Editorial: Taxing times for media relations

If, like many people, you had blithely dismissed the new tax

self-assessment regime as a minor annual inconvenience, the warning

issued by KPMG this week about the consequences for public relations

will be all the more alarming.

Although PR involves far more than just media relations, PR people still

spend much of their time dealing with journalists. And from this year

those relationships will be wrapped up in a whole new layer of

bureaucracy.

With a few exceptions, any benefits given to journalists by clients or

their agencies - including press trips, and items sent for review which

are not returned - will involve a heap of forms on all sides. In these

cases, the client will have to send a form to each journalist concerned,

stating the value of the benefit. If the review or trip was organised by

the publication employing the journalist, then it will have to declare

the benefit to the taxman. If it was organised by the client or its

agency, the client must notify the Revenue.

The rules are complex, and the Inland Revenue guidance sketchy. But

there are hefty penalties for failing to comply - pounds 300 for not

issuing a form, and up to pounds 3,000 for supplying the wrong

information.

What is more the new rules may alter the nature of the trips and reviews

that PR people can arrange. All journalists, except those who are

self-employed, will have to pay tax on the value of those benefits -

unless the costs were incurred ’wholly, exclusively and necessarily’ in

the course of their job.

The trick word is ’necessarily’. For the Revenue will not automatically

allow the whole cost of, say, a week’s trip to a holiday destination for

a travel journalist if it judges that it was unnecessary to stay for a

full week in order to write a review. Likewise that staple of car

industry PR, the foreign trip to test drive a new model, could incur a

tax bill for the journalist if insufficient time is spent on the

business of driving the car.

In future, journalists will think twice about accepting such ’benefits’,

and PR people will have to be far more wary about exactly what they

arrange on their behalf.

This measure - brought to you by the Government that professes to hate

bureaucracy - introduces a further burden with particularly awkward

consequences for PR activity. PR people must be given far clearer

guidance about acceptable practice in these areas. Otherwise they could

unwittingly tie themselves and their journalistic contacts up in knots

of expensive red tape.