How Premier League clubs may have avoided paying £250m in tax
Premier League clubs may have avoided paying up to £250m in tax, experts have warned.
The Tax Policy Associates say that the 20 top flight clubs could have cost a quarter of a billion in lost tax between 2019 and 2021, and £470m since 2015.
The group says in their report that: “Football clubs at all levels are using an artificial tax avoidance scheme to avoid VAT, income tax and national insurance/social security.”
Premier League use “dual representation”
Estimates suggest that Manchester City avoided the most tax in 2021 – £10.9m – using a “dual representation avoidance structure” – Manchester United, Liverpool, Arsenal and Chelsea make up the top five.
Dual representation is when players transfer clubs or negotiate a new contract and an agent represents both the club and player involved – when half of the agent’s fee for brokering the deal is paid for by the club, half of the payment avoids tax.
Labour MP Meg Hillier, chair of Parliament’s Public Accounts Committee, said she will ask HMRC to look into 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.”
If all parties involved in the deal provide written consent to dual representation, it is allowed under Football Association rules.
HMRC, in theory, could issue penalties if it finds that rules have not been followed legitimately.
“Dual representation cannot be assumed to be a tax avoidance scheme; its use can be tax compliant,” a HMRC spokesperson said.
“However, we carefully scrutinise arrangements between clubs and employees, and we work closely with the football industry to educate and deal with tax risk head on.
“Our actions and the money bought in from this industry speak for themselves. Since 2015, from across all tax areas in the football industry, we’ve recovered £573m that would otherwise have gone unpaid.”
BBC Newsnight, who ran the investigation, approached individual clubs, but each declined to comment.
A Premier League spokesperson said: “We believe that the overall figure suggested here is based on assumptions that do not recognise the individual circumstances of each transaction.
“During the 2019/2020 season Premier League football contributed £7.6bn to the UK economy. In the same season the Premier League and its clubs generated a total tax contribution of £3.6bn to the UK Exchequer, £1.4bn of which was accounted for by Premier League players.”
Commenting on the report, Pete Hackleton, head of sports & entertainment at Saffery Champness LLP said: “It’s estimated that in the 2019/20 season, the Premier League clubs paid £3.6bn in taxes, of which £1.4bn came from Premier League players. The days of tax avoidance schemes and offshore planning are long gone, and Players are very aware of their tax obligations, and paying all of their liabilities in full.