RSS feedsIf anyone was under the impression the taxman’s crackdown on football agents’ fees and players’ image rights was a load of hot air, the lead item on the agenda at the next meeting of football’s leading FDs puts paid to that theory.
The finance chiefs of the Premier League have been summoned to London on 12 February and payments to agents and image rights will lead the debate. Javed Khan, FD of the Premier League, will chair the forum, Accountancy Age understands.
Image rights are taxed at a lower rate than a player’s income and HMRC wants to clamp down on this being used as a lever to avoid paying what it feels is owed.
Tax experts suggest that FDs could consider a cap on the percentage of players’ remuneration paid as image rights during the discussions. This move could see a limit enforced, along the same lines as the one agreed by Rugby’s Super League last year.
“Players would have the amount of salary paid as image rights dependent on their profile. The lower the profile, the less money could be placed into image rights,” said the football expert.
The Premier League holds regular meetings of club FDs, but HMRC’s stated clampdown, which Accountancy Age revealed last week, appears to have pushed the issue to the forefront of its agenda.
“The issues to be discussed may be ‘could or should the Premier League broker a deal like the one in Rugby League?’,” said the expert. “The maximum could be 20% for example. A UK-domiciled player currently puts his cash into a UK image rights vehicle and pays tax at a corporate rate rather than a personal rate of 40% – or soon to be 50% – so the profits on which he pays tax would be at a much lower rate.
“If you include the non-domiciled players who may put their cash into a non-domiciled (UK) vehicle, as long as he doesn’t bring those profits onshore he won't pay tax at all.”
There are also two VAT disputes relating to Birmingham City and Newcastle United going through the courts. The clubs want to recover tax paid on payments to the middle men but the taxman is refusing to compromise.
HMRC has targeted the issues as it looks to maximise the amount of money it believes is owed to the Exchequer, and the meeting is a clear sign that HMRC's mission to crush any wrongdoing in this area is being taken very seriously by the Premier League’s representative body.
According to Deloitte’s Sports Business Group a record £170m was spent in the January 2009 transfer window. This year, spending was drastically reduced to £30m.
Despite the slump, HMRC is still unhappy about the sum of tax which it believes is due from football, with VAT and PAYE the most pressing problems. HMRC has hit clubs including Portsmouth and Notts County with winding-up petitions in recent months for unpaid bills.
The Premier League declined to comment.
IN OUR VIEW
HMRC’s announcement may have been seen as a mere fishing expedition, but the prominence of the issue on the football club FDs agenda is evidence they are not taking the news as an empty threat.
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