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Investigations into footballers’ tax affairs TREBLE this season as 246 potential breaches checked

Nearly 250 footballers were investigated by HMRC over potential tax affairs breaches during the 2019-20 season, a sharp rise compared to the previous campaign.

Business advisor company UHY Hacker Young Group made Freedom of Information (FOI) requests to HMRC, with this season’s total going up from 87 last season. 

Furthermore, 25 football clubs were investigated over tax affairs, which is two more than last season, while 55 agents or agent’s fees were looked at by HMRC this season.

It comes amid a wider clampdown on aggressive tax approaches adopted by the wealthy, particularly after the Panama Papers leak of 2016.

Breaches into image right deals, whereby players are paid additional fees for advertising and other image-related means, were also investigated. 

These fees are only taxed at the 19 per cent corporation tax rate compared to the 45 per cent income tax rate for high earners, such as Premier League players. 

Image rights payments can also be paid to a company, or even placed in off-shore accounts which can reduce tax even further. 

These investigations can be opened if HMRC have reason to suspect there is unusual activity in tax records or accounts. The most common trigger is submitting noticeably incorrect figures on a tax return. 

Gary Ashford, a former senior figure at HMRC who is now at UK law firm Harbottle & Lewis, revealed that the situation is more complicated by the vast number of footballers who come from overseas. 

Mr Ashford said: ‘One of the main problems is that some advisers treat every sportsperson, particularly footballers the same. Over time it has become ‘normal’ to part remunerate them by way of image rights contracts.

‘Under UK law, when we mention image rights, we are actually talking about various intellectual property rights. 

‘This analysis is not considered in sufficient detail and so a “one-size-fits-all” approach can create significant problems for a player, or other sportspersons. 

‘It may well be the case that all their income or a significant proportion is employment income. The situation can be even more complicated if the player is from overseas, and is being taxed as a U.K. non Dom.’

UHY Hacker Young’s Elliott Buss said that some footballers are not aware of tax regulations, despite their hefty wage packet, and that mistakes in either completing or remembering to pay tax are made regularly.

Mr Buss said: ‘If you are second-choice left-back in the Championship getting paid a great deal in image rights payments, then this is likely to trigger an investigation by the taxman.

‘You may have to make a robust argument to HMRC to show how the value of the image rights has been arrived at.

‘Despite having a very substantial income, many young footballers don’t get the advice they need when it comes to tax. 

‘Often they don’t realise they need to pay tax on the fees that the club pays the agent on behalf of the player when they sign a new contract. That frequently results in errors, investigations and hefty penalties.’

An HMRC spokesperson said the company is working hard to support the football community in the coronavirus pandemic period and is looking forward to more co-operation with clubs and players. 

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