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Agents Fees in Football and the Taxman

05 February 2010

HMRC have always considered that there is scope for abuse with regards to agent’s fees.  In particular, that football clubs are incorrectly recording that they have used the agent exclusively and that he did not act for the player during the transfer negotiations, or when the player re-negotiates his contract with the club. Moreover, that in some cases the amount paid to an agent was in reality disguised employment income, such as a signing on fee that ultimately finds its way back to the player via the agent.  In recent times there have been some high profile criminal cases, none of which have yet been proven and one of which was rightly brought to an end.

HMRC will continue to investigate payments to agents and, where they think the amount is excessive, they will look to track the money and see where it ultimately ends up.  If some of it finds its way to the player’s bank account they will quite rightly be suspicious but this does not necessarily mean that the club have sought to cheat the public purse by disguising the payment of employment income.

In most cases, where some of the money eventually goes to the player, the player will be a non-domiciled individual and it may be that the agent has an agreement whereby some of the fees he earns will be paid to the player. There can be a multitude of reasons for this.  For instance, in return for a share of the fee, the player will help the agent penetrate the football market in that player’s country, possibly generating more transfers and agents fees in the future.

If you consider that an average agent fee could be in the region of £300,000 to £400,000 and that if the player receives £200,000 of it, then if the club was complicit in evading employment related taxes, the tax and NIC loss would be in the region of £102,000.  Whilst this may sound a lot, most clubs wage bills are likely to be at least £2m a month, with a tax and NIC take of £1m. This figure will be considerably greater with a lot of premiership clubs.  So why would a club seek to avoid £100k liability to HMRC and face criminal action just to sign a player for the club?

Whilst HMRC may have justified concerns over some agents’ fees, I think they should have irrefutable corroborating evidence showing the club were complicit in evading taxes, before wasting a lot of taxpayer’s money on criminal investigations with a high profile but little impact to date.

Author: Jeff Millington

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