Tax Policy Associates (TPA) has published a new report alleging that premier league football clubs are ‘avoiding tax on an industrial scale by artificially structuring their payments to football agents’, estimating some £470m in lost revenue since 2015.
According to TPA, the scheme aims to avoid employment taxes and VAT on commissions paid to agents, by structuring contracts so that the agent acts for the club as well as for the player. Rather than all of the agent’s fee being paid by the player out of their after-tax income, the club typically pays half of those fees and, critically, on behalf of itself rather than on behalf of the player. This means there is no taxable benefit in kind for the player, and no employer NICs on the half paid by the club. The club is also able to recover VAT.
TPA alleges that the arrangement is ‘fundamentally artificial’ because, in reality, the agent is acting for the player, not the club. This seems obvious, says TPA, given the conflict of interest in contract negotiations where the player wants to be paid as much as possible but the club wants to pay a little as it can get away with.
In response, the International Sports Tax Association rejects the report, saying that the conclusions are ‘based on a fundamental misunderstanding of the relationship between agents and clubs’, pointing out that agents clearly often work for both player and club. It notes in its final comments: ‘It seems that the conclusion of “tax avoidance in football” came first and then the report tried to make the evidence fit. There is no tax avoidance scheme here, there is no beginning and end, there is no money invested, no one is buying a package which is promising to save them a shedload of tax.’
Tax Policy Associates (TPA) has published a new report alleging that premier league football clubs are ‘avoiding tax on an industrial scale by artificially structuring their payments to football agents’, estimating some £470m in lost revenue since 2015.
According to TPA, the scheme aims to avoid employment taxes and VAT on commissions paid to agents, by structuring contracts so that the agent acts for the club as well as for the player. Rather than all of the agent’s fee being paid by the player out of their after-tax income, the club typically pays half of those fees and, critically, on behalf of itself rather than on behalf of the player. This means there is no taxable benefit in kind for the player, and no employer NICs on the half paid by the club. The club is also able to recover VAT.
TPA alleges that the arrangement is ‘fundamentally artificial’ because, in reality, the agent is acting for the player, not the club. This seems obvious, says TPA, given the conflict of interest in contract negotiations where the player wants to be paid as much as possible but the club wants to pay a little as it can get away with.
In response, the International Sports Tax Association rejects the report, saying that the conclusions are ‘based on a fundamental misunderstanding of the relationship between agents and clubs’, pointing out that agents clearly often work for both player and club. It notes in its final comments: ‘It seems that the conclusion of “tax avoidance in football” came first and then the report tried to make the evidence fit. There is no tax avoidance scheme here, there is no beginning and end, there is no money invested, no one is buying a package which is promising to save them a shedload of tax.’
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