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Worry in football as UK taxman focuses on international affairs

Pace of change leaves 40% of clubs nervous of compliance – survey

Law firm building international sports practice

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An annual survey of football clubs has revealed uncertainty over tax in football’s English Premier League.

Perhaps inspired by the Spanish tax authorities, which have caught the biggest names in the game over tax unpaid on international name and image rights, HM Revenue & Customs is increasing pressure on players and clubs.

In 2017, HMRC launched a football compliance programme, which has recently snared an agent in the UK.

High profile former managers and players have also been in the spotlight over tax because of investments in the Ingenious film scheme, which has been handed a £50m (€55m, $64m) tax bill.

According to accountants BDO, international tax affairs will be HMRC’s richest vein to mine.

Uncertainty over tax in football

BDO’s 2018 Annual Football Directors Survey published on Tuesday shows that 40% of football clubs are somewhat uncertain about complying with tax obligations given the pace of change of HMRC’s enquiries – compared to 22% in 2017 and 10% in 2016.

Since 2016, there has also been a drop in confidence among football clubs regarding their tax affairs, with 51% in 2018  saying that their position is robust and defendable compared to 73% in 2016.

However, only 4% of respondents said they were “somewhat concerned” about a challenge causing a problem.

Dawn Register, partner, tax dispute resolution at BDO, said the survey showed a mixed response to HMRC’s tactics

“While there has been a rise in uncertainty amongst clubs about the liabilities they could face if they don’t comply with tax obligations, perhaps due to the number of club investigations that do not appear to have developed further, there has been a fall of 16% in the last year of those that believe a significant challenge will create an issue for the club,” she said.

Register said there was a general acceptance of probes, with the common reporting standard in effect and the failure to correct penalty regime due to come into effect from 1 October 2018.

“They would have been mindful for some time now that HMRC will be even more interested in any offshore banking arrangements, international player transfers and offshore image rights,” she said.

“The data HMRC will receive in respect of offshore affairs could inform enquiries into football finances given the large number of foreign nationals playing in the English Premier League.

“With this in mind, it is important that football clubs continue to ensure their internal compliance and tax policy is robust.”

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