HMRC has recovered almost £70m of unpaid tax from footballers, agents and clubs over the past year as part of a crackdown on tax avoidance schemes in the sport.
This initiative has led to investigations being launched into 20 football clubs, 83 players and 21 agents since April 2023.
HMRC’s efforts have focused on the abuse of ‘dual representation contracts’ and other tax avoidance strategies prevalent in football. Dual representation contracts allow agents to claim to represent both a player and a club during a transfer, resulting in tax advantages that HMRC is now challenging. The tax authority has tightened its guidance, requiring clubs to provide evidence if they claim an agent worked for them during a transfer. Failure to provide such evidence could result in the agent’s fee being treated entirely as income to the player, subject to income tax and National Insurance.
The campaign has already included high-profile figures in football, including former England players John Barnes and Emile Heskey. Barnes was recently banned from his position as a company director for failing to pay more than £190,000 in tax, while Heskey has faced legal action over an unpaid tax bill of £1.6m relating to a film investment scheme.
HMRC has been particularly wary of the “excessive” use of image rights, with players setting up limited companies to handle payments for their image rights, often resulting in lower tax rates. However, HMRC does frequently investigate cases where it believes the value of a player’s image rights is inflated or unfounded.
Elliot Boss, partner at UHY Hacker Young, warned that the football industry remains a key target for HMRC, particularly when it comes to correctly reporting agent fees and educating young players about their tax responsibilities. He pointed out that younger players, who often earn large salaries, may not realise they have to file tax returns, leaving them vulnerable to fines and investigations.
Over the past five years, HMRC has recovered £384m of unpaid tax from the football industry, with £67.5m recovered in 2023 alone. The campaign is part of a wider effort to ensure compliance and deter tax evasion within the sport, following high-profile tax fraud cases involving international stars such as Lionel Messi and Javier Mascherano in Spain.