HMRC recovers £70 million in tax action against footballers and agents

HM Revenue & Customs (HMRC) has recovered almost £70 million in unpaid taxes from footballers, agents and clubs over the past year as part of a rigorous crackdown on tax avoidance in sport.

Since April 2023, this initiative has led to investigations into 20 football clubs, 83 players and 21 agents.

The focus of HMRC’s efforts has been on the abuse of “dual representation contracts” and other tax avoidance strategies common in football. Dual representation contracts allow agents to claim they represent both the player and the club during a transfer, resulting in tax benefits that HMRC are now questioning. The tax authorities have tightened the guidelines and require clubs to provide evidence if they claim that an agent worked for them during a transfer. If no such evidence is provided, the entire agent’s fee may be treated as income to the player, subject to income tax and national insurance.

This crackdown has already involved well-known figures from football, including former England internationals John Barnes and Emile Heskey. Barnes was recently banned as a company director for failing to pay more than £190,000 in taxes, while Heskey faced legal action over an unpaid £1.6 million tax bill linked to a film investment scheme.

HMRC has been particularly vigilant about the “over-aggressive” use of image rights, with players forming limited companies to handle the payments for their image rights, often resulting in lower tax rates. However, the tax authorities regularly investigate cases where it believes that the value of the player’s image rights is exaggerated or unfounded.

Elliott Buss, a partner at UHY Hacker Young, warned that the football industry remains a key target for HMRC, especially when it comes to correctly reporting agent fees and educating young players about their tax responsibilities. He noted that younger players, who often earn significant salaries, may not be aware of their obligation to file tax returns, leaving them vulnerable to fines and investigations.

Over the past five years, HMRC has recovered £384 million in unpaid taxes from the football industry, including £67.5 million in 2023 alone. The crackdown is part of a wider effort to ensure compliance and tackle tax avoidance within the sport , following high-profile tax fraud cases involving international stars such as Lionel Messi and Javier Mascherano in Spain.