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
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
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.