Premier League clubs avoided £250m in tax, expert estimate

2 months ago 9

Premier League trophyImage source, Getty Images

By Ben Chu and Mike Cowan

BBC Newsnight

Premier League shot clubs whitethorn person avoided paying £250m successful taxation implicit a three-year period, fiscal experts person estimated.

It follows investigation looking astatine however shot agents are often paid to correspond some players and clubs successful negotiations, including transfers.

Tax Policy Associates, which led the analysis, says the signifier reduces the magnitude of taxation paid connected cause payments.

HM Revenue and Customs said it was investigating "a fig of clubs".

We bash not cognize which clubs are being investigated, but the teams thought to person benefitted astir from dual practice successful the past fewer years see Manchester City, Manchester United, Arsenal and Chelsea. The clubs each declined to comment.

Dual representation

When footballers determination clubs oregon negociate a caller contract, an cause represents the subordinate progressive and seeks the champion presumption for his oregon her client.

The cause volition past person a fee, oregon commission, and the full transaction volition incur tax, including income tax, National Insurance and VAT.

However, taxation officials are investigating the usage of alleged "dual practice contracts", which sees an cause paid for acting for some the subordinate and the nine progressive successful the deal.

The process is analyzable - but erstwhile fractional of the agent's interest is paid by the club, it means that fractional of the outgo avoids tax.

The Tax Policy Associates deliberation vessel has estimated the signifier is perchance worthy tens of millions of pounds a year.

If the agent's interest is picked up solely by the player, it says HMRC tin expect to person astir 60% of the full outgo successful tax.

However, the magnitude of taxation owed falls to astir 30% of the payment, if the interest is divided betwixt the subordinate and the nine utilizing dual representation.

Use of the signifier has go modular successful the sport, with immoderate apical formation clubs utilizing it successful each of their deals. In 2021, FA information revealed astir 68% of Premier League subordinate deals were done done dual representation.

Image source, Getty Images

Tax Policy Associates estimates the signifier whitethorn person saved apical players, their agents and their acquiring clubs £81m successful 2019, £91m successful 2020 and £81m successful 2021 - much than £250m implicit the 3 years.

In 2021, Tax Policy Associates estimates Manchester City saved £10.9m successful tax, followed by Manchester United with £10m and Liverpool with £8.1m. In 2020, the largest beneficiary was Chelsea, redeeming £12.8m.

All its estimates are based connected the presumption that subordinate and nine divided the cause interest 50:50.

In theory, the FA has rules against an cause acting for some the subordinate and the club. But if each parties supply written consent to usage dual representation, the signifier is technically allowed.

However, Labour MP Meg Hillier, seat of Parliament's Public Accounts Committee, said she volition impulse HMRC to look into the Premier League's usage of dual representation.

"Guidance that's a spot anemic isn't truly bully enough," she said. "You request to person a existent clarity astir precisely what the presumption is truthful that each nine does the aforesaid thing. You can't person 1 nine doing it and getting distant with it and different not."

£7.6bn system boost

In April 2021, HMRC issued caller guidance connected the usage of dual practice which said it would request clubs to support grounds that agents are legitimately moving for some sides of the contract.

It said fees should not automatically beryllium divided 50:50, and should alternatively bespeak the grade the cause represented the nine and the player.

HMRC could contented penalties and demands for repayments if it finds that an cause has not legitimately been moving for some the subordinate and the nine erstwhile brokering transportation deals.

But the Association of Football Agents (AFA) said it disputed the deliberation tank's findings, saying determination was a "fundamental misunderstanding of however the shot transportation marketplace works".

It said: "The AFA's members volition proceed to enactment intimately with HMRC to guarantee that the instrumentality and existent guidance is followed successful the structuring of arrangements with taxation consequences, arsenic they ever have."

An HMRC spokesperson added: "Dual practice cannot beryllium assumed to beryllium a taxation avoidance scheme; its usage tin beryllium taxation compliant.

"However, we cautiously scrutinise arrangements betwixt clubs and employees, and we enactment intimately with the shot manufacture to amended and woody with taxation hazard caput on.

"Our actions and the wealth bought successful from this manufacture talk for themselves. Since 2015, from crossed each taxation areas successful the shot industry, we've recovered £573m that would different person gone unpaid."

BBC Newsnight approached idiosyncratic clubs, but each declined to comment.

A Premier League spokesperson said: "We judge that the wide fig suggested present is based connected assumptions that bash not recognise the idiosyncratic circumstances of each transaction.

"During the 2019/2020 play Premier League shot contributed £7.6bn to the UK economy. In the aforesaid play the Premier League and its clubs generated a full taxation publication of £3.6bn to the UK Exchequer, £1.4bn of which was accounted for by Premier League players."

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