Research by Pinsent Masons suggests that HMRC is focusing on Premier League footballers’ contracts which, according to the firm, are potentially open to abuse.
The analysis shows that in 64% of Premier League footballer contract negotiations, the same agent represented both the club and the individual player. HMRC’s main concern is that it seems likely that the agent will primarily work for the player rather than for the club. If the agent’s fees are split 50:50 between the club and the player, then in effect the club is paying for a proportion of the player’s share of the agent’s advice. This would be a taxable benefit in the hands of the player.
The firm notes that HMRC will not accept a default 50:50 split, and will instead require evidence from the club to show that the apportionment of fees matches the actual provision of services to the player and the club.
Ian Robotham, Legal Director at Pinsent Masons, commented: ‘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.
‘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.’
In 2022/23 HMRC is investigating 329 footballers, 31 clubs and 91 agents, compared to 93 footballers, 9 clubs and 23 agents in the previous season, according to figures published by UHY Hacker Young.
Research by Pinsent Masons suggests that HMRC is focusing on Premier League footballers’ contracts which, according to the firm, are potentially open to abuse.
The analysis shows that in 64% of Premier League footballer contract negotiations, the same agent represented both the club and the individual player. HMRC’s main concern is that it seems likely that the agent will primarily work for the player rather than for the club. If the agent’s fees are split 50:50 between the club and the player, then in effect the club is paying for a proportion of the player’s share of the agent’s advice. This would be a taxable benefit in the hands of the player.
The firm notes that HMRC will not accept a default 50:50 split, and will instead require evidence from the club to show that the apportionment of fees matches the actual provision of services to the player and the club.
Ian Robotham, Legal Director at Pinsent Masons, commented: ‘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.
‘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.’
In 2022/23 HMRC is investigating 329 footballers, 31 clubs and 91 agents, compared to 93 footballers, 9 clubs and 23 agents in the previous season, according to figures published by UHY Hacker Young.
