A record 329 professional footballers are reportedly under investigation for suspected tax avoidance with Premier League stars among those being scrutinised.
That figure has increased from just 93 the previous year, showing a dramatic rise in the English game. HMRC are also said to be investigating 31 clubs and 91 agents after appointing a team of fraud experts to work with the FA's Football Compliance Project.
It's claimed HMRC's new team will focus on tax avoidance linked to image rights. Clubs are alleged to have paid players extra using their image in endorsements, which is sometimes paid to a firm the player sets up rather than an individual. Firms are subject to 19 per cent Corporation Tax rather than 45 per cent high-earner Income Tax.
According to The Sun, there is also a discrepancy over the commission clubs are paying to agents. HMRC reportedly believe these payments should be taxed. It's claimed Newcastle are currently battling a £5million tax demand relating to transfers.
"The Football Compliance Project linking up with HMRC’s elite fraud unit means the tax authority is very concerned about the significant amounts of unpaid tax in the sport," Elliott Buss, a partner at accountancy group UHY Hacker Young, told The Sun.
"HMRC sees football as an industry where millions of pounds in tax can very easily go unpaid. It is determined not to let that happen."
HMRC has collected £560million in additional football-related tax during the last seven years. Last year, 93 footballers, nine clubs and 23 agents were investigated over nearly £56m in unpaid tax - giving an idea of the scale of this year's alleged operation.
Speaking to The Sun last August, Buss said: "HMRC sees the football industry as an area where there is a great deal of unpaid tax owed by high earners. HMRC has identified £55.6m in unpaid tax from the football industry.
"Targeting agents’ fees is a signal they think this is an area where too much tax is underpaid... it is understandable the likes of Marcus Rashford or Harry Kane would utilise a company to sell their ‘image’. But players with near to no brand recognition use image rights to avoid paying tax."
The issue of image rights in football has been a tax problem for several years. As reported by The Guardian in August 2020, the number of footballers investigated by HMRC rose from 87 to 246 during the 2019-20 tax year according to research by UHY Hacker Young.
Buss explained: "The image rights of the likes of Paul Pogba and Mohamed Salah are undoubtedly worth millions of pounds a year.
"However, if you are second-choice left back in the Championship getting paid a great deal in image-rights payments, then this is likely to trigger an investigation by the taxman. You may have to make a robust argument to HMRC to show how the value of the image rights has been arrived at."
