13 March 2020
- Largest investigation in the history of Portugal’s tax department
- A record number of footballers, clubs and agents in England are being investigated over tax payments
- Portuguese authorities have searched the house of Spain’s 2010 World Cup Winning captain Iker Casillas
Premier league clubs spent over £230m in the January 2020 transfer window, surpassing last year’s total of £180m, so it is safe to safe that there is no shortage of money among footballers. In light of this, HMRC are expecting more compliance than previous years.
HMRC has previously said it was making enquiries into tax risks including image rights and agents fees. Similarly, in Portugal, public authorities (including nearly 200 police officers) carried out 76 searches across the country at houses, football clubs, lawyers and agents’ offices. This comes as the Portuguese ‘super-agent’ Jorge Mendes (agent to Cristiano Ronaldo and Jose Mourinho) is being investigated into tax evasion and money laundering at some of the country’s biggest clubs.
HMRC have been investigating players and clubs over image rights and agents fees for some time. Although image rights are a legitimate means of paying a player for off-field activities, they are complicated tax traps that are easy to fall into. Payments are usually made to a separate company set up to manage the rights. If HMRC feels that too much of the player’s pay is being diverted to the company, then they may decide to treat some of the payments as wages. In short, this means HMRC will demand a large tax bill.
38 agents, 40 clubs and 172 players were under investigation in January 2019. Premier league clubs paid fees totalling £211m to agents during the 2017/18 season and that number is set to increase year on year. One notable personality is former Manchester United winger Angel Di Maria, who agreed to pay £1.7m to settle a tax case after admitting to fraud.
A spokesman stated “HMRC is successfully tackling risks in the football industry, including image rights and agent fees, and has brought in £355m in additional revenue for its compliance activities since 2015.”
It is clear that HMRC are paying special attention to the taxation of footballers due to the high profile nature of the job, which is understandable when in 2016/17 Paul Pogba’s tax bill equated to 1,279 average earners’ tax bill.
So, how can we help?
There are many complications surrounding how to treat agents’ fees and whether the player is liable to tax on part of the payment. Our tax team here at UHY Hacker Young LLP has extensive experience in providing advice regarding agents’ fees and image rights. If you have any more questions regarding your current tax position please contact Neela Chauhan or another member of our sports team.
