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The Beautiful Game – Football’s Reputation, HMRC & The Taxman…

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

ALL IN THE GAME: FOOTBALL’S REPUTATION AND THE TAXMAN


There is nothing wrong with a good (or even a ‘bad’) pun.

However, that’s not why I would argue that football has become something of… well… a football for parliament and HMRC in recent decades.

After falling short when challenging Arsenal legends Dennis Bergkamp and David Platt about their image rights payments in 2001, the Revenue has continued to tackle soccer’s big names in the years since in the hope of ultimately coming out on top.

Its resolve has been stiffened by the bellowing of MPs on the sidelines, determined that the taxman should be getting stuck in and recovering a greater share of the sport’s riches than it has been in the past.

Just months after receiving a kicking (pun intended) from the Commons’ Public Accounts Committee early in 2017 about its “dismal record” on the issue, HMRC went on the offensive.

As a result, I found myself being quoted by a number of print and broadcast media outlets about raids involving both Newcastle United and West Ham United.

Those enquiries have since expanded significantly, with the Revenue revealing this January that 173 players, 40 clubs and 38 agents were now the subjects of its investigation into alleged image rights abuses (Source.)

In addition, it disclosed how the work of its special football compliance unit had led to some £355 million in previously unpaid taxes being recovered in the last four years.

Despite those impressive numbers, HMRC has been keen to increase the pressure still further.

According to The Times, the Revenue’s deputy director, Kerry Singleton, is reported to have written in the last week or so to all of the 1,900 player intermediaries registered with the Football Association, warning that they may be subject to investigations into alleged fraud relating to how agents are paid for work done on transfer deals.

More than merely being another instalment of the image rights saga, this is being regarded as something of a new and very serious departure – a separate inquiry into a very specific and fundamental part of the multi-billion dollar industry which football has become since the Premier League was inaugurated in 1992.

Figures published in April last year by the FA make clear how lucrative the transfer market is. They showed that Premier League clubs paid more than £211 million to agents during the course of the 2017-18 season (Source)

Until now, HMRC’s pursuit of football’s stars has seemed rather obscure and as difficult to comprehend as some of the tactics deployed by the game’s leading coaches. There are, I would imagine, few individuals who can easily grasp the often complex ways in which players are remunerated for the use of their name or likeness on items sold in the club shop, for example.

It’s important to note, though, that whilst distasteful to some, tax avoidance is not a criminal matter.

This new allegation of fraudulent activity is considerably more grave and runs the risk of damaging the sport’s reputation because it raises the question of possible criminality.

Let’s not forget that we’re at a time when clubs such as Manchester City face accusations that they violated the rules on ‘Financial Fair Play’ put in place by football’s governing body, FIFA, and the same global federation finds itself fending off allegations that it may have been improperly influenced in awarding the 2022 World Cup to Qatar.

Football, of course, is a game of passions with almost tribal loyalties to individual clubs and worldwide enthusiasm for the sport as a whole.

Even so, if HMRC’s latest investigation into football is borne out by fact and results in hard consequences for agents, might some fans and sponsors reason that ‘the beautiful game’ is too clouded in impropriety and take their support and custom elsewhere?

For more information on the topics raised above please contact a member of our helpful tax advice team or check out some more tax avoidance related articles and news below…

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