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Football clubs braced for HMRC challenge

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BDO’s latest annual survey of football club finance directors reveals a drop in confidence over the last year among football clubs in relation to their tax affairs, although concerns about major problems arising from HMRC investigations have receded.

The results show some 40% of football clubs are ‘somewhat uncertain’ about complying with their tax obligations in 2018, as compared with 22% in 2017 and 10% in 2016.

Regarding payments to players, 51% of clubs were confident that their tax position was ‘robust and defendable’ in 2018, compared with 73% in 2016.

Despite HMRC’s announcement in 2017 of a specific football compliance programme, only 4% of clubs are concerned that a sizeable challenge from HMRC could create a problem, compared to 18% in 2017 and 14% in 2016.

Dawn Register, tax dispute resolution partner at BDO, commented that while there seemed to be a general acceptance across the industry that HMRC had stepped up its compliance activity, the results indicate a mixed response.

‘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,’ Register said. ‘Furthermore, the majority of respondents are not concerned about the prospect of a visit from HMRC.’

With the CRS and ‘failure to correct’ penalty regime coming into effect in October 2018, Register added that football clubs ‘would have been mindful for some time now that HMRC will be even more interested in any offshore banking arrangements, international player transfers and offshore image rights’.