Phonographic Performance Limited PPL
Many, if not all ACC Clubs, will be aware that PPL have recently launched a consultation exercise with a view to vastly increasing the tariffs that are charged to Clubs and other licensed establishments. The ACC is unhappy that as a national body of Clubs we were not consulted by PPL regarding the proposed tariff changes and were unable, therefore, to raise our concerns with PPL prior to the consultation document being sent out.
PPL is an organisation which recovers royalties on behalf of its Members. Any organisation which plays music in public, including Private Members Clubs, requires a licence in order to broadcast the music. The proposed changes do not relate to the standard tariff charged but do affect Clubs which host events in which live music is played or performed. This is referred to as ‘Specially Featured Entertainment’.
The proposed tariff revision structure is wholly unreasonable and the ACC, along with CORCA, will be making a robust objection to the proposals. However, we encourage all Clubs to return the consultation document that they have received to PPL. Whilst we can make a general return on behalf of Clubs, the proposals will affect each Club differently – depending on the size of the Club and the types of events which are held – and as such it is important for individual Clubs to submit their own individual return to PPL.
Many Clubs are confused regarding the differences between PPL and the Performing Right Society (PRS) since both organisations require businesses to hold licences in order to broadcast music. PRS and PPL are both companies which represent performers and record companies and licence the use of recorded and live music in public performances; however they each cover a different part of the copyright used in recorded music.
• The use of recorded music on behalf of the record companies and the performer’s rights.
• This covers bought CDs, music played through a television, the radio and playing music on the internet in public.
• PPL covers some 45,000 performers and 5,750 record companies. In 2010 they collected £143m and distributed £124m with the remainder being spent on administration and collection costs. They have a central London office and employ 240 people.
• The use of the actual lyrics and composed music in any public performance of music, on behalf of the song writers, composers and publishers.
• This includes using the radio, CDs, and streaming on the internet, music on television and also live music performances.
• The revenues collected by PRS are far greater than PPL but for the purposes of this article these figures and their distribution are not relevant.
The Club will require both licences if recorded music is being played in the Club through any kind of device (live performances, discos, background music, juke boxes, TV and Radio etc.).
It is thought that the proposed revised tariff is so punitive that even the largest and most successful Clubs may be unable to hold live music events if these proposals are ultimately implemented by PPL. One of the largest ACC Clubs has told us that:
‘As a rough guess we could be currently be paying around £25 for a Friday night disco but in 3/4 years time the cost would be over £200 according to their tiered increase system. As we provide discos every week this will take our PPL fees from around £750 well into the thousands. Looking at the document as proposed it seems to us that PPL will price us out of entertainment’.
We are also concerned that a private company with large staff and expensive central London office is suggesting to unilaterally raise these tariffs with no apparent concern of the repercussions of such a policy. In our opinion both PPL and PRS are acting as a monopoly since there is no competition in place to prevent these companies from operating within this specific and unique market place.
It is these concerns that we will be raising with PPL along with other relevant authorities and groups. Even suggesting such changes in the midst of an extremely difficult financial trading time for all Private Members’ Clubs suggests that PPL are seemingly divorced from the reality that most business within the leisure industry are currently operating under.
In our view, both PPL and PRS should be supporting Private Members’ Clubs, not seeking to undermine them by imposing changes which are short sighted and, many would say, greedy.
Thankfully there are legal recourses to any action PPL implements which do not have wide support by the matter being referred to the Copyright Tribunal. The Copyright Tribunal can then judge if the increase in fees is justified. It has been mooted by some trade professionals that this preliminary proposal is simply wishful thinking on the part of PPL who know that the industry could not accept anything approaching these proposed numbers and that this is simply a negotiating tactic by PPL.
It is fair to say that these proposals will be resisted across the whole licensed and leisure industry and that the more responses that PPL receives from Clubs condemning the proposed changes the more difficult it will be for them to implement these changes.
Automated Lottery Machines AMLD Tribunal Decision
Regular readers of the Magazine will recall that there has been in a long running and costly dispute with HM Revenue and Customs (HMRC) over the tax treatment of Category B3A gaming machines, also known as automated lottery machines. This stretches back over four years and has involved two separate Tax Tribunals.
The first Tribunal confirmed that income from the machines is exempt from VAT. Clubs were advised to obtain a VAT refund and most Clubs have now done this. If your Club operated this type of machine and have not claimed a refund, then time is running. You will need to take action as soon as possible and we suggest you discuss this with your machine supplier.
The second Tribunal was over the issue of the AMLD liability of the machines, this issue was complicated by the fact that the law changed three times in three years.
The Tribunal has now released its Judgement which in summary is:
Period 1 – 10/07/03 to 18/07/06 – No AMLD required
Period 2 – 19/07/06 to 31/10/06 – No AMLD required
Period 3 – 01/11/06 to 20/07/09 – AMLD required
Period 4 – 21/07/09 onward – No AMLD required
What this means, in practice, is that any Default Licence falling within Period 3 is now due and payable.
The good news is that any AMLD paid for a B3A machine from 22/07/09 onwards should be refunded and in these cases, the refund due may exceed any amount now payable.
The Club’s machine supplier may be willing to deal directly with HMRC regarding this matter, we advise you to check with them before contacting HMRC directly. There is still a chance that HMRC may Appeal against the Judgement and Clubs must continue to treat the B3A machines as if they are subject to AMLD until such time as HMRC state that they will accept the Tribunal Decision and not raise an Appeal.
In addition to the Club’s machine supplier, if the Club has engaged the services of Ian Spencer & Associates on the separate Linneweber case, then he will also be able to deal with any queries that you may have regarding this matter.
Linneweber 2 update
Last month we printed details and enclosed documentation regarding an opportunity for ALL Clubs to reclaim VAT paid on Gaming Machines for the previous four years. If any Clubs did not receive this information please contact the ACC Office.
Clubs should be aware that there is a four year capping period on all claims so it is essential that Club’s claims are submitted as soon as possible in order to maximise the amount of VAT that can be reclaimed. We are suggesting that Clubs use our recommended VAT consultant, Ian Spencer, to complete and submit the documentation on their behalf and he has agreed to do this fixed fee.
In the enclosure in last month’s magazine it was stated that an example spreadsheet was attached. Some Clubs did not receive this spreadsheet, if you did not receive it then please note that it, along with all the other applicable documentation, is available to download from Ian Spencer’s website – www.vatproblemssolved.com
We advise all Clubs to submit a claim as there is a good chance of success in this case. Clubs which submitted claims for the orginal Linneweber, successfully received thousands of pounds of VAT refunds. Please note that Clubs which did not submit a claim for the original Linneweber are able to submit a claim for Linneweber 2.