Football v HMRC: Scrutiny sees £400m clawed back from clubs
HMRC has collected over £384m in unpaid taxes from football clubs over the past five years as it has intensified its crackdown on the sector.
In the past year, HMRC has recovered £67.5m in extra tax from clubs, players and agents following an investigation by national accountancy group UHY Hacker Young.
This was down from the £124.8m recovered in the year ending March 2023. Despite that, the figure is still up from the £58.7m recorded in 2022.
As of the year ending March 31, 2024, HMRC had opened investigations into 20 football clubs, 83 football players, and 21 football agents.
These investigations have recently focused on the misuse of dual-representation contracts and tax avoidance schemes related to agents’ fees.
Dual-representation contracts have been a particular target, where an agent claims to represent both a club and a player during a transfer.
These arrangements often lead to a significant portion of the agent’s fee being treated as a benefit in kind for the player, thus evading income tax and VAT.
HMRC’s new guidelines, published in May 2024, now require clubs to provide clear evidence that agents are genuinely working for both parties in a transfer. Failure to do so will result in the entire fee being attributed to the player for tax purposes.
UK-based agent Nicholas Maytum, who has worked with Gustavo Viera, appeared on HMRC’s list of deliberate tax defaulters this July for tax liabilities of over £740,000.
Elliott Buss, partner at UHY Hacker Young, explained that “agent fees have long been a target for HMRC. It sees them as very simple tax evasion.”
She noted that “everyone in football needs to be aware that HMRC will be investigating any transfers where agent fees are not reported correctly – and handing out fines.”
It is not just agent fees that are being targeted; many lower-league football clubs have been hit with HMRC fines as they’ve failed to file their returns on time.
It was reported last month that at least 21 professional football clubs in the UK have fallen into arrears to the HMRC over corporation tax or VAT.
“HMRC see the football industry as an obvious target for collecting unpaid tax,” Buss noted.
According to High Court records, HMRC has issued winding-up petitions – statements of intent to shut down a company due to unpaid debts – to several football clubs. This included Taunton Town Football Club (active), Chorley Football Club (withdrawn), and Reading Football Club (withdrawn).
A spokesperson for HMRC told Morning Wire “we continue to carefully scrutinise arrangements between clubs, players, and agents, to ensure the correct tax is paid.”
“We work closely with the football industry to educate and deal with tax risk head on.”
“Our actions and the money brought in from this industry speak for themselves. Since 2015, from across all tax areas in the football industry, we’ve recovered £793m that would otherwise have gone unpaid,” they added.