Players and agents ordered by HMRC to provide evidence of involvement in transfers

Premier League stars are ordered to provide ‘non-existent’ evidence to prove their agents’ involvement in transfers as part of a major retrospective tax purge for players.

The Inland Revenue is investigating a large number of historic transfers dating back to September 2018 as they seek further payments from players in relation to agent fees in a fight that could cost footballers millions of pounds in additional tax.

Sports post may reveal that the HMRC is asking players for the involvement of their representatives in deals involving emails, texts and WhatsApp messages, details of any phone calls and all correspondence related to transfers – a request that has caused widespread dissatisfaction with the player and agent community.

At the time many of the deals under investigation took place, it is alleged that there were no guidelines prescribing players and agents needed to keep records or provide such information.

“They basically go back in time to change the rules and then punish players in the present day,” said a person involved in one of the HMRC’s investigations.

Transfers are generally negotiated orally, meaning there is very limited documentation to offer the HMRC – or in many cases no tangible evidence exists.

From the perspective of the HMRC, there is an acknowledgment that football negotiations are more nuanced than in other sectors, yet there continues to be a insistence that player deals should be treated as much as possible as any other.

The tax office updated their existing guidance on record-keeping in March 2021, focusing in particular on agents’ fees, in which they clarified that to claim tax deductions, records must be kept, just like any business.

In January 2021, the PFA sent educational letters to all of its members to educate players about tax risks.

The main focus of the HMRC exercise is to identify the roles played by each agent in the transfers examined – primarily whether the intermediary worked solely for the player or also on behalf of the buying club.

In most cases, a broker acts as a conduit between player and buying club under what is commonly known as ‘dual representation’.

With dual representation, 50 percent of the broker’s fee is allocated to the player and tax is levied, with the club being liable for the other half.

But the HMRC is now demanding additional tax, insisting that footballers – and not the club – get the full benefit of contract negotiations, despite the obvious financial and performance gains that teams get from signing a player.

Given their high earnings, footballers are already among the biggest taxpayers in the UK.

There is a sense within football that the HMRC is deliberately targeting players to fill the economic shortfall created during Covid.

Going forward, there is a growing sense that the increasing role that players’ families play in transfers will fall alongside the HMRC microscope.

A growing number of family members are appointed as transfer paper representatives in addition to their usual agents, meaning they are entitled to a percentage of the fees.

The role that family members play in the actual execution of deals is a point of contention among the agent community, who generally do most of the work for deals.

An HMRC spokesperson said: ‘HMRC is working closely with football clubs and players to assist them in obtaining their tax rights, by stepping in to rectify any mistakes to ensure that all clubs, their players and agents comply with their tax obligations, just like other UK taxpayers.

“As such, we carefully examine the individual arrangements between football clubs and their players to ensure the correct tax is paid in the UK.”