Premier League clubs ‘may have avoided £250m in tax over the payment structures to agents’
Premier League clubs “may have avoided paying £250m in tax because of the way payments with agents are structured”, and HMRC and the government were urged to question how agents represent both parties.
- Dual representation has reportedly become standard practice in the industry.
- See agents paid to represent both clubs and players in deals.
- Payments to agents are made to avoid taxes when the club pays the sum
Premier League clubs may have avoided paying £250m in tax over a three-year period by using dual representation contracts to pay agents, according to a report.
Agents and clubs were estimated to have saved £81m in 2019, £91m in 2020 and £81m in 2021 through the practice. a BBC Newsnight report said.
According to Tax Policy Associates, which calculated the figures, dual representation allows clubs and agents to avoid employment taxes and VAT on large commissions paid to soccer agents on transfers and contracts.
See an agent get paid to act for both the club and the player in the deal, rather than just the player they represent.
The fees paid to agents reportedly dodge income tax, national insurance and VAT when the club pays the sum.
Report claims Premier League clubs may have avoided paying £250m in tax
Tax Policy Associates says this means the tax received by HMRC falls from 60 per cent when the agent fee is paid solely by the player, to 30 per cent when split between the player and the club using dual representation.
The practice has become standard in the sport, it is claimed, with an estimate that HMRC may have lost £470m since 2015.
Manchester City, Manchester United and Liverpool were reported to be the biggest beneficiaries of the use of dual representation in 2021, with the clubs estimated to have saved £10.9m, £10m and £8.1m respectively.
Tax Policy Associates’ estimates are based on the assumption that players and clubs split the agent’s fee equally, which is said to be the industry standard.
HMRC, which is reportedly investigating “a number of clubs”, has been urged to “aggressively challenge all clubs that have historically used joint representation contracts”.
Tax Policy Associates has also called on the Government to enact specific rules against the avoidance of income tax, national insurance and VAT.
The BBC and Tax Policy Associates said individual Premier League clubs declined to comment on the analysis.
Tax Policy Associates claims HMRC may have lost £470m since 2015
A Premier League spokesperson said: ‘The Premier League and clubs have regular discussions with HMRC over agent fees.
“Prior to 2021, there was an industry standard position with HMRC, regarding the split between player and club services provided by agents. In 2021 HMRC changed their guidance and the clubs are fully aware of this detail.
“We believe that the general figure suggested here is based on assumptions that do not recognize 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 Treasury, £1.4bn of which was from Premier League players. The League also supports 94,000 jobs in the UK, with 72 per cent of the League’s economic activity generated outside of London.’
The Football Agents Association claimed the findings showed a “fundamental misunderstanding of how the football transfer market works”.