- Negotiations where agent represented both player and club under HMRC scrutiny
- HMRC suspects football clubs and players of underpaying tax
64% of Premier League footballers’ contracts now take a form which HMRC says is open to abuse shows new analysis by multinational law firm Pinsent Masons.
The research shows the same agent represented both the football player and the club in 494 of 769 contract negotiations* in the Premier League last season. HMRC has expressed concerns that in these types of contracts there is a greater chance that tax will have been underpaid by the football clubs and players concerned.
The tax authority is particularly focused on deals which claim a 50:50+ split of the agent’s fees between the player and the club as HMRC believes that agents will inevitably work primarily on behalf of the player. If the agent is doing more of the work for the player than the club and the club is paying for the player’s share of the agent’s advice, that is a ‘taxable benefit’ that the player should be paying tax on based on the proportion of work carried out on the player’s behalf – but often doesn’t.
HMRC have now made clear that they will not accept a 50:50 default split, and that football clubs will have to produce evidence to prove that to the tax authority’s satisfaction that the split adopted in transactions setting out the provision of services to the football club and to the player have been correctly apportioned.
HMRC has a growing focus on the football industry overall. HMRC previously confirmed that during the 2021-22 season it had targeted 93 footballers with investigations and is looking to recoup £5.8m in underpaid tax from those players. This year, that number rose dramatically to 329 players, 31 football clubs and 91 agents under investigation***.
Ian Robotham says: “HMRC believes a significant number of Premier League football clubs and players are underpaying tax because of the way the deal between the footballer, football club and agent has been structured as against the work actually carried out.”
“The football industry is currently under HMRC’s microscope for its tax practices, many of which the tax authority believes do not result in the correct amount of tax being paid.”
Given that those contracts which are of potential concern make up such a high percentage of all contracts related to player transactions, this can be expected to be a continued area of focus for the tax authority.”
“We would recommend that any football clubs and footballers who believe they may have been left open to an investigation by HMRC, or have already been contacted by HMRC for further information relating to specific player related transactions, to seek professional advice without delay.”
*Source: Football Association
**Source: Football Association
***Source: UHY Hacker Young, The Sun