Taxman doubles amount of unpaid tax recovered from UK football clubs
HMRC more than doubled the amount of unpaid tax that it recovered from UK football clubs in the past year as part of a crackdown on the sport.
The taxman recovered £124.8m in the year ending March 2023, up markedly on £58.7m in the previous year, according to a report by accountants UHY Hacker Young.
Manchester United and Newcastle United are among the clubs to have been investigated by HMRC, according to the teams’ most recent accounts.
Former Manchester City and West Ham United manager Manuel Pellegrini, meanwhile, was fined £343,000 in 2022 for allegedly evading more than £800,000 in tax.
“HMRC is really cracking down on the football industry to recover what it sees as a significant amount of unpaid tax,” said Elliott Buss, a partner at UHY Hacker Young.
“Football clubs are a subject of particular concern and HMRC now have these clubs’ tax affairs in their sights.”
Areas of particular interest to HMRC include agents’ fees, image rights and benefits in kind, such as hotels and travel costs for footballers and their families.
A spokesperson for HMRC said: “We will 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.”
The taxman suspects that clubs sometimes underpay National Insurance on agents’ fees by claiming that only half of it is in a benefit in kind when it is often a majority, according to the report.
HMRC also believes that clubs intentionally overvalue image rights, which do not incur National Insurance if they are paid to a player’s company, as a means of avoiding tax.
“The growing proportion of agents’ fees being paid by clubs is drawing the attention of the taxman to the possibility that not all tax due on these payments is being paid,” added Buss.
“Football clubs should seek professional advice on tax law compliance in order to avoid what can be lengthy and costly HMRC investigations.”