HM Revenue and Customs are launching a clampdown on the way top footballers are paid. They have begun a fresh wave of investigations into so-called ‘image rights’ payments by Premiership clubs to their players. Wigan Athletic has already confirmed that it has been examined by the authorities. In its most recent accounts the club states that it has ‘undergone an investigation by HMRC into the correct operation of PAYE/NI on certain payments and expenses made to/on behalf of employees.’ Club chairman David Whelan confirmed that the probe concerned image rights payments.
HM Revenue and Customs are launching a clampdown on the way top footballers are paid. They have begun a fresh wave of investigations into so-called ‘image rights’ payments by Premiership clubs to their players. Wigan Athletic has already confirmed that it has been examined by the authorities. In its most recent accounts the club states that it has ‘undergone an investigation by HMRC into the correct operation of PAYE/NI on certain payments and expenses made to/on behalf of employees.’ Club chairman David Whelan confirmed that the probe concerned image rights payments.
Footballers pay income tax on their salaries like anyone else, but many players (David Beckham is one example) have set up private companies to handle payments for sponsorship deals and other earnings, as it has reduced their exposure to tax. Foreign footballers playing in Britain are able to set up these companies offshore and pay no tax on their income. Given the changes last year in the taxation of non-UK residents or ‘non doms’, it was no surprise to see the taxman taking a fresh look at image rights, even though then Arsenal star Dennis Bergkamp won a test case against the Inland Revenue some years ago.
The arrangements that footballers have made are entirely legal and widely used. Whilst it is not illegal to allow players to channel part of their pay into private companies set up for their benefit, the public finances are under great pressure and there is less sympathy than there was before the recession for tax arrangements which benefit wealthy individuals. Of course, the general principle is that taxpayers are not required to arrange their affairs to maximise tax revenue, provided what they do is legal. However, the wealthier you are, the more access you have to specialist advice that allows you to arrange your affairs in a way that minimises your tax liability. Of course, this may simply suggest that tax is too high anyway, but such a philosophical debate is beyond the scope of this page. However, I would advise HM Revenue and Customs not to ring me up, as they have done before, not because I wish to be unhelpful to them, but I simply do not have the chapter and verse they require.