HM Revenue & Customs (HMRC) has clawed back nearly £70 million in unpaid taxes from footballers, agents, and clubs over the past year as part of a rigorous crackdown on tax avoidance schemes in the sport.
This initiative has seen investigations launched into 20 football clubs, 83 players, and 21 agents since April 2023.
The focus of HMRC’s efforts has been on the misuse of “dual-representation contracts” and other tax avoidance strategies prevalent in football. Dual-representation contracts allow agents to claim they represent both the player and the club during a transfer, resulting in tax advantages that HMRC now challenges. The tax authority has tightened guidelines, demanding that clubs provide evidence if they claim an agent worked for them during a transfer. Failure to provide such evidence could see the entire agent’s fee treated as income for the player, subject to income tax and national insurance.
This crackdown has already implicated well-known figures in football, including former England internationals John Barnes and Emile Heskey. Barnes was recently banned as a company director for failing to pay over £190,000 in taxes, while Heskey faced legal action over an unpaid £1.6 million tax bill related to a film investment scheme.
HMRC has been particularly vigilant about the “over-aggressive” use of image rights, where players form limited companies to handle payments for their image rights, often resulting in lower tax rates. However, the tax authority frequently investigates cases where it believes the value of the player’s image rights is inflated or unfounded.
Elliott Buss, a partner at UHY Hacker Young, warned that the football industry remains a prime target for HMRC, particularly when it comes to correctly reporting agent fees and educating young players about their tax responsibilities. He noted that younger players, often earning substantial salaries, may be unaware of their obligation to file tax returns, making them vulnerable to fines and investigations.
Over the past five years, HMRC has recovered £384 million in unpaid taxes from the football industry, with £67.5 million recouped in 2023 alone. The crackdown is part of a broader effort to ensure compliance and deter tax evasion within the sport, following high-profile cases of tax fraud involving international stars such as Lionel Messi and Javier Mascherano in Spain.