No ‘extra time’ for footballers as HMRC clamps down on tax evasion

There is a dual perception of football’s modern relationship with tax. On the one hand the impact of taxes on footballer’s phenomenal wages presents them as contributing significantly to the public. In 2013-2014 it was reported that £2.4 billion had been paid by footballers in tax. Yet there is also extensive public dissatisfaction with HMRC for failing to thoroughly investigate suspected tax avoiders amongst clubs, players and agents.

HMRC have been trying to clamp down on tax evasion from footballers and football clubs and are currently investigating Newcastle United and West Ham United over suspected tax fraud, conducting early-morning raids on their headquarters.

A similar situation occurred 10 years ago when the City of London police investigated high-level financial crimes following ongoing suspicion of bribery among English Premier League Football Clubs. The offices of Newcastle United, Portsmouth and Rangers were raided, as was the home of Harry Redknapp, and club owners and directors Milan Mandaric, David Sullivan and Karren Brady were arrested. However, everyone was cleared of tax evasion and no legal action was taken against any of the football clubs. The police were therefore left red-faced, made worse by Redknapp successfully challenging the legality of their search warrant.

HMRC’s chief executive, Jon Thompson, said that the most significant tax evasion risk in football is ‘the legitimacy of image rights’ arrangements, which can lead to players qualifying as non-domiciles and receiving payments offshore. He went on to state that investigations are continuing into 43 players, 12 clubs and 8 agents. Several clubs have been involved in making settlements and HMRC told the Guardian last November that it had taken over £80 million of additional tax from clubs player and agents. This, however, is only a fraction of the £2.4 billion of annual tax reportedly paid by the Premier League.

HMRC knows it must produce results in this investigation or else risk a repeat of the 2007 debacle. Public attitude against tax evasion of large corporations and very wealthy individuals is growing, so HMRC will undoubtedly be feeling the pressure.