The relationship between the tax authorites and football has been a difficult one in recent years. There was the controversy over payments for players ‘image rights’ while the tendency of clubs in financial difficulties to use their tax payments as a de facto credit card also gave rise to resentments.
In recent years HMRC has collected more than £80m in additional tax payments from clubs, players and agents following probes into ‘image rights’ payments through which parties to a transfer can make large tax savings.
The relationship between the tax authorites and football has been a difficult one in recent years. There was the controversy over payments for players ‘image rights’ while the tendency of clubs in financial difficulties to use their tax payments as a de facto credit card also gave rise to resentments.
In recent years HMRC has collected more than £80m in additional tax payments from clubs, players and agents following probes into ‘image rights’ payments through which parties to a transfer can make large tax savings.
Yesterday HMRC officials staged raids on Newcastle United and West Ham United and also talked to Chelsea, Investigations were also carried out in France. 180 officers took part in the operation. What appears to be under investigation is undisclosed payments to players and their agents.
HMRC is believed to be investigating transfers in which one agent represented both the club and the player. They may have declared only one side of the payment to the tax authorities.
It seems likely that Premier League points and status for both West Ham United and newly promoted Newcastle United are safe for now.
However this “on-going” investigation risks creating instability and uncertainty for both clubs at a time when they both, for different reasons, need it the most. HMRC investigations of this scale are costly and only undertaken in the most serious of circumstances. Earlier investigations into football normally involved only six to eight officers per search.
David Conn argues that the tax authorities will be under pressure to produce results given the failure of earlier investigations and prosecutions.