HMRC invokes legal powers to examine football agents' fees
31 October 2011
HM Revenue & Customs has forced the
Football Association to reveal full details of payments made by FA
clubs to agents during last season.
HMRC suspects that dubious methods are widely
used in professional football to minimise players' and managers'
income tax. One of its current targets is the third party payment -
money paid by a football club to a player's agent when it buys that
player. HMRC (and the FA) considers it is the footballer that
should be paying the agent, and so it counts the club's payment to
the agent as the player's taxable income.
These payments to agents are typically made
via offshore entities without ever entering the UK, and many of the
players concerned are not British anyway. So HMRC has had
difficulty obtaining hard evidence of them.
However. the Football Association, which
operates a clearing house for player transfer fees, has now
revealed it is the subject of an HMRC disclosure notice ordering it
to reveal all such payments for the 2010-2011 playing season. The
deadline for compliance is today, 31 October. All such payments -
probably adding up to GBP60-80 million - will then be audited and
the footballers who arranged them will be charged extra income
tax.
According to the Daily Telegraph, which claims
to have seen the FA-HMRC correspondence, HMRC has also offered
clubs an amnesty under which they can escape a formal investigation
by paying half the estimated unpaid tax.
• The large amount of money circulating in
professional football, and the lax standards of accounting
practised by many clubs, has given rise to several tax disputes.
One still continuing is over the use of leading players' image
rights, where income tax is minimised by taking a director's loan
from an image rights company. Some leading clubs are also paying
their footballers through employer-financed retirement benefit
schemes or interest-free loans instead of wages, thus avoiding
national insurance contributions and the 50 per cent top rate of
income tax. And last year Scotland's top professional football
club, Glasgow Rangers, came under scrutiny for paying a total of
GBP46 million to its players via offshore trusts.
It has also been noticed that 14 of the 20
professional football clubs playing in England's Premier League are
domiciled in offshore financial centres.
Sources
Telegraph
AP via Guardian