It has been evident for some time that the tax authorities have been getting tough with football clubs who use their tax payments or as an interest free loan. In the case of Rangers £21.5m is owed even before the conclusion of a tribunal into the ‘big tax case’ which could triple that sum.
It has been evident for some time that the tax authorities have been getting tough with football clubs who use their tax payments or as an interest free loan. In the case of Rangers £21.5m is owed even before the conclusion of a tribunal into the ‘big tax case’ which could triple that sum.
In particular Revenue & Customs has targeted the football creditors’ rule which is unique to English football. A recent court case found that the rule did not break insolvency law, but Damian Collins MP is going to reintroduce a private members’ bill to have the rule abolished. However, such bills rarely go far unless they have government backing.
Revenue & Customs has also been pursuing clubs over the image rights paid to players. While the system is legal, the tax authorities believe that many players have exploited it to avoid paying the top rate of income tax. Chelsea and Manchester United have had to negotiate settlements with Revenue & Customs.
Revenue & Customs has issued at least 25 winding up petitions against 12 professional clubs in the last three years. However, the Premier League claims that a case like that of Rangers could not happen in England. Because of an early warning system, it would not be possible for one of its clubs to be deducting PAYE tax and National Insurance and simply not passing it on, as happened at Rangers under Craig Whyte.
Alex Salmond, Scotland’s first minister, appears to have applied pressure on the Revenue to tread softly with Rangers, but, not suprisingly, this had no impact on the tax authorities and went down badly with fans of other clubs.