Editor in Chief (interim) AccountingWEB
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HMRC reaps £73m from football tax clampdown

A freedom of information request from accountants UHY Hacker Young confirmed that HMRC investigated 246 professional footballers during the 2019/20, up from 87 the previous year. 

13th Aug 2020
Editor in Chief (interim) AccountingWEB
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HMRC blows the whistle on football players' image rights deals
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The main focus of the tax department clampdown was on revenue from image rights that are used to supplement players’ contractual wages.

In addition, the tax affairs of 25 clubs and 55 agents were put under the spotlight in a campaign that yielded £73m from the industry. In some cases, UHY Hacker Young partner Elliott Buss suggested that HMRC had evidence that the commission agents earned on player transfers were not being declared properly.

Image rights

Image rights have been a tax flashpoint for many years, culminating in a 2017 tax tribunal case involving Hull City Tigers FC and their Brazilian left back, Geovanni. The Rangers FC tax case that ultimately saw the former Scottish champions liquidated and relegated to the second division in 2013 also involved revenue from players’ image rights that were paid into a separate employee benefits trust.

HMRC had previously challenged international players Dennis Bergkamp and David Platt in 2000, when a tribunal ruled it was reasonable for them to pay their image rights into a holding company, which would then pay corporation tax on the income rather than the higher rate income tax percentage due on their salaries.

A framework was put in place under which the tax department would not challenge image rights payments so long as the players and clubs fulfilled certain criteria. These were written into the employment income and capital gains tax manuals used by HMRC staff and tax advisers. Under these rules, players must demonstrate they have a substantial level of public recognition and the exploiter of the rights must show they are monetising the images in a way that goes over and above the individual’s contractual employment terms.

According to UHY Hacker Young partner Elliott Buss, HMRC has been targeting over-aggressive rights deals where players who are not household names were being paid a significant percentage of their compensation in rights payments.

“Lots of lesser-known footballers are effectively avoiding tax by getting paid huge sums for image rights that HMRC views as overpriced,” he said.

“The image rights of the likes of Paul Pogba and Mohamed Salah are undoubtedly worth millions of pounds a year. However, if you are second-choice left back in the Championship getting paid a great deal in image rights payments, then this is likely to trigger an investigation by the taxman. You may have to make a robust argument to HMRC to show how the value of the image rights has been arrived at.”

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