12 08 2020
Tax affairs of 246 professional footballers investigated by HMRC
Football is facing extra scrutiny over imaging rights amid concern younger players are not receiving all the tax advice they need
The number of professional footballers being investigated over their tax affairs has almost trebled in the past year, according to a study.
Freedom of information requests showed that 246 players were under investigation by HMRC during the 2019-20 season - up from 87 in the previous campaign.
The image rights of players are thought to be facing extra scrutiny. This is where additional money is paid on top of a salary for the use of a footballer's image by the club, such as in advertising and endorsements.
This income can be paid to a company set up by the player specifically for this purpose and is only taxed at the 19% corporation tax rate, rather than the 45% income tax rate paid by high earners.
In some cases, image rights companies can be based offshore, which can reduce the money owed even further.
Elliot Buss, a partner at accountants UHY Hacker Young, which carried out the study, said: "If you are a second-choice left-back in the Championship getting paid a great deal in image rights payments, then this is likely to trigger an investigation by the taxman.
"You may have to make a robust argument to HMRC to show how the value of the image rights has been arrived at.
"Despite having a very substantial income, many young footballers don't get the advice they need when it comes to tax.
"Often they don't realise they need to pay tax on the fees that the club pays the agent on behalf of the player when they sign a new contract. That frequently results in errors, investigations and hefty penalties."
The number of investigations into agents and any fees paid went up from 23 in 2018-19 to 55 in 2019-20.
There were 25 investigations opened into football clubs over the same period, which was a rise of two.
The HMRC's overall additional tax collected from investigations into professional football in 2019-20 was £73.1m - more than double the previous figure of £35.3m.