination statements and operate PAYE on deemed employment income where necessary.
• Prepare for HMRC’s increased compliance activity – Expect more digital correspondence, targeted nudges and AI‑driven checks as HMRC invests in compliance technology. Keeping records up‑to‑date and working with qualified advisers reduces the stress of unexpected enquiries.

Meeting HMRC compliance requirements for fashion show production companies now depends on strong digital systems, accurate payroll processes, and clear contractor assessments.

How Apex Accountants Support Fashion Show Producers

Apex Accountants specialises in advising creative and event-based businesses. We help fashion show production companies build robust financial systems and remain compliant. Our services include:

• Tax investigation support – Experienced advisers manage HMRC enquiries and negotiate settlements.
• Cloud accounting and VAT services – We set up and maintain digital accounting software, prepare MTD‑compliant VAT returns and advise on VAT treatment for events and sponsorship.
• Payroll and CIS management – Our payroll team processes PAYE for permanent and temporary staff and administers the Construction Industry Scheme (CIS) for subcontractors.
• IR35 and employment status reviews – We assess contractor arrangements, prepare status determination statements and advise on working through umbrella companies.
• Management reporting and virtual CFO – We provide insight into cash flow, profitability and tax planning, enabling you to budget for future events and navigate regulatory changes.

Visit our tax investigation services, cloud accounting services and VAT services pages, and contact us to learn how we support fashion show production companies.