Is your football club tax fit?

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If you closely follow tax developments in the sporting press, you will have seen the reporting of HMRC’s announcement back in March that HMRC has initiated a special football compliance project. You will also, no doubt, have seen the news that the Supreme Court has published its judgement in the Murray Group/Rangers case (but more on that below).

This new compliance project seems to have been developed on the back of criticism from the Public Accounts Committee over HMRC’s approach to the taxation of image rights. As yet, we have very little information from HMRC about this dedicated team, but what we do know is that:

  • experts from the project team will, over a period of 3 years, visit all English Premier League, Championship and Scottish Premier League clubs; and
  • the team will be looking at all aspects of compliance, including payments to players. In other words, they will not just be looking at image rights payments.

HMRC has also reaffirmed that it will publish further guidelines for employers to help them better understand how payments for image rights should be treated and which payments should be subject to PAYE as earnings.

Murray Group Update

On 5 July, the Supreme Court finally published its judgement in the Murray Group/Rangers case concerning tax avoidance schemes which utilised employee benefit trusts. After some initial success by the taxpayer, the Supreme Court have reaffirmed the findings of the Court of Session and ruled in HMRC’s favour.  In short, this final decision confirms that all payments made to the trust established by Murray Group were earnings of the players and employees involved (regardless of the fact that they were paid to the trust) and PAYE was due at the point those payments were made.

Employers who undertook similar planning and who have not already settled with HMRC are likely to receive follower notices from HMRC. It remains to be seen whether HMRC will attempt to apply the principles in this case to other areas, such as image rights.  No doubt this will be come clearer as the compliance project gathers pace.

So how can we help?

At Walker Morris, we have a team dedicated to helping our clients deal with their tax issues and they have a wide range of experience on which you can call. One of our team, Nicola Parkinson, has been a regular contributor to online publication, Law in Sport.

In short, if your club has implemented any arrangements which you have questions about or if you just have a nagging doubt about whether something has been properly accounted for, be it big or small, our team can help. We can discuss your particular concerns and outline a plan of action to deal with any identified issues.

It is worth bearing in mind, that if a tax charge has been triggered, there is often little which can be done to minimise the tax charge itself when dealing with HMRC. However, with the right advice and a considered plan of action, there are ways to minimise the level of potential penalties which can be as much as 100% of the tax due.

The benefit of legal professional privilege

As lawyers, we are in a unique position to offer tax advice with the benefit of legal professional privilege. Whilst your other tax advisors might owe you a duty of confidentiality, it is only your lawyer who has the absolute right to withhold information from third parties, including HMRC and/or the Courts, on the grounds of legal privilege.  That right applies to any documents or information communicated between you and your lawyer for the purposes of seeking or obtaining legal advice.

By speaking to Walker Morris first, you can benefit from full and frank advice without the risk of future disclosure to HMRC. With the benefit of that advice, we can then work together with your usual tax advisor to implement any recommendations.

This article was written for and first published by LawInSport.