Footballers and tax schemes

by | Jan 10, 2020

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Football and money have been synonymous for a generation as the salaries, image rights and endorsement earnings of footballers (not to mention the sums earned by their agents in the transfer market) reach ever more stratospheric levels. A significant number of Premier League players’ total annual earnings now exceed £2m a year, and in the top clubs, many earn significantly more.

In seeking to invest their money wisely, footballers have routinely sought professional advice from banks and investment management companies. Many have also invested in tax schemes (dressed up as investments) that have been systematically dismantled by the introduction of DOTAS and Accelerated Payment Notices coupled with the evermore purposive interpretation adopted by the courts. Unfortunately, many investors now face financial ruin often with little or no recourse.

The question of image rights payments – a standard, but controversial practice across the sport – arose from the 2017 budget when all businesses were instructed to change image rights to employee payments. The financial incentive for footballers to create their own Image Rights Company (IRC) is considerable, making them liable for only 19% in corporation tax rather than 45% as an employee. For foreign players, the savings can be even greater since part of the payments could be made offshore.


Last March, a spokesman from HM Revenue & Customs (HMRC) explained: ‘HMRC carefully scrutinises the individual image rights arrangements between football clubs and their players to make sure the right tax is being paid in the UK. We are carrying out visits to every Premier League club and most football league clubs, along with their players. We’re currently making enquiries into 198 footballers, 44 football clubs and 29 agents for a range of issues, including image rights abuse.’ By October, the number of agents who were subject to active inquiries had more than doubled to 62.

The exploitation of image rights is certainly controversial. On the one hand there’s the question of whether they even exist and are capable of being assigned by the player, on the other there’s the issue of valuation and whether the amount paid by the club is justifiable or whether it is nothing more than disguised remuneration.

Perhaps more significantly, HMRC has also escalated its crackdown on the football industry, ratcheting up the pressure in other areas relating to what they perceive to be unacceptable tax practices, opening inquiries dealing with intentional tax avoidance, which may or may not involve some form of deception. The increased focus on football came after HMRC received a kicking in a report from the Public Accounts Committee (PAC) about its “dismal record” on the issue.


In 2017, Newcastle United and West Ham United were raided by HMRC officials on the same day as part of a Europe-wide investigation into player transfers that led to the arrest of several football officials. Both clubs strenuously denied any wrongdoing.

Last year saw HMRC send a letter to 1,900 football agents warning them of potential tax investigations following “serious allegations of fraud” and it has opened new investigations into football transfer activity – in particular, the enormous fees that agents receive. HMRC has even undertaken raids at the homes of some footballers, which have gone unreported, in relation to tax avoidance schemes and possible tax evasion. Some are under suspicion of indulging in tax practices which are potentially on the cusp of being fraudulent.

But other stories have made headlines: ‘Footballers who once earned millions face penury over tax demands’; ‘Beckham-backed film funding firm to begin appeal against HMRC’; ‘Danny Murphy loses £1m Coutts tax avoidance battle with Coutts’; ‘Wayne Rooney faces £6m tax bill as film scheme busts’; ‘Thierry Henry’s former agent loses £1.2m tax battle’; ‘Fergie, Sven and Hoddle face huge ‘dry tax’ bills from failed scheme.’ Such headlines speak for themselves.


The story goes back to 1997 when Film Partnership Schemes were introduced by Gordon Brown, the new Chancellor in the incoming Labour government, to encourage British film production and generate additional revenue for the economy. These schemes reached a peak between 2004-2007 with billions of pounds being invested. But HMRC has taken a dramatically different view in recent years, clamping down on these schemes, some of which they now regard as a device to avoid tax. To date, HMRC’s rigorous enforcement on football has netted £355m in additional tax receipts since 2015.
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