Lorimer letters: what broadcast media professionals need to know

What are Lorimer letters?

Also known as LP10 letters, Lorimer letters are provided by HMRC to freelancers who want to be classed and paid as self-employed contractors and don’t operate through a limited company.

They can legitimately prove they should be classed as self-employed because they run their own freelance business.

A Lorimer letter provides assurance to the hiring company that the individual they’re contracting for short-term work should be paid gross, with no income tax or National Insurance contributions (NICs) deducted.

Without such an assurance from HMRC, broadcast professionals working on short engagements have often been overtaxed when they’re paid through the payroll.

Lorimer letters – the backstory

The name of what’s officially termed a Letter of Authority refers to case law (Lorimer v Hall, 1993).

Ian Lorimer was a TV technician working for 20 production companies on brief engagements; Brian Hall a tax inspector.

Hall argued that because Lorimer used equipment provided by the companies he was working for, he was an employee as he didn’t meet one of the “self-employed” HMRC tests (to provide his own equipment). Also, it was argued, the production company “dictates the hours to be worked, where he shall work, the date he shall work”.

Lorimer, though, was ruled to be running a self-employed business and not working in a succession of short-term employments because he took a business-like approach to finding new clients and engagements.

The case helped to clarify differences between employment and self-employment.

Who Lorimer letters help

HMRC typically issues Lorimer letters for behind-camera workers and production-based roles only.

As per this HMRC Employment Status Manual, particular behind-camera occupations in TV and film are treated as self-employed. They include camera operators, producers, writers, directors, gaffers, carpenters, electricians and stage managers.

HMRC provides a list of accepted self-employed grades (job titles), and told Frame 25: “The list can’t cover every grade and doesn’t mean that a role can’t be self-employed.

“For roles not covered by this guidance, the facts should be looked at in more detail. We recommend using other HMRC guidance to decide the correct employment status such as the online tool ‘check employment status for tax’ (CEST), but it isn’t mandatory.

“HMRC can also issue a Letter of Authority to qualifying behind-camera workers for very short-term, irregular engagements of less than 10 days (dailies type work).”

If you’re not in an approved grade, you can prevent National Insurance being deducted using a Lorimer letter.

What it means for freelancers working in behind-camera roles

While the hirer is responsible, for tax reasons, for deciding if a freelance worker’s job with them is employed or self-employed – depending on the role and the contractual working arrangements – freelancers who do not work through their own limited company can benefit like those who do.

Lorimer letters show the engager that HMRC has checked the freelancer’s employment status, so the engager needn’t worry about it.

Lorimer letters and IR35

An individual contracted for short-term work and paid gross, with no income tax or National Insurance contributions (NICs) deducted, is by definition working off-payroll.

Under IR35 – off-payroll working rules, to use the official name – which come into effect for the private sector next month having been deferred by a year because of the pandemic, liability for any unpaid employment tax falls on the engager where workers provide services through their own limited companies or work off-payroll with a Lorimer letter.

Engagers – the companies benefitting from individuals’ work –therefore become responsible for determining whether a contractor is inside or outside IR35, and deducting income tax and employee national insurance where applicable.

Many engagers have introduced robust systems to examine employment status and begun to review the relationships they have with workers. Self-employed freelancers are now being checked routinely by engagers.

Freelancers with a Lorimer letter should generally be able to satisfy clients that they are not employees.

How to get a Lorimer letter

While it’s been said that HMRC used to give Lorimer letters away like confetti some time ago, more recent anecdotal evidence suggests HMRC scepticism has increased and rules on the provision of Lorimer letters have tightened.

To apply for a letter, HMRC asks for the completion and return of this questionnaire and engagement history spreadsheet. The period required for the spreadsheet is the last 12 months’ work history.

HMRC says: “We will consider an application for a letter if a worker can demonstrate multiple short-term contracts of 10 days or less over a 12-month period for different companies.

“They would also need to show that they work as a self-employed business with some financial risk/expenditure to find and manage the work and/or provision of substantial equipment.”

The Lorimer letter questionnaire

The questionnaire you’ll be asked to complete and return when applying for an L10/ Lorimer letter asks for basic details such as your job title and NI number, information on your business’s expenditure and methods in organising and obtaining your work, and moves on to questions relating to your business set-up.

If you have to use your own kit to perform your job, HMRC will want you to list and value each item.

The engagement history spreadsheet, meanwhile, asks for a list of your employers in the past 12 months, and it should account for every separate engagement in date order.

Applications can be emailed to [email protected] and HMRC suggest applicants allow up to 15 working days for approval (or otherwise).

More information

For further information, call HMRC’s Film & TV office on 0300 123 2326 or contact us at Frame 25.