October 23 – The UK tax authorities are following the Spanish lead and focussing on payments to players for their image rights that have not been declared for tax. The payments are made separate to the player’s salary and are often taken outside the UK by companies holding the rights, rather than directly to the players or managers.
HM Revenues and Customs, the UK tax collector, has now raised tax revenue of £330 million, according to the Financial Times, in an escalating crackdown that currently has open “inquiries” into 171 players, 44 clubs and 31 agents.
This is an increase from the 90 players, 38 clubs, and 13 agents that HMRC was investigating in September last year.
“We carefully scrutinise the individual arrangements between football clubs and their players to make sure the right tax is being paid in the UK,” said an HMRC spokesperson to the Financial Times.
In Spain both Lionel Messi and Ronaldo have been the highest profile players amongst a raft of Barcelona and Real Madrid player hauled before the judiciary for tax alleged tax fraud related to image rights. All have lost their cases.
The advantage for players of paying their image rights income into a company rather than taking the money as salary is that in the UK they would pay the lower rate of corporation tax at 19%. HMRC argues that players who take a large proportion of their salary from their clubs as image rights are in fact avoiding tax.
For overseas player the tax may not be due at all if the company where the money is paid into is in a tax haven.
The Spanish argument, that is being followed in the UK, is that the player’s primary workplace, fame (that generates image rights value) and income is in the country and so all income should be taxed in the country.
The HMRC has been cracking hard on football tax avoidance hainv issued demands to more than 750 footballers who invested in what they were advised were tax free film funds but which the government subsequently ruled were liable for tax.
Last year 180 tax inspectors raided several clubs across England for suspected income tax and national insurance fraud.
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