In a Treasury statement to the UK’s Public Accounts Committee (PAC), the department confirmed that HMRC has “initiated a specific football compliance project” in order to “make sure the rules on image rights are applied consistently in football”.
The investigation comes at a time when “rarely a month goes by without the press reporting on tax and football”, said Paul Noble, a tax investigations expert at law firm Pinsent Masons.
“From Lionel Messi’s Spanish tax investigation to Glasgow Rangers’ EBTs, from players using tax avoidance schemes to HMRC chasing clubs for unpaid taxes.
“Football is a sport rich with money generated by sponsorship and television rights and involves many areas where tax may be at risk for HMRC and with this in mind it attracts a great deal of scrutiny and interest,” he said on the company’s website.
HMRC ‘sweetheart deal’
Last December, it emerged that around 180 football stars are using ‘companies as pension pots’ to save tax on their earnings after their clubs struck a deal with HM Revenue and Customs (HMRC).
An investigation by UK newspaper The Times found that footballers, including most of the England squad, are using an arrangement agreed with the UK tax office that allows them to cut tax on earnings related to ‘image rights’ where stars get paid to lend their name to products and advertising.
Premier League players Ander Herrera of Manchester United and Cesar Azpilicueta of Chelsea were found to be using a scheme, which funnelled money the players earned from image rights via a company, so that they are subject to corporate tax rates rather than income tax, a practice which dramatically reduces the footballers’ personal tax bills.
England and Manchester United captain Wayne Rooney allegedly has £8.95m ($11.25m, €10.65m) in his image rights company Stoneygate, while England goalkeeper Joe Hart has amassed £2.31m in JCLC Promotions.
HMRC has denied striking any formal deal with football clubs, but a senior official admitted last year that UK tax authorities are currently investigating 43 football players and 12 clubs over their use of offshore companies to avoid paying tax on money earned through image rights in the UK.
According to Pinsent Masons, the tax office has a project team that focuses on the risks associated with image rights – both in relation to football and the entertainment industry. HMRC also collects information from football clubs to assess whether the “balance between pay and image rights is reasonable”.