A report out today reveals that Premier League football clubs are avoiding tax on an industrial scale, by artificially structuring their payments to football agents.
The report by estimate it cost £250m in lost tax from 2019-2021, and £470m since 2015.
Manchester City were one of the biggest culprits .In 2021, Tax Policy Associates estimates Manchester City saved £10.9m in tax, followed by Manchester United with £10m and Liverpool with £8.1m. In 2020, the largest beneficiary was Chelsea, saving £12.8m.
The purpose of the scheme is to avoid employment taxes and VAT on the large commissions paid to football agents.
In reality, these agents act for players. But the scheme works by constructing artificial contracts where the agent acts for the club as well as the player – so-called “dual representation contracts”. Half the fees are then paid by the club – even though it is the player who is really benefiting from all (or almost all) of the agent’s work – and these fees escape income tax, national insurance and VAT.
The defence of dual representation contracts by clubs is that “everybody does it”. That is true. But it’s the view of Tax Policy Associated that the arrangements are improper – they contravene both the letter and the spirit of the law.
“This isn’t “legal tax avoidance” they say, “it’s a failure to comply with the law. HMRC should be aggressively challenging it (and we understand that, in least some cases, it already is).”
There are potentially serious consequences for football says the report-If HMRC were able to recover all £470m then Premier League clubs would struggle to pay it – the Premier League’s total profits in 2022 were the largest for some time, but still only £479m.
Labour MP Meg Hillier, chair of Parliament’s Public Accounts Committee, told the BBC who will cover this report on Newsnight this evening that she will urge HMRC to look into the Premier League’s use of dual representation.
“Guidance that’s a bit weak isn’t really good enough,” she said. “You need to have a real clarity about exactly what the position is so that every club does the same thing. You can’t have one club doing it and getting away with it and another not.”
