The Premier League hopes a deal with HMRC will protect the players’ sponsorship deals and avoid the loss of £100 million in taxes.
HMRC is questioning the legitimacy of contracts between the football clubs and the ‘image-rights’ companies which are set up in order to protect and increase a player’s public profile.
They believe that the main incentive of these deals is to attract foreign players who have previously been put off from playing in Britain due to the excessive taxation levels.
The image rights work by paying some of a player’s fee to ‘image-rights’ companies which are often offshore and therefore out of reach of Britain’s tax authorities.
Players would then receive payments from those image rights companies.
The finance director of the Premier League, Javed Khan, will meet with his counterparts from all 20 Premier League football clubs this week to discuss the matters at hand.
Mr Khan wants to examine a banding system where players who earn the most would be placed in a higher band and therefore pay a higher percentage of their salaries into image-rights companies.
It is hoped that this would satisfy HMRC as although all players have a certain degree of image rights awarded to them, HMRC are querying the level of some of those image rights.
This would ensure that less prolific players would not have as much of their salaries paid to these companies as those players who have very substantial public profiles.
However, a former Revenue manager who helped to instigate the investigation into image rights has said:-
“The Revenue’s legal opinion is robust. The evidence they see is quite favourable to the Revenue. When you consider the amount of tax at risk, the Revenue isn’t going to do a deal.”
A spokesman from HMRC has said:-
“The government remains committed to ensuring everyone pays their fair share of tax and that the minority who seek not to do so should not succeed.”
Also, the instructions to staff last year said effectively ‘no deals. If it is a winner then run it and if in doubt drop it.’
When you consider HMRC can employ the best counsel available it is going to be difficult for the Premier League.