TaxAdministrationTaxman to tackle transfer tax dodge

Taxman to tackle transfer tax dodge

HMRC attempts crackdown on football agents' tax avoidance

The taxman is to launch an attack on football agents’ payments from player
transfers which are suspected of being concealed in offshore accounts.

A senior source within HM Revenue & Customs said that a clampdown was
required to foil tax avoidance in the multi-million pound deals.

It is understood HMRC has become concerned about payments to agents relating
to player transfers being made through offshore structures.

“One of the things we’re going to have to get further inside are pay­ments to
[football] agents… It’s murky,” said the insider.

An HMRC spokesman said the Specialist Investigations Unit would contact
agents directly – or the agent’s accountant – if they handled the transaction.

Agents are expected to pay 40% of their fees in income tax if they are
unincorporated. According to a report for the Barclays Premier League, clubs
spent £70.7m on agents’ fees last season in 803 transactions. The figures relate
to payments to agents for the period October 1, 2008 to September 30, 2009.

A separate report for The Football League on fees found that between July 1,
2008 and June 30, 2009 Football League clubs engaged in 3,727 player
transactions. Clubs committed to pay a fee to an agent in 229 of those deals.

“No agent was used in 3,498 transactions. League clubs committed to spend
£8,809,501 on agents’ fees,” the report added.

The HMRC insider said the department had become concerned that the taxman was
being denied the full tax take from the football transfer industry.

“Certainly of interest with the bigger football transfers in the UK and in
other countries is the huge proportion of the transfer fee which leaves
football,” the source said.

The taxman has recently become aware that payments do not necessarily remain
in the game and that a proportion are making their way to Panama, Switzerland or
Gibraltar either for the agent and in some instances for the players.

The Football Association responded by saying it ensured all transfers
were completed properly because it acted as a clearing house for every
transaction made. However, its mandate ends once the money reaches the selling
club.

Tax experts said that the proportion of transfer fees bundled up in image
rights was a particular bone of contention.

“I have heard some tales,” said Richard Mannion national head of tax at Smith
& Williamson. “The amount of the transfer fee that is made up of image
rights is an issue. The problems come when those image rights are paid into an
offshore account.”

Derek Allen, ICAS director of taxation said: “Football agents and football
players have a relatively large amount of income and not all of them declare it.
When [HMRC] targets a particular sector like this it’s because they believe
there is a serious failure in compliance. They clearly want to make sure they
pick a yield from that activity.”

The FA said: “The FA handles all international transfer fees paid by member
clubs through its ‘clearing house’ function which provides full transparency in
the process. Likewise all payments to agents by English Clubs are required to be
paid through the clearing house.??

“This season The FA, through new requirements, has also sought greater
transparency in the domestic transfer market with the publication of agents
fees. For the first time this season this has resulted in a game-wide picture of
the level of spending on agents.??

“Our powers of investigation are wide-ranging and include the ability to
request any participant, including clubs, to disclose any documentation they
have in relation to our enquiries and to attend for interview. Where necessary
we will provide assistance to HMRC and other statutory agencies if they have
wider concerns.”??

IN OUR VIEW

Is the crackdown on reported bad behaviour by football agents going to be hit
by poor timing? Indebted clubs are unable to shell out large sums of money to bu
y players.

Further reading:

thefa.com

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