HMRC’s continued spotlight on the football sector

HMRC is continuing to push enquiries into the football sector and announced that it has collected just short of £400 million in unpaid taxes from football clubs, players and agents over the past five years. Since 2015, it is thought that HMRC enquiries produced £793 million of extra tax that would otherwise have gone unpaid.    

HMRC has reported that it has recovered £67.5 million in additional tax and issued enquiry notices in the year to 20 football clubs, 83 players and 21 agents during the year ended 31 March 2024. Although this is lower than the reported £124.8 million recovered in the previous year to March 2023, it is still an increase from the £58.7 million of tax recorded in 2022.

HMRC has long held the view that the sports sector and particularly football is ‘low hanging fruit’ as far as generating extra tax receipts is concerned. Following the decision in the Sports Club case (Sports Club plc and others v Inspector of Taxes [2000] STC 443), HMRC has raised enquiries into image rights arrangements involving football clubs and players to check the commercial justification of such arrangements. They also want to make sure that payments by clubs to players’ image rights companies were not salary dressed up as something else (therefore avoiding PAYE income tax and national insurance deductions).

More recently, HMRC has challenged the typical 50:50 split of an agent’s fees in dual representation situations between duties performed on behalf of the club and those for the player. Our article on the tax issues associated with football agents’ fees from May 2024 covered this topic in more detail and shows the sizeable difference in outcome for tax and national insurance depending on whether the agent is acting for the footballer or the club. It is vital that clubs, agents and even players keep a detailed audit trail of the way in which the agent generates their invoices, supported with documentation This documentation should also include a detailed narrative of the work performed.

It is not just the elite Premier League clubs that are being targeted. Many lower league clubs have had to deal with time consuming enquiries as well. This probably explains why it is believed that over 20 professional football clubs in the UK have fallen into arrears with payments due to HMRC for corporation tax and VAT. Several time to pay arrangements have accordingly had to be agreed.

It is clear that HMRC’s thirst for raising enquiries into the activities of football clubs, players and agents shows no signs of being quenched. More enquiries can therefore be expected to be issued given the tax revenue generated.

If you are a club official, player or agent who has received a notice of enquiry or have any questions about the issues raised in this article please get in touch with Hayley Ives, John Cassidy, Pete Fairchild or your usual Crowe contact. We have the credentials and experience to help deal with such enquiries quickly.