Image rights under pressure as taxman tackles players’ pay

If 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

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

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

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.


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.

Further reading:

Related reading