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Football and goalkeeper AccountingWEB Everton footballer loses to HMRC in a tax penalty shootout
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Everton footballer loses to HMRC in a tax penalty shootout

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The FTT refused to play ball and allow a footballer to deduct agency fees from their employment income, nor to entertain their excuses for the late filing of returns.

21st Mar 2024
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Baye Oumar Niasse joined Everton FC in February 2016, with Everton agreeing to meet certain fees payable to his agent on his behalf.

HMRC claimed to have issued tax returns for the 2015/16 to 2017/18 tax years to Niasse within the appropriate time frame. Niasse denied having received these. Following several chase letters and penalties, Niasse submitted the three returns via his newly appointed advisor and appealed against the penalties.

The first two of these returns included employment expenses of £169,800 in respect of the fees paid on Niasse’s behalf by Everton.

HMRC opened enquiries into these returns, followed by closure notices amending the figures and increasing the tax due by £76,410 and £76,463 (i.e. 45% of £169,800) respectively.

Appeal

In March 2021 Niasse appealed to the first tier tribunal (FTT) against HMRC’s assessments and the late submission penalties. The grounds of appeal were that Niasse had not received the notices to file returns and, being new to UK tax and in receipt of only PAYE income, had not believed a return would be needed.

The FTT first considered the assessments of underpaid tax. All parties agreed that the amounts paid by Everton on behalf of Niasse were taxable by ITEPA 03, either as employment income (s.62) or a benefit (s.201). However, were the payments also deductible under s.336 or s.352?

Obligation to incur

In order to be deductible under s.336, Niasse needed to have been obliged to incur the expenses due to his employment and they needed to be incurred wholly, exclusively and necessarily for the purpose of that employment.

Niasse argued that he was obliged to incur the fees, as Everton required him to have an agent. Failing that, he believed it was “almost obligatory, if not customary” for footballers to have agents.

HMRC disagreed, arguing that the duties of a footballer did not require them to incur agency fees. The fees were paid to bring about the employment, not as part of the employment. Further, there was no evidence that agents are ‘obligatory’, nor ‘customary’; Niasse freely chose to engage an agent and thus incur the expenses under consideration.

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Replies (26)

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By Paul Crowley
21st Mar 2024 16:49

Fair play to both HMRC and to FTT
Any decent'agent' would know that a highly paid footballer employed by a football club was likely to need to submit a tax return.
If he was employed then the PAYE system records his address. Notices went missing? Nah he chucked them in the bin.
The agent got him a job. Definitely no deduction there.
Either Everton staff and players chose not to help him or he ignored advice and locker room chat.
He could have googled Do I need to file a tax return
Would anyone earning those amounts not know that the tax system exists and have access to other players to confirm their beliefs?

Was the p11d properly submitted?

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Replying to Paul Crowley:
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By rmillaree
22nd Mar 2024 10:44

my issue with hmrc and notice to file notices is that i am not aware that hmrc can categorically state these letters have been issued - might be wrong but over the years i have had many honest people strongly assert that they never received the notice to file letters hmrc said they issued. Maybe i have ben unlucky but hmrc should imho have to provide reasonable poof of posting when and where not sure they do that ?

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Replying to rmillaree:
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By richard thomas
22nd Mar 2024 11:06

Only if the taxpayer specifically challenges on those grounds, otherwise the presumption in s 7 Interpretation Act 1978 applies. See Upper Tribunal cases of Rogers and Marano and the case of Tinkler (ending up in the SC but not on this point).

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Replying to richard thomas:
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By FactChecker
22nd Mar 2024 13:15

Of course those were in the (not long distant) days when 'posted' almost always led to 'delivered'.
Irrespective of the legal position, the flaw with rmillaree's suggestion (despite my sympathy after having observed many similar situations) is that 'proof of posting' no longer has a definable correlation with any form of proof of delivery.
So, until the law changes ...

Thanks (3)
Replying to FactChecker:
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By richard thomas
22nd Mar 2024 13:28

But if, when challenged, HMRC cannot supply proof of posting, the delivery assumption in s 7 IA 78 (and indeed as a matter of common law) does not apply. It is then a contest between HMRC - we must have posted it - and the taxpayer - well I didn't receive it. In a case where a penalty is being determined the burden of proof is on HMRC so unless HMRC can show the taxpayer is lying (eg documents where the taxpayer admits receiving it), the taxpayer will win.

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Replying to richard thomas:
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By FactChecker
22nd Mar 2024 15:23

Thanks ... I should've gone to Specsavers (or at least bothered to look up what the section actually said)!

I had mis-remembered (well assumed honestly) that HMRC held a trump card - as the default position of "we said so disprove it" - so it's encouraging (for justice if not my memory) that it's t'other way round.

And apologies to rmillaree, whose complaint is now not just logical but justified.

Thanks (2)
Replying to FactChecker:
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By richard thomas
22nd Mar 2024 15:37

Of course HMRC confuse the issue, by thinking that the only valid ground of appeal against a penalty is that of RE. Someone who says they didn't received the NTF is NOT saying I have a reasonable excuse for failing to file a return, but that they are not liable to a penalty because there has been no failure of the relevant type.

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By FactChecker
21st Mar 2024 20:16

I'm beginning to feel less and less 'connected' to cases like this - or possibly am just becoming naïve?

What is meant to be unusual here (other than journos liking to have a footballer in the story)?
* "services provided by the agent related to assisting Niasse in getting the job" (not the performance of it) - so just like any agency that represents the seller.

There could've been (and may have been for all I know) more fun to be had with the concept of whether a professional footballer is an ‘entertainer’ - especially after HMRC asserted footballers do not “perform with a theatrical bent”.
Have they never seen any pre-planned/rehearsed set-piece free-kicks, let alone the improvisational flair of a 'penalty' dive and the modern 'he touched my face, red card ref!' appeals to the crowd?

Thanks (8)
Replying to FactChecker:
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By richard thomas
21st Mar 2024 21:19

The recent death of Stan Bowles was a reminder to me of the fact that a few, a very few, footballers were entertainers of a sort. Add in Tony Curran, Duncan Mackenzie, Rodney Marsh and (one of) my second-level footballing (not political) hero, Paolo di Canio. For the avoidance of doubt I have but one first level footballing hero, the Chateau Yquem of footballers, Bobby Moore, whose career I watched at first hand. The only person outside family whose death, and the tributes at the Boleyn Ground, led me to cry in public.

I have to say with hindsight certain other types of footballing spectacle could be entertaining - the Chelsea-Leeds FA cup Final Replay for instance.

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Replying to richard thomas:
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By FactChecker
21st Mar 2024 23:27

Often just fun, sometimes really entertaining, and occasionally almost crushing the air out of your lungs. The pavements outside my local pubs on 4 May 1976 started with a carnival atmosphere - and ended in a funereal silence (they say even the birds stopped singing).

One game the difference ... at the end of a season when we all believed that Stan the Man would deliver the League (First Division in those days) to QPR at last.

Mind you, although lucky enough to see a remarkable variety of stunning goals, one of the first goals that just made my jaw drop = https://www.youtube.com/watch?v=tvZ9ajiWtug

Thanks (3)
Replying to richard thomas:
the sea otter
By memyself-eye
22nd Mar 2024 10:54

and don't forget the Liverpool - V- Manchester united FA cup game last week-end !

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Replying to richard thomas:
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By Jo Nokes
22nd Mar 2024 10:57

Oh yes, the Hammers in the sixties, brilliant

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Replying to FactChecker:
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By quanticoaccountants
22nd Mar 2024 09:51

The distinction between an agent acting for TV Luvvies and an agent acting for a professional footballer is totally artificial. They both do the same job.

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Replying to quanticoaccountants:
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By Paul Crowley
22nd Mar 2024 10:23

But one is an employee for a duration
The other probably self employed on a temporary contract

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By listerramjet
22nd Mar 2024 09:42

The interesting question is on whose account those agency fees should rest. The agent usually acts as an intermediary notionally representing player but in reality taking a turn on the contract value from the club. Although the contracts are usually worth less I believe this is how it works for most other sorts of business where recruitment agents are involved. So surely the footballer is not a party in the relationship between club and agent, and the agents fees are nothing to do with him?
Perhaps the other interesting thing is how contracts are constructed as between a salaried player and things like image rights, which higher profile players will have. But given how the the transfer market actually works you might wonder if a contract is really employment.

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By quanticoaccountants
22nd Mar 2024 09:47

Sorry, but I struggle to see the difference between Richard & Judy's agent's fees and those of a professional footballer's agent. They both do the same job. If HMRC claim that footballers don't need agents then why do TV luvvies? The difference is totally artificial.

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Replying to quanticoaccountants:
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By More unearned luck
22nd Mar 2024 15:45

The relevant difference is not what the agent does but the nature of the client's income. TV luvvies are (probably) SE or they are 'entertainers', whereas footballers are employees and therefore their claims for relief founder on the rocks of 'necessarily' and 'in the performance of..' since, in this case, they were held not to be entertainers.

Necessarily is an objective test; if footballer A can negotiate his contract without the help of an agent then it can't be necessary for any other footballer to use an agent.

Another difference is that 'theatrical' agents represent their client only, in the world of football the agent oddly acts for both sides, as in this case where the agent acted for Everton and Niasse.

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By JCresswellTax
22nd Mar 2024 10:02

Why are football story headlines always 'penalty shoot out', 'red card'.

Boring! Surely in 2024 we can have some original headlines!

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Replying to JCresswellTax:
the sea otter
By memyself-eye
22nd Mar 2024 11:01

How about 'Transfer window closes on..."
Or "HMRC scores after extra time"
Or "HMRC's VAR calls this case 'offside'!"

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By Arcadia
22nd Mar 2024 11:25

I have sympathy with the footballer on the 'I am on PAYE therefore I didn't think I needed to do a tax return' argument. I have seen a number of people tripped up by going over the £100k which HMRC says necessitates a tax return. Why? PAYE should be perfectly capable of dealing with earnings of any amount.

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Replying to Arcadia:
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By dwgw
22nd Mar 2024 11:48

Good point.
HMRC are quick enough to blame laggardly taxpayers for not being ready to rely on their super-efficient online 'help' facilities and irrationally preferring to speak to a living human for guidance. How come they're seemingly incapable of developing a PAYE system that removes the requirement for single source, high earning employees to file a tax return?

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By Rgab1947
22nd Mar 2024 11:46

".... stating footballers do not “perform with a theatrical bent”.

Having seen some dives and writhing on the ground in the hope of a penalty I would certainly see them as performing with a theatrical bent.

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By RogerMT
22nd Mar 2024 12:26

While agents at the top level of the game may not be obligatory, they are most certainly customary, surely? Also, loved the bit about footballers not "performing with a theatrical bent"! The tribunal have obviously not seen a football match for some time, then! :)

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Replying to RogerMT:
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By EllaB
22nd Mar 2024 15:31

Indeed they are - my son plays professionally and the agents start circling once they hit around 15/16. Which is great as we were well out of our depth with how to do the best for him by then! Though his club reports the fees on a P11D - which I am surprised was not the case here.

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By Paul Crowley
24th Mar 2024 02:51

The agent acted for both parties in a tripartite agreement.
When I read that out loud even my son said conflict of interest.

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By nick farrow
25th Mar 2024 10:06

the distinction between entertainers agent fees and footballers agent fees has always seemed harsh to me especially as the employer is benefiting from the service

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