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  • HMRC Still Tackling Football on Tax

    12 April 2021

    Andy Wood

    Over the course of the last year, much of our normal home and work lives have been placed in a state of suspended animation by the global state of lockdown.

    There have arguably been few sources of relief, reminders of our usual pastimes to sustain us.

    Televised football has arguably been one. In fact, such has been the desire of the game’s governing bodies and television companies to lessen the blow of supporters’ absence from stadia that the number of matches on our screens is greater than ever before.

    Yet even football had to put up with a brief interruption to its playing schedule.

    One organisation which seems not to have rested, though, is HMRC and, regardless of the circumstances impacting football in the past 12 months, the taxman certainly hasn’t taken his eye off the riches which it continues to generate.

    Forget the long-ball game. The Revenue plays the long game and it definitely plays to win.

    Barbed comments in January 2017 from the House of Commons’ Public Accounts Committee about HMRC’s need to tighten the rules on star players image rights’ income produced the same effect as a manager’s half-time rollicking.

    Three months later, there were Revenue raids at Newcastle United and West Ham’s grounds.

    That was followed by a Supreme Court ruling on the use of Employee Benefit Trusts by the ‘oldco’ Glasgow Rangers which saw liquidators still disputing a £48.9 million bill as of last December.

    In addition, the last financial year saw the tax affairs of 246 professional footballers – nearly three times more than the year before – and 55 agents being investigated by HMRC.

    I don’t think that we should be too surprised, therefore, at news that, just like a recalcitrant 1970’s centre-half, the Revenue continues with its tough-tackling approach.

    In an update to its Employment Income Manual within the last couple of weeks, HMRC has tightened the rules on agent representation still further.

    The Revenue is particularly keen that transfer deals in which agents act for both the individual player and the club which is paying to sign him (a process referred to as ‘dual representation’) are documented more fully.

    It believes that some agents may under-report the hours which they put in on behalf of players – and on which they pay income tax and National Insurance contributions (NICs) – and exaggerate the work carried out for the clubs, for which the agents charge VAT.

    HMRC is adamant that it “does not accept a default split (eg 50:50)”. From now on, therefore, clubs must provide more information which “includes but is not limited to meeting notes, emails, details of time spent and other documentation to substantiate its payments”.

    Some commentators have suggested that adding yet another layer of complexity to deals as the clock ticks down on transfer deadline day may see some players decide to ply their trade elsewhere.

    However, with the Football Association recently revealing that English clubs spent a total of £272 million during the year to the start of February, I reckon that HMRC simply doesn’t care.

    It is focused on pounds not points and it has probably calculated that clubs will swallow the inconvenience because they want to avoid a run-in with the Revenue and all the financial and reputational risks which that entails.

    Top four or relegation zone? Neither matter to HMRC when it has a £31 billion tax gap to fill.

    If you have any queries about this article, tax and sport or tax matters generally, then please get in touch.

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