Tennis associations lobby for relief from UK taxes

28 November 2011

The UK tax authorities made GB68 million from taxing international sports and entertainment professionals’ endorsement and appearance fees in 2009/10.

The figure – obtained by the news agency Bloomberg under a freedom of information request – is up 20 per cent on the previous year’s.

HM Revenue & Customs’ Foreign Entertainers Unit calculates the UK-taxable income of non-resident sports professionals by looking at the number of UK events they compete in, and dividing it by the total they compete in worldwide. This ratio is then applied to all the professional’ income, including endorsement and sponsorship income that may have nothing to do with the UK.

The policy was established in 2008 in a test case against tennis star Andre Agassi. It has produced good results for HM Treasury, which is driving HM Revenue & Customs to maximise its tax take and help reduce the public sector deficit. But it is prompting an increasing number of top-level athletes to threaten withdrawal from UK competitions.

The latest to speak is Spanish tennis star Rafael Nadal, who says he will save himself money by not playing at this year’s Queens tournament in London. Nadal makes over $20 million a year from nine endorsement contracts; Bloomberg calculates that each UK appearance this year costs him £1 million in tax.

If repeated by others, Nadal’s action will make Britain uncompetitive as an international competition venue – which would lose the country far more revenues than the Treasury will ever gain by taxing star players. The ATP World Tour Finals alone may bring GBP100 million a year into the UK, according to a report commissioned by ATP’s sponsor Barclays.

The government is aware of this and has exempted participants in the 2012 Olympics from the rule. The same applies to some football tournaments. But those exemptions have created resentment among other sporting associations, who are lobbying to have their extended to their own big events.

According to BBC News, UK tennis officials, including Lawn Tennis Association chief executive Roger Draper, are in discussions with the Chancellor and Prime Minister to obtain exemption for foreign players. There is even a veiled threat that the ATP World Tour Finals could be taken away from London if the LTA do not get their way in the 2012 Budget.

Two other celebrity sportsmen known to have kept away from the UK for tax reasons are Jamaican Olympic sprinter Usain Bolt, and Spanish golfer Sergio Garcia.

There was a similar row over last year’s Ryder Cup golf tournament, held in Wales. Professional golfers revolted at the prospect of having to pay a huge UK tax bill for playing for their country, even though they would receive no fees or prizes from the competition.





Accountancy Age


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