A Tax on Art Schools

Art education has undergone radical changes in recent years not just in the content of courses but also in the funding and administration of the colleges themselves. In fact, few art schools exist as such, most now being institutes, faculties or departments within universities, with only a handful surviving as autonomous higher education corporations. Have these changes promoted and advanced the quality of students' education? And what has any of this to do with Artlaw?

To address the last question first, one discernible change over the last 20 years has been the development of 'Professional Practice' studies in most art schools. The idea of art students spending part of their time studying the hard edges of the reality of life as a practitioner – whether working self-employed, employed or in partnership with others – was developed throughout the UK by Artlaw Services in the mid-1970s. By 1984 when that legal information, educational and advice service was wound up, its team of art lawyers and administrators was regularly teaching professional practice studies in around 100 art and design courses in all major art schools throughout the UK. Students were helped to achieve a practical working knowledge of such matters as: contract; copyright; income tax; VAT; product liability: health and safety; landlord and tenant; forms of trading including companies, charities and co-operatives; income-generation, including grants, prizes and public funding; accounts and accounting. The teaching programme in those days was labelled 'Is there life after art school?'.

Since that time, most colleges have themselves developed professional practice studies to a point where many have made such issues an integral part of the course programme, particularly where a modular teaching structure has been put in place. The benefits of doing so are seen to be that students will be better equipped to enter the world of work – in visual art or otherwise. A further value is that such teaching requires engagement by the colleges of outside professional practitioners to act as visiting lecturers and to bring to the students their hands-on experiences of real life: employed and self-employed artists, public and private arts administrators, accountants and lawyers. That, you might agree, is the good news. The bad news is that, in many colleges, the recruitment and engagement of such visiting lecturers are being administered in such ways as to deny to students such benefits. The problem is income tax or colleges' interpretations of tax law. Most practitioners are pleased to offer their services to colleges as a visiting lecturer, even though the fees offered are so commercially uncompetitive that a day or half-day's teaching leaves most well out of pocket. There has always been, and continues to be, a traditional commitment amongst professionals to contribute in this way; certainly in the UK, but also in the EU and the USA. However, administrators in art institutions are increasingly seeking to engage such professionals by offering them part-time contracts of employment; not as free-lance visiting practitioners. This usually means that the visiting lecturer is required to 'apply' for a part-time post, sign a contract of employment with strict terms and conditions, and to have income tax and national insurance contributions deducted by the college before receiving not their fee, but their salary. Such terms of engagement act as a serious disincentive to most professionals who would otherwise be pleased to visit for a flat fee which their firms could receive to compensate for their absence, or which could be brought to account with their Tax Inspector if they are self-employed.

The upshot is that many would-be professional visitors are simply unwilling or unable to give their services to such colleges. The busier and more successful the practitioner, the less able or inclined they are to undertake such visits. A further serious loss of quality from such visitors relates especially to artists themselves. Long gone are the days when practising artists could keep body and soul together by undertaking a few regular visits each week during term: a great loss to the students as well as to the artists themselves. Why do the colleges behave in this way? It seems that most art school personnel or finance departments have succumbed to pressures placed upon them by the Inland Revenue. It is widely understood that Tax Inspectors insist that colleges treat visiting lecturers as employees and deduct income tax and national insurance contributions at source. The aim is to prevent such visitors receiving their fees gross and not subsequently declaring them for income tax purposes.

It is open to colleges to refuse to engage visitors in this way, but they are persuaded to do so by the added threat that failure to do so may result in the college being required to pay the visitor's income tax which the college should have deducted at source. Under the law, that is indeed a possibility. Extensive enquiries do not show that many colleges have tried to resist such pressures, or, that those which have done so have succeeded. Some visiting professionals have successfully persuaded a few colleges not to engage them as employees, usually by insisting that the company or firm they already work for is allowed to present an invoice for their 'real' employee's visit. For free-lance artists, that is not a viable option. UK law in this area is not free from difficulty: whether a person is engaged to provide services, under a contract of employment or under a free-lance agreement, depends (as so often in the law) on all the circumstances of each case. At the end of the day, only a court of law can definitely decide. This puts colleges and would-be visiting professionals in some difficulty. The pragmatic solution is a willingness to resist. If the colleges and would-be visitors have the willingness to resist the pressures outlined above, it is possible for genuine visiting professionals to ensure that art students derive the substantial benefits that professional practice studies are intended to bring about. Regrettably, such a willingness appears largely to be lacking – on both sides – throughout the UK.

Students are the losers.

The Artlaw Team would be pleased to hear from anyone interested or involved in this issue.

© Henry Lydiate 1995

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.