According to official figures, since 2015, HMRC has clawed back more than £332m in tax in a crackdown on football.
At this time HMRC has open ‘enquiries’ into 171 players, 44 clubs and 31 agents, a considerable increase from the numbers this time last year, when HMRC said it was making enquiries into 90 players, 38 clubs and 13 agents. The crackdown follows the end of an agreement between HMRC and the Premier League, under which clubs accepted limits on how much they could pay players for their “image rights”.
HMRC has increasingly questioned the image rights practice under which these payments are made, specifically when they are made to companies holding the rights, rather than directly to the individuals concerned. Whilst a player’s wages are taxed at standard income tax rates (ie 45% for most of the income of top flight players), income received by an image rights company is taxed at corporation tax rates (ie 19%). Like other UK companies, flexibilities over how and when the income is drawn from the image rights’ company can create further tax advantages. This is particularly attractive for overseas players, or even UK players who move away from the UK for a period of time, who can further use offshore tax rules to their advantage.
To learn more, please contact one of the tax team.