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HMRC get tough on image rights payments

Thu 4th Feb 2010 | Money & Finance

Finance chiefs of the Premier League have been summoned to London on 12 February and payments to agents and image rights will lead the debate, according to Accountancy Age.

It’s understood that the meeting has been called to discuss the issue after it emerged that HMRC wants to clamp down on this being used as a lever to avoid paying what it feels is owed.

Tax experts suggest that Finance Directors could consider a cap on the percentage of players’ remuneration paid as image rights during the discussions. This move could see a limit enforced, along the same lines as the one agreed by Rugby’s Super League last year.

It’s believed that players would have an amount of salary paid as image rights dependent on their profile. The lower the profile, the less money could be placed into image rights.

It appears that this issue has been pushed to the forefront of the Premier League’s agenda.

A UK-domiciled player currently puts his cash into a UK image rights vehicle and pays tax at a corporate rate rather than a personal rate of 40% – or soon to be 50% – so the profits on which he pays tax would be at a much lower rate.

It’s also reported that there are also two VAT disputes relating to Birmingham City and Newcastle United going through the courts. The clubs want to recover tax paid on payments to the middle men but the taxman is refusing to compromise.

HMRC has targeted the issues as it looks to maximise the amount of money it believes is owed to the Exchequer, and the meeting is a clear sign that HMRC's mission to crush any wrongdoing in this area is being taken very seriously by the Premier League’s representative body.

Despite the slump, HMRC is still unhappy about the sum of tax which it believes is due from football, with VAT and PAYE the most pressing problems. HMRC has hit clubs including Portsmouth and Notts County with winding-up petitions in recent months for unpaid bills.

 

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