The legislation means that foreign sports stars are taxed on any winnings they earn whilst on UK soil and also a cut of any annual global sponsorship.
This means that if Usian Bolt, for example, competed in 10 races over the year and just one of these was in the UK, the taxman will hand him a bill relating to 10% of all of his income.
The result of this could be that Usian Bolt would end up paying more over to HMRC than he earns for appearing in the UK.
The UK sporting industry as a whole are, unsurprisingly, concerned that the reputation of the UK for hosting a major sporting events is under serious jeopardy.
Although rumours are circulating that ministers are due to consider a Major Events Bill to give sporting events an exemption from the legislation, frustration is growing as the Ryder Cup is due to be held in October in Wales amid fears that some of the world’s top golfers may refuse to compete.
Players competing in the Ryder Cup receive no prize money so the thought of having to pay out tax with no prospect of receiving any income may just prove too much for some competitors.
According to Mitchell Platts, director of public relations corporate affairs for the European Tour, said:-
“These tax rules are discouraging leading sportsmen and sportswomen from competing in Britain.
Discussions continue to take place with HMRC and these discussions include the Ryder Cup.”
It is not yet known if a suitable solution to the UK’s complicated tax law will be reached before the Ryder Cup begins but HMRC have defended the strict legislation by stating that the USA, Australia and South Africa have similar systems.
This is not the first time the UK sporting world has suffered as a direct result of our tax system.
This year, Wembley failed to secure the opportunity to host the Champions League final as it was reported that a number of foreign football stars would be reluctant to play on UK soil.
Only time will tell as to whether a more permanent arrangement can be made with the UK government to put a stop to the scaring away of foreign sporting superstars.