Young musicians are given their big break – by the taxman

Finance fund that benefits investors and young talent wins approval from HMRC

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The Independent Culture

Finally some good news for Gary Barlow’s accountant. A new investment scheme with tax advantages, designed to help new musicians launch their careers, has been given the stamp of approval by HM Revenue & Customs.

Annie Eve, an acoustic singer from London, is tipped to be the first star to emerge from the new music industry investment vehicle – which has the taxman’s backing.

Barlow and other members of Take That were criticised for investing £26m in the  Icebreaker scheme, which bought music rights but was actually a mechanism for tax avoidance since it used  offshore loans to ramp up  the tax relief offered to high net worth individuals on  their losses.

But HMRC has now given “advance assurance” to Sound Wave, a new multi-million pound media finance fund, which offers investors a  minimum 50 per cent tax reduction and gives singers like Eve the chance to release an album on a major label  and pocket 100 per cent of  the proceeds.

Sound Wave utilises the Seed Enterprise Investment Scheme (SEIS) which offers tax relief for start-ups.  The scheme gives Eve a £150,000 investment to set up her own record company, Mouth To Mouth Recordings, and record and market  her album, Sunday ’91.

The album, released next Monday, is licensed to a major label, Sony Red, but Eve receives 80 per cent of the proceeds, rising to 100 per cent in 2017 if the advance costs are recouped.

HMRC has given preliminary approval to Sound Wave, on the expectation that investors will qualify for full tax relief after three years’ commitment to a vehicle which could generate profits, depending on the quality  of its artists.

Eve’s “intense acoustica”, which has earned comparisons with Bon Iver, has been playlisted on BBC 6 Music and Sunday ‘91 earned a four-star review in the Evening Standard. Although Eve, 22, is normally more concerned with songwriting than seed enterprise, she recognises that musicians have to become small businesses to survive. 

“Making an album costs money: to get the right studio and the right producer.  This scheme gave me the ability to do that and most importantly to make the record I wanted to make without having to compromise my freedom as an artist or my integrity as a writer. If the album does well we all benefit,” she said.

HMRC urged wealthy stars who wish to avoid  being tagged “tax avoiders” to seek an advance assurance before investing in schemes which might ultimately require them to pay back millions to HMRC.

A spokesman said: “To allow companies to give a degree of comfort to prospective investors, HMRC offers an advance assurance facility to companies thinking of seeking investment via either enterprise investment schemes or SEIS.”

Joe Macarthy of Sound Wave said: “This SEIS portfolio is sanctioned and endorsed by HMRC and offers upfront tax benefits to investors and an opportunity to participate in an expanding area of an exciting industry.

“This country is the third-biggest exporter of music in the world. Sound Wave enables investors to invest into the industry in a very tax-efficient way and participate directly in the success of individual recording artists with the support of major label distribution.”

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