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Posts tagged ‘HMRC’

Football Apprentices

Not for the first time do HM Revenue and Customs (HMRC) turn their attention to the ‘beautiful game’. Clubs who fail to pay their staff the National Minimum Wage will be prosecuted.  Never mind the minimum wage, there has been a spate of recruitment adverts offering the opportunity for work, without pay!  2013-14 will result in penalties (or at least that’s the threat).  It doesn’t stop there, HMRC says some clubs are not paying backroom staff the legal minimum.  Research has illustrated that posts are being advertised for work at football clubs in areas such as sport science, marketing, supervisors etc. HMRC is now taking pre-emptive action to safeguard workers by contacting 44 football clubs, to ensure they are not breaching minimum wage regulations.

Michelle Wyer, Assistant Director of HMRC’s National Minimum Wage team, says: “Paying the National Minimum Wage is not a choice – it’s the law. It can’t be right that as some players are paid millions of pounds, other members of staff are paid below the legal limit.  HMRC enforces the rules, protecting workers from rogue employers and ensuring they get at least the wage to which they are legally entitled. Where an employer ignores these rules, we will take steps to ensure arrears are paid out in full and the employer fined. In the most serious cases, criminal prosecution can follow.”

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Magpies been hoarding

As a sequel to ‘Taxman Cometh’, one Premier Club has been tackled – Newcastle United.

Apparently the Club had set aside an amount to pay but the actual figure yet to be disclosed is predicted to be less than the contingent liability that the Club had calculated and ‘stored’ in previous accounting.

Newcastle United has settled its claim for outstanding tax by the HM Revenue & Customs over the payment of “image rights” to players.

The majority of arrears is understood to relate to the payment of image rights to its players.  It is said, a ‘loop hole’ had been taken advantage of and by classifying these payments as image rights rather than salaries they could be distributed to companies (including offshore). Thus, benefitting from reduced corporation tax (26% rather than higher rate at 50%).

I understand that Chelsea and Newcastle have dealt with HMRC though other premiership clubs are following suit. A HMRC spokesman has quoted that: “The majority of premier league football clubs have now confirmed that they will pay tax arising from image rights payments, and we continue to negotiate with those that are yet to settle.”

Taxman Cometh

The HMRC (after this Week’s clearance of our ‘Harry’) remains intent on targeting and exposing the leading clubs on alleged tax evasion.  This statement derived from inside information from Sporting Intelligence (SI).

I understand that it’s such as ‘perks’ for players that are to come under some scrutiny. By perks, the sorts of things included are ‘partner’s’ benefits, holidays, offshore accounts, expenses, hospitality etc. All finance directors in the Barclays Premier League were recently consulted and the findings from that research have led to this predicted action by the taxman.  The foreign immigration will be focused upon also especially in terms of whether players are totally compliant with N.I contributions.  Why shouldn’t they be exposed to such an investigation – after all we all pay them?

SI quotes: “HMRC has found big discrepancies in at least one club and they now want to make sure these discrepancies are not widespread”.  The Government apparently seeks £8Bn “claw back” and of course the football industry is high-profile enough to make an example that might strike home.  The whole matter falls under a strategy to bring football in line with other industries.

Too much credit

Today seeks to clarify the future with regards to ‘football creditors’ in the Industry.  How often have I been in debates on seemingly ‘straight forward’ definitions as to what’s ‘in’ and ‘out’ of the football creditors list.   The importance often in my acting as adviser to a bidding party that seeks to understand more fully the investment implications of any expression of  a desire to take over a failing club.

e-petition describes the current debate as: “When football clubs go out of business or into administration in the main with large debts it is the football industry that protects itself through this rule. This means that other clubs, players on large contracts, are always guaranteed to receive monies owed to them but the companies servicing clubs with outstanding invoices only receive whatever the creditors agreement allows, normally 1/2p in the pound”.

Of course, depending on whom I’m representing, I might be either for or against the motion to change.  However, in that I seek a ‘level playing field’ in most instances it would appear only fair that the rules governing administration for football become streamlined with those for business as a whole.  Certainly, HMRC agrees and seeks parity for this sector of the economy with the rest of the real world. Since the Enterprise Act, HMRC has lost its status as a preferential creditor and joined the ranks of unsecured ­creditors in an insolvency situation.