Why is HMRC looking at football clubs and agency fees on transfer payments?

7th November 2017 by Fiona Hotston Moore

The current investigation by the UK tax authorities into the “beautiful game” is possibly the biggest campaign on tax evasion ever pursued by HMRC. It’s reported 180 HMRC officers are working on the case across the UK and liaising with their colleagues in other European tax authorities.

This is a very substantial investment of resource by HMRC in one sector.

The current focus by HMRC is on the transfer payments made to agents by clubs. These payments are substantial. It has been reported that the deals under scrutiny by one club alone amount to £500m and, in a single season, transfer payments across the premier league can amount to a billion pounds.

The crux of the issue here is who is the final recipient of the monies paid as agency fees?  And if the monies were paid direct to the end recipient would they have been liable to tax and national insurance?  Perhaps amounting to nearly half the sums received.

At first glance the sums went to the player’s agents. However it appears, as a result of a labyrinth of paper work created by lawyers, the monies may have flowed through to other agents, intermediaries and perhaps offshore bank accounts. HMRC will be looking at both the flow of money and the contractual arrangements.

I suspect these very complex arrangements have become standard practice in the industry and that clubs, their advisers and lawyers will be losing sleep at the moment. Whilst the structuring of such arrangements may be legal it remains to be seen if tax has been avoided and can now be collected by HMRC.

HMRC has recently demonstrated an appetite to clampdown on tax avoidance even where celebrities and sportspeople are involved. The investigations, court cases and legislation enacted in the area of so called “film schemes” have delivered tax collections of in excess of £500m. The tax take in the football sector could be even higher. Indeed some of the players who invested in film schemes may now be facing further tax bills from the investigation into agency payments and, aside from this, there is also the complex area of the taxation of image rights.


Fiona Hotston Moore

Fiona Hotston Moore

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