HMRC have announced that they will visit all English Premier League, Championship and Scottish Premier League clubs in the next three years to review payments made to players to ensure that the rules on image rights are not being exploited with the result that tax is being underpaid.
The announcement comes on the back of concerns raised by the Public Accounts Committee that HMRC is not doing enough to ensure that the correct amount of tax is collected from high net worth individuals. Further impetus was added by the recent announcement at the Budget that HMRC would publish guidelines for employers who make payments of image rights in order to "improve the clarity of the existing rules."
Andy Brown, a Partner in Bird & Bird's International Tax Disputes team with experience in dealing with footballers' image rights, says:
"This renewed focus on footballers' image rights shows that this issue is not going to go away for some time and clubs and players should be ready for HMRC to challenge arrangements where they take the view that certain structures and remuneration packages are not compliant with anti-avoidance legislation. Football clubs should assess their position (and that of their players) and determine the extent of their risk exposure.
The impact of a successful challenge by HMRC on a player's remuneration has historically been largely focused on the players themselves. However, HMRC are increasingly looking at those they perceive as enabling and facilitating tax evasion and avoidance. Anyone in the "supply chain" of tax evasion or defeated tax avoidance arrangements, such as those who helped advise upon and create the structures, could therefore find themselves subject to HMRC's inquiries and will similarly need to assess their position."