Greater than 50 rich Premier League footballers and agents are currently under investigation due to possible tax avoidance, as revealed last December 7 by HMRC.
Tax avoidance from players, agents and clubs
The bosses from the HM Revenue and Customs called MPs to put a stop to how several sports stars are able to avoid paying UK tax legally on image rights payments.
HMRC boss Jennie Granger spoke to the Commons public accounts committee and mentioned to the MPs that a huge inquiry is now ongoing regarding how taxes are declared by the sports stars and clubs for their image rights.
She mentioned that there are 43 players, 8 agents and 12 clubs now under inquiry.
The HMRC already has a special team looking into tax avoidance in the entertainment and sports industries that brought in greater than £150 million during the past couple of years, as stated by Ms Granger.
However, Jon Thompson, the HMRC chief executive, mentioned that there is a need for a new clampdown to really stop these players from taking advantage of the legal inadequacy regarding image rights.
According to him, these earnings coming from image rights are regarded differently from the players’ normal salaries, after court ruled out in 2000 that these need to be treated separately in terms of income streams.
This means that even though they pay their domestic tax from their salaries, they also can incorporate image rights in other countries to pay different tax rates for those earnings.
Ms Granger mentioned that the HMRC is also looking into the truth regarding some claims indicating the distinction of these earnings from image rights and the salaries.
She asked if they were properly transferred, or if they were transferred using an equal value, or if there should be income that comes back to the United Kingdom, which depends on their residency, as every one of these issues may be included in this matter.
Even though a country’s residents are aware of tax being a responsibility, there are still individuals, businesses and firms that do not oblige. This is why investigations are conducted. And, these investigations can also go randomly which is what an audit protection insurance is for. It helps expenses and costs be covered during the process, aside from minimizing the hassle for those investigated.