HMRC Investigate Sports Clubs for Exploitation of Image Rights Tax Loophole
HMRC (Her Majesty’s Revenue and Customs) have become concerned that football and rugby clubs and their players may be exploiting a tax loophole which allows them to avoid paying tax on image rights payments.
HMRC are currently investigating all 12 Guinness Premiership clubs and it is believed that County Cricket and Rugby League clubs are also under scrutiny; top football clubs could be the next big target.
A rugby club official said: “Some clubs face a potentially huge bill if the Revenue finds instances of image rights being paid in lieu of salary, thus avoiding PAYE and National Insurance, but there is a feeling that it is using rugby and cricket to establish ground rules before moving on to the biggest football clubs.”
Image rights refer to an individual’s right to prevent unauthorised use of their name, likeness or any other personal attributes. Sports clubs pay players large sums of money, sometimes up to a fifth of their total salary, for the right to use their image in advertising and in general promotion of the club.
The HMRC is investigating allegations that clubs and players have been placing money gained from image rights transactions into offshore accounts, thus avoiding paying tax on a significant portion of their income.
If the Revenue is successful in proving the sums are taxable, it could be backdated until 2006.
Kevin Kinsella, Chief Executive of the UK’s foremost tax investigation firm KinsellaTax Investigations Ltd., noted, “I read with interest that HMRC are planning on investigating sports clubs as I have previously acted on behalf of a number of high profile football league players; mainly of the old brigade. There is a potentially huge, un-tapped source of backdated tax here. There are examples where the image rights of a player are worth more to a club than their contribution on the field and so it is thought that the HMRC might target those players, particularly when it moves on to the bigger football clubs.”
Damien Hopley, Chief Executive of the Professional Rugby Players’ Association says they are not worried by the investigation.
“The only issue we would have is if we felt unfair penalties were being imposed. All we want from HMRC is clarity.”
For more information regarding this issue and HMRC tax investigations in general, contact KinsellaTax Investigations Ltd. http://www.kinsellatax.co.uk/.
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