HMRC to hit football clubs with 30-page image rights probes- RSM Tenon

The taxman is shaping 30-page letters to football clubs informing them of sweeping probes into how much of players' salaries are put into image rights, according to RSM Tenon.

HMRC has taken issue because it believes the practice can see the UK's tax take reduced if it is abused.

Image rights are placed into vehicles which operate as companies, meaning they are taxed as corporate funds instead of as income, which is higher and set to rise to 50% from 6 April.

"We believe that HMRC is raising enquiry letters into clubs’ employment tax processes, running into 30 pages and more, seeking to levy income tax, national insurance, interest and penalties on so-called 'excessive' payments to Image Rights Companies," said Pete Hackleton associate director at the firm's entertainment, media and sports division.

"HMRC contends that in many cases the IRCs receive an excessive return and therefore payments to them are effectively ‘disguised employment income’".

HMRC has become noticeably tougher in its approach to football clubs, agents and players in the past few months.

Senior figures at the Revenue told Accountancy Age the football industry was on its hitlist.

It also emerged HMRC was owed significant amounts of taxation by a number of clubs, leading to winding-up orders in the courts against Portsmouth, Cardiff City and Southend United.

An HMRC spokesman would not comment on individual cases, but said:"

The Government remains committed to ensuring that everyone pays their fair share of tax and that the minority who seek not to do so, should not succeed.

HMRC said business customers should use its Clearance Service if they wanted clarity about how tax law applies to specific transactions.

"They will need to provide us with the full facts and context of the transaction, as well as highlighting the uncertainty in question," the spokesman added.

Further reading:

Access more information about the Clearing Service here