Football clubs urged to advise players against tax avoidance

The vast majority of professional football clubs in England and Scotland (85 per cent) do not take an active role in their players' tax affairs, potentially exposing them to illegal tax avoidance schemes.

Furthermore, 60 per cent of clubs do not get involved in players' tax affairs, even when HMRC makes inquires relating to image rights payments and agents fees, research from accountancy and business advisory firm, BDO, reveals.

As a result of their high salaries, tax avoidance scheme promoters often target footballers and drag them into illegal schemes.

Many are currently involved in various schemes, such as the Ingenious Media scheme, which recently lost a legal challenge against HMRC for accelerated payment notices (APN) issued to users of its scheme.

Richard Morley, partner in the tax dispute resolution team at BDO, commented: 'Footballers are clearly targeted by promoters of tax avoidance schemes due to their huge salaries, with most players sold these schemes in the belief they are a genuine and legitimate way of reducing their tax demands.

'However, with HMRC's ongoing crackdown around tax avoidance, many players that invested in these schemes are now in serious financial difficulty facing hefty tax bills, and on the receiving end of large APNs (accelerated payment notices) which have no right of appeal.'

On the other hand a small minority of clubs (15 per cent) have expressed concern at the changing definitions of tax planning and tax avoidance, and believe that it will change the way clubs structure payments to agents and players.

As a result of Ingenious Media's failure in the judicial review against HMRC over APNs, some former footballers have said they will have to sell their homes to pay the disputed tax sums that HMRC is demanding.

Morley believes that, in order to avoid similar scenarios in the future, clubs need to take a more active role in their players' tax affairs.

'This demonstrates a clear need for clubs to think more carefully about their players' future wellbeing. Financial distractions can bring a huge amount of worry, which in-turn may divert attention from their performance on the pitch. Players also have a role to take and need to consider more carefully the quality of tax advice they receive.'

He added: 'For anyone that may have invested in one of these schemes we would urge them to seek up to date financial advice and to carefully review the scheme in order to properly understand the details and options available to them.'

Binyamin Ali is editor of Private Client Adviser