Welcome to the Spring edition of the Publishing eBulletin. Over the past few weeks, we have been exploring the legal and commercial issues arising from the COVID-19 outbreak with our clients and we share our latest briefings on contractual and employment issues below. A number of publishing industry professionals attended a webinar we hosted last week on managing COVID-19 contractual issues. If you would like a copy of the presentation from this webinar, please contact our Marketing team here.
We are currently helping clients review how the changed circumstances may impact their staff and existing contracts, as well as providing additional support where their own legal teams may be reduced or unavailable. If you would like to discuss arranging similar support for your organisation, please contact Shireen Peermohamed, who will be able to co-ordinate the advice you need.
Also on the topic of employment, we look at the incoming IR35 reforms and the effect these will have on personal service companies.
We also take a look at the latest on Brexit, the good news for publishers under the 2020 Budget announcement, and the outcome of the Audible Captions US copyright lawsuit.
COVID-19 and contracts
As the Coronavirus outbreak continues, we have received an increasing number of inquiries about contracts and the cancellation of events.
Our contractual disputes team discuss the key rights and obligations, as well as practical implications, that businesses should be focussing on in these uncertain times here.
COVID-19 and employees
Following the latest government guidance on reducing exposure to the COVID-19 virus, a number of issues arise for employers.
Brexit: where are we now?
Audible captions lawsuit reaches settlement
A US copyright case that we and the publishing industry alike have been following since the summer reached its conclusion earlier this month.
After a number of major US publishers filed a copyright violation claim against Amazon’s audiobook company Audible, the parties have since finalised the terms of a settlement agreement.
We explore the development of this case here.
IR35: the new Off-Payroll Working Rules
In February, the Treasury published the outcome of its review of the new Off-Payroll Working Rules (commonly known as IR35) which will apply to large and medium sized organisations in the private sector. IR35 was originally planned to come into force on 6 April 2020 but Stephen Barclay, chief secretary to the Treasury, has since confirmed that these new rules will be delayed until April 2021 “in response to the ongoing spread of COVID-19 to help businesses and individuals.” Barclay also clarified that: “This is a deferral not a cancellation and the Government remains committed to reintroducing this policy.”
The reforms are relevant for the publishing industry as many service providers, such as freelancers and consultants, contract for their work via a limited company. If the relationship between the individual and the client publisher would – but for the presence of the limited company – be one of employment, the limited company must pay employer’s national insurance and deduct income tax and employee’s NI via the PAYE system on the entirety of the individual’s earnings from the provision of the services. Under IR35 these payment and deduction obligations will be placed on the client, which will pose a significant change for publishers using the services of individuals who trade in this way. Employment Partner Marian Derham takes a detailed look at the IR35 changes and how businesses and contractors can plan ahead and prepare for the changes, which you can read here, as well as providing the key takeaways from the Government’s response to the UK Treasury’s review here.
Budget 2020: Digital publications tax cut
The new budget contains some particularly welcome news for publishers, online newspapers behind paywalls, and readers alike: Chancellor Rishi Sunak announced that as of December 2020 e-books, e-newspapers and e-magazines will be zero rated for VAT telling the Commons:
“Digital publications are subject to VAT. That can’t be right. So today I’m abolishing the Reading Tax. From the 1 December, just in time for Christmas, books, newspapers, magazines or academic journals, however they are read, will have no VAT charge whatsoever.”
Up until this time, the UK’s current application of a standard rate of VAT (at 20%) to e-books will continue to apply, but thereafter e-books will be treated in the same manner as books in physical print which are zero-rated for VAT purposes (0%). However, it remains unclear whether this zero rate will extend to audiobooks.
You can revisit our previous discussion on the disparity between VAT rates for physical books and their electronic counterparts here.