Hi all
We had a potential client visit us this afternoon, who is a professional footballer for a premier league team.
According to him, he has to pay his agent out his own pocket, the football club does not cover any of this expense.
Can we claim this back for him, as a wholly and exclusively expense?
Many thanks.
Mike
Replies (23)
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From past experience, no. These fees are not wholly, exclusively and necessarily for the purposes of the employment.
In other words, the footballer doesn't need to pay these fees to actually run on the football park and play.
If the agent assists in the running of the footballer's off field commercial activities (if any) the footballer should be able to claim a portion of agent fees as an expense in his tax return.
Also look out for image rights companies.
If you do not have experience, this is probably one to turn down. Unless you have lots of time to do plenty of research.
I think if you need to ask this sort of question then you know yourself that you cant accept the appointment. Presumably, even if this isnt a high profile Premier League player then you will still be at risk of a very hefty PI claim when it goes wrong....
MissAccounting
I think if you need to ask this sort of question then you know yourself that you cant accept the appointment. Presumably, even if this isnt a high profile Premier League player then you will still be at risk of a very hefty PI claim when it goes wrong....
Jesus he only asked a question! From your history of questions raised, I would suggest that you practice what you preach!!!
Image rights companies are normally where pro footballers fall down.
Nike/Adidas etc will pay them a lum sum of say £30,000 to wear their boots. The players pocket the whole lot. After they retire, they might get an investigation from HMRC and low and behold they see this £30,000 payment. Enter a tax bill with fines and interest. Some football players live to their means and end up owing thousands to the tax man without the football income to pay for it anymore.
I have seen this happen a few times.
Its all subjective
and depends on the services are provided by an agent. Such fees are brokerage or commision for procurement of a contract in first place.
If I were approached I would see if I could get myself on a specialist tax course and absolutely go for it.
I agree with Miss Accounting
You should have the knowledge to deal with this.
A professional footballers tax affairs are specialist and you should know more than you do. You are not dealing with a client where there is one small aspect you don't understand.
At the very least ask about getting training on the subject but I think you will struggle.
Be careful
Watch out with this one! I know that HMRC went after the big clubs a few years ago for this. They may have changed their policies now. The Big Four have footballing specialists because of the level of knowledge and documentation required.
Is it a benefit for the club or the player? From experience, the agents do sod all. Review the contract and question your client on the negotiations that took place and who done what. Be prepared for a possible audit.
Is it worth doing?
There are some accountants who specialise in this area. Doing this work for one client would be very difficult to do a good job.
Case
There was a case on this a few years ago. I had only a passing interest at the time and didn't commit it to memory very well but, broadly, the gist was that the contract provided for the club to pay the agent's fees.
The outcome - quite rightly, imho - was that the agent's services were supplied to the player and this counted as pay and needed to be grossed up for tax and NI.
That's the usual situation
A club will pay the agent if they want the player enough but not if the agent isn't "accommodating".
Aye but....
A club will pay the agent if they want the player enough but not if the agent isn't "accommodating".
But that's not the issue here. The issue is the tax status - whether it's an expense of the club's business or an expense of the player and therefore part of his pay package.
That's not the issue either
A club will pay the agent if they want the player enough but not if the agent isn't "accommodating".
But that's not the issue here. The issue is the tax status - whether it's an expense of the club's business or an expense of the player and therefore part of his pay package.
It's obviously not an expense of the club. I don't think anybody thinks it is.
It's obviously an expense of the player but obviously not allowable again tax.
I thought this was obvious so I was extending the issue as I thought everybody understood the tax situation.
The Test
Could one not argue that without an agent one could not perform his business duties therefore wholly and exclusively? Similar to a landlord who uses (and offets against tax) property management fees?
The test is that the expenses must be wholly, exclusively and necessarily incurred in the performance of the duties. Any expense incurred before the employment starts, or when he is not performing the duties, is not allowable.
Property management fees? That is a completely different test.
Agree
It's obviously not an expense of the club. I don't think anybody thinks it is.
It's obviously an expense of the player but obviously not allowable again tax.
I thought this was obvious so I was extending the issue as I thought everybody understood the tax situation.
Whilst I agree with your conclusions, I'm not convinced that it's obvious.
Acting
One might try to argue that the modern footballer is a theatrical artist and the fees are deductible under section 352. See Richard and Judy v HMRC.
Video clips of any "simulation" could help here.
What?
What is the agent doing that makes him a better footballer? He's getting him a job and negotiating salary.
As was mentioned above - the agents work regarding his non-footballing (employed) related activities is allowable. We don't know what activities, besides playing football, he performs.