The tax man is not just coming for Newcastle and West Ham, he's coming for football - and it's not before time

Ian Herbert
The Independent
The HMRC are clamping down on agent fees and image rights amongst other things: Getty
The HMRC are clamping down on agent fees and image rights amongst other things: Getty

The tax man is coming – that was the message sent across football’s bows with a series of dramatic dawn raids involving no fewer than 180 customs officers on Wednesday. And not before time.

The salaries of those at the top end of the game are beyond our wildest comprehension and yet the sport is extremely well versed in the ways and means of tax mitigation. Dark arts, some may say.

One insider says that the football agents who earned a staggering and record-breaking £174m from Premier League clubs, according to figures released this month, do not need to seek to avoid tax on the big deals. Typically, they will take five per cent of the deal and if the player in question is particularly coveted they will demand 10 or even 15 per cent, instead. The player in question will be compensated via a bigger up-front signing on fee.

But the abstruse world of football is coming under scrutiny and there are questions to be asked. The Panama Papers revealed 12 months ago that an offshore company for which Lionel Messi and his father are co-signatories had been set up in Panama, a day after the player was charged with tax irregularities. By then, he had already ploughed a substantial slice of his £40m annual salary offshore to limit his tax, when the Spanish nation was experiencing the agony of 22.4 per cent unemployment.

Almost every self-respecting top-flight player in every self-respecting league in Europe will also have struck an agreement with the club he signs for that a percentage of his wage, typically 15 per cent, will be siphoned off into an account established for image rights.

When you are hearing about your club concluding a transfer this summer, one of the first questions the player is being asked will be: "Do you have an entity?" Or: "How would you like us to do the 15 per cent?"

Quite often, the notion of image rights is ridiculous. Players below the Premier League rarely have an image to monetise. If evidence were really needed that this is a preposterous artificial construct, designed to line the pockets of individuals who increasingly command six figures a week, then it came in the revelation that Manuel Pellegrini, a very grey man, earned image rights while at Manchester City.

In last month’s budget, Chancellor of the Exchequer Philip Hammond served notice that this regime would be examined. The only surprise is that this raid has come so suddenly. It was only last week that a specialist sports accountant told me: “HMRC are doing the rounds on agents’ fees and image rights. Image rights are going to have to be a genuine commercial arrangement and if the club does not have details there will be questions. The revenue are coming. They’re interested in all things.”

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