MANCHESTER UNITED STARS’ image rights deals are being investigated by the taxman.
Red Football Limited, United’s UK-based parent company, admitted in recently-published accounts that it was in talks with HMRC which could lead to the club having to pay out to the Treasury.
Manchester United are to be investigated over their players’ image rightsCredit: Reuters
It is unclear whether the probe relates to current or past Old Trafford players, or both.
But arrangements to pay stars in connection for their involvement with the club’s promotional and commercial work, on top of their playing salaries, are among the issues under discussion.
A United spokesman said: “We don’t comment on the specifics of our employees’ contractual matters.
“The club operates within the rules set by football’s governing bodies and all payments and agreements are reported to HMRC in the standard way.”
TAXMAN COMES KNOCKING
United are far from alone in being targeted by the taxman.
HMRC’s last official statement said it was looking into “223 players, 49 clubs and 62 agents on a range of issues, including image rights”.
But it is rare for a club to make that situation public.
United’s transparency may be related to the fact that it is floated on the New York Stock Exchange, which has very strict rules about keeping investors informed of a company’s financial position.
Section 28.1.ii of the notes to Red Football’s accounts for the year to June 30 2019 states: “We are currently in active discussions with UK tax authorities over a number of tax areas in relation to arrangements with players and players’ representatives.
“It is possible that in the future, as a result of discussions between the Group and UK tax authorities, as well as discussions UK tax authorities are holding with other stakeholders within the football industry, that interpretations of applicable rules are subject to challenge and could result in a liability being required in relation to these matters.”
FOOTBALL COULD OWE BILLIONS
The previous set of Red Football accounts made no mention of potential tax liabilities, but they could be related to issues from some time ago.
Earlier this year HMRC won a long-running case against Hull City over an image rights deal with former star Geovanni, who left the club in 2010.
The taxman has had his eye on football and its billions for many years.
But despite repeated warnings, the industry continues to fall foul of the rules.
FOOTBALLERS SET UP COMPANIES
It is believed that the two main areas of dispute remain the same as they have been for years: agent payments in transfers and who is liable for the tax on them, and so-called image rights.
Although image rights are not recognised in British law, HMRC acknowledge that it is legitimate in some cases for clubs to pay players to use their name, image and time for commercial purposes.
Typically, footballers will set up separate companies to manage their off-pitch income and such firms pay corporation tax at a rate of 19 per cent – compared to the 45 per cent top tax rate for their on-pitch salaries.
The problem comes when image rights deals are used to bump up artificially a player’s overall income.
The classic trick is to pay a reduced salary but a big image rights deal that bears no relation to the commercial value that the player brings to the club, in order to reduce the overall amount they pay in tax.
This was one of the issues when Portsmouth became the first Premier League club to go into administration in 2010.
And In 2017 HMRC issued new guidelines which warned clubs that any image rights payments had to be commercially justifiable – not just disguised income from employment.
Source: Soccer - thesun.co.uk
