HMRC continues its investigations into professional footballers, including Premier League stars, for suspected tax avoidance.

We share why HMRC is focusing on footballers, what its main areas of concern are, and how we can help players and their clubs minimise their exposure.

Why is HMRC investigating footballers?

It’s no secret that the football industry is saturated with very high earners, which significantly increases the risk of large amounts of unpaid tax. In recent years, HMRC has dedicated a significant proportion of its resources to investigating football players and, as reported by the media, a record 329 footballers are under investigation for suspected tax avoidance.

What are the main areas HMRC investigate?

Agent fees and Benefits in Kind

Given the amounts involved when dealing with premier league football transfers, HMRC has specifically targeted this area of tax avoidance, rejecting 50:50 club/player splits without adequate evidence and supporting documentation. Splitting agent fees equally between the player and the club results in less tax being paid. This is because the alternative to paying the agent’s fees on the player’s behalf would be to pay the player more salary, which would be subject to Income Tax and National Insurance Contributions. HMRC has since updated its guidance to highlight that the split between the club and the players needs to be proportionate to the services provided by the agent. In addition to agent fees, often taxed as a benefit in kind, accommodation for players’ friends and family is often paid for by the club; this is also a form of taxable employment income that often goes untaxed.

Image rights

It’s common for footballers to be paid a premium in addition to their salary for the use of their image by the club. However, the way in which such premiums in relation to image rights are taxed is often through the use of limited companies, which are set up solely for this purpose. This results in tax being paid at Corporation Tax rates rather than being taxed at the 45% Income Tax additional rate. HMRC has especially targeted players with a small brand recognition, as it further indicates they are using a company purely to reduce their tax liability.

How can Buzzacott help?

If you’re a footballer, agent, or representative and are concerned about you/your client’s tax position, we urge you to seek specialist tax advice prior to HMRC discovering errors. Buzzacott can review you/your client’s financial affairs to ensure that protective measures are put in place to avoid errors, and/or to confirm that reporting and compliance requirements are being met, even if they are not currently facing an HMRC investigation. This ensures the correct amount of tax has been paid should HMRC decide to investigate. Considering the rate at which footballers are investigated, this is highly likely. It’s important you are appropriately represented and protected throughout an HMRC investigation. Barbara Bento, Director in our Tax Investigations & Dispute Resolution team, has experience in assisting Premier League footballers who are being subject to an HMRC investigation. Her technical and tax investigations knowledge assists clients during the investigation process in order to bring it to a swift and fair conclusion.

Should errors be discovered, it may be necessary to make a disclosure via the Digital Disclosure Facility, or more specifically via the Worldwide Disclosure Facility should the income be offshore.