HM Revenue and Customs is likely to be hoping that Manchester United win tonight’s Champions League final. If they win, the players’ bonuses will yield some significant revenue. But whether Barcelona win or lose, their players will not have to pay any tax.
HM Revenue and Customs is likely to be hoping that Manchester United win tonight’s Champions League final. If they win, the players’ bonuses will yield some significant revenue. But whether Barcelona win or lose, their players will not have to pay any tax.
The estimated loss to the taxpayer as the result of the deal to allow Wembley to host the final is £2m. Not that much when you consider that the Government borrowed £10bn last month, but some taxpayers might well feel aggrieved. For example, Lionel Messi, the world’s best paid footballer on £180,000 a week, would have had to pay £250,000.
One of the last acts of the Labour Government was to include a small clause in the 2010 Finance Act, their last piece of fiscal legislation, that exempted the Wembley final from the normal policy of taxing overseas sports starts and entertainers on their performances on British soil. The then Chancellor Alastair Darling felt obliged to give in to Uefa demands given the prestige of the event and the value of the cash flow to Wembley Stadium.
Quite how much could have been charged is not entirely clear. The Revenue’s practice has been to tax not only a player’s earnings and any bonus payment, but also the pro rata total global earnings for the period in Britain. This then brings in lucrative sponsorship and image rights. In Messi’s case, a week’s work would add up to £600,000 and three-quarters of that could be taxed at the top rate of 50 per cent.
However, such a player would have very good accountants and they would be able to offset large amounts of the earnings against ‘expenses’ and commission payments. However, all is not lost. The final is reckoned to be bringing £30m to the London economy. That should yield a substantial sum in VAT. Not all of the spending will attract VAT, but £3m would be a conservative estimate.