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Despite some high-profile run-ins between elite football players and the taxman, while football club finance directors remain concerned about tax compliance risks, few are expecting difficulties in defending any actions HMRC may take, according to analysis by BDO
The firm’s annual football directors survey shows that 40% of football clubs are somewhat uncertain about complying with tax obligations given the pace of change of HMRC enquiries – compared to 22% in 2017 and 10% in 2016.
Since 2016, there has also been a drop in confidence among football clubs regarding their tax affairs, with 51% in 2018 saying that their position is robust and defendable, compared to 73% in 2016.
Despite this and HMRC’s announcement in 2017 that it had initiated a specific football compliance programme, this year only 4% of clubs are somewhat concerned that a sizeable challenge could create a problem, compared to 18% in 2017 and 14% in 2016. Just 19% of clubs say they are concerned about HMRC’s plan to visit clubs over a three-year period.
Dawn Register, partner, tax dispute resolution at BDO, pointed out that over the last few years, HMRC has stepped up its compliance activity and has been more vigilant in its targeting of complex salary structures.
‘The results of the survey show a mixed response to this. While there has been a rise in uncertainty amongst clubs about the liabilities they could face if they don’t comply with tax obligations, perhaps due to the number of club investigations that do not appear to have developed further, there has been a fall of 16% in the last year of those that believe a significant challenge will create an issue for the club. Furthermore, the majority of respondents are not concerned about the prospect of a visit from HMRC,’ she said.
However, BDO warns clubs against complacency over tax affairs, highlighting that the common reporting standard (CRS) is now in operation, while the failure to correct penalty regime comes into effect from 1 October, and suggests these moves will heighten interest in any offshore banking arrangements, international player transfers and offshore image rights.
Register said: ‘The data HMRC will receive in respect of offshore affairs could inform enquiries into football finances given the large number of foreign nationals playing in the Premier League. With this in mind, it is important that football clubs continue to ensure their internal compliance and tax policy is robust.’
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