HMRC urged to tackle concerns over football clubs - 15th Feb 2017

Another year has brought fresh criticism for HMRC from MPs, who have singled out football as an area the tax authority and the government must tackle.

A recent report by the Public Accounts Committee (PAC) highlighted concern about tax evasion in the football industry and the “misuse” of image rights to reduce tax liabilities.

The committee revealed that 43 players, 12 clubs and eight agents were currently the subject of “open inquiries” by HMRC. However, it said that in some cases clubs were failing to co-operate fully with the tax inspectors.

Current tax rules allow for income from image rights to be treated as a separate revenue stream for tax purposes, which means that taxpayers who believed their image had a market value could set up a company to receive payments for those rights.

The committee feared these rules are being abused and its report stressed: “Government should take urgent action to address image rights taxation.”

Since HMRC set up a specialist unit dealing with high net worth individuals, across all sectors, in 2009, the amount of income tax they paid had fallen by £1 billion, the report said. This was despite income tax receipts from the public rising by £23 billion over the same period.

Each of the estimated 6,500 individuals worth £20 million or more has been assigned a “customer relationship manager” by HMRC to administer their tax affairs but while HMRC said this had resulted in the collection of an additional £2bn in tax. it was unable to explain why the income tax they paid fell by 20 per cent - from £4.5 billion in 2009-10 to £3.5 billion in 2014-15 - when the overall income tax take increased by nine per cent to £23 billion.

PAC chairwoman Meg Hillier said: “If the public are to have faith in the tax system then it must be seen to have fairness at its heart. HMRC’s claims about the success of its strategy to deal with the very wealthy just don’t stack up.”

HMRC, who have been told to report back to the PAC by July this year, replied: “There is absolutely no special treatment for the wealthy. In fact we give them additional scrutiny, with one-to-one marking by HMRC’s specialist tax collectors, to ensure that they pay everything they owe, just like the rest of us do.”

Something tells us that HMRC v PAC will continue to be a hard-fought – and not necessarily good-tempered – encounter in 2017!

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