HM Revenue and Customs have now become concerned that sports clubs, and their players, may be using their image rights as a tax loophole, thus evading tax.
HMRC are currently investigating all 12 Guinness Premiership clubs and it is believed that county cricket and rugby league clubs are also under scrutiny and top football clubs could be the next big target.
A rugby club official, who does not wish to be named, said;
“It is clear that the Revenue sees this area as a potential tax loophole. Some clubs face a potentially large bill if the Revenue finds instances of image rights being paid in lieu of salary, thus avoiding PAYE and National Insurance, but there is a feeling that it is using rugby and cricket to establish ground rules before moving on to the biggest football clubs where the potentially big money lies.”
Generally, clubs pay a percentage of a player’s salary for use of image rights which could be as much as a fifth. Sports clubs pay for these rights as if an individual player gains an advertising contract or make a public appearance then they enhance their public appearance which benefits the club.
The Revenue are concerned that the money is apparently being paid to players who do no exploit their rights. Apparently they put the money into offshore accounts, therefore avoiding tax on a large lump of their income. If the Revenue is successful in proving the sums are taxable, it could be backdated until 2006.
There are examples where the image rights of a player are worth more to a club then his contribution on the field and so it is thought that the Revenue might target those players.
Damien Hopley, chief executive of the Professional Rugby Players’ Association says they are not worried by the investigation.
“The only issue we would have is if we felt unfair penalties were being imposed. Rugby union is enjoying a high profile and young players emerging are finding themselves fêted in a way their predecessors were not. All we want from HMRC is clarity.”
KinsellaTax, however, are not worried as the club we sponsor is all above board.
Parkside Rangers FC have 3 teams; U11’s, U16’s A and U16’s B.
To find out more about Parkside Rangers FC and the community support that KinsellaTax give then please visit www.clubwebsite.co.uk/parksiderangersfc01