SECRET TAX DEAL FOR FOOTBALL MILLIONAIRES

MILLIONAIRE footballers are being allowed to cut their income tax bills under a secret deal with the taxman, the Mail can reveal. Premier League stars have been told by HMRC that a fifth of the money they receive from their clubs can be paid to what are known as ‘image rights’ companies.

This allows the money to be taxed at the corporation tax rate of just 20 per cent. The deal, which has been in place for two years, is thought to be saving the football- ers and the Premier League giants they work for millions of pounds a year. Last night MPs and campaigners branded the deal outrageous and ‘morally wrong’.

They demanded to know why Premier League stars were being granted special treatment by the taxman, and attacked HMRC for keeping the deal secret – despite months of requests for information about it by the Mail.

The revelations are yet another blow to the sport’s reputation, coming days after England manager Sam Allardyce was forced to quit when he was caught trying to cash in on his position.

THE taxman has struck a secret deal with Premier League football clubs which allows them and their superstar players to reduce their tax bills.

Under the agreement, clubs have been told they can pay up to a fifth of their footballers’ total pay packages to ‘ image rights’ companies, rather than as part of their wages.

The deal allows fabulously wealthy footballers to reduce their income tax bills significantly. Instead they pay corporation tax at a lower rate on this part of their income. It also allows the clubs to cut the amount of National Insurance contributions they pay.

The exact amount by which the clubs have reduced their tax bills under the deal is not known, but latest figures suggest six of the top Premier League clubs and their players could be avoiding up to £88million per year under the set-up.

Manchester United, Chelsea, Manchester City, Arsenal, Tottenham and Liverpool football clubs all refused to comment last night. Furious MPs and campaigners said the arrangement – which is completely legal – was ‘utterly wrong’.

Richard Murphy, a chartered accountant and director of Tax Research UK, said it was ‘undoubtedly special treatment for high-earning footballers’.

Margaret Hodge, the Labour MP and former chairman of the Public Accounts Committee, added: ‘These kind of secret deals for the very wealthy are totally unjustifiable. They are the kind of thing that brings the whole tax system into disrepute.’

The revelations will lead to further dismay among fans at the culture of greed at the heart of British football. They come when the finances of the sport are under unprecedented scrutiny.

England football manager Sam Allardyce was this week forced to quit his £3million-a-year job after being exposed trying to cash in on his position. Allardyce complained about the tax system in the UK during the Daily Telegraph’s investigation into corruption in football, claiming HMRC is the ‘most corrupt business’ in Britain.

There have also been allegations of bribery and corruption among other senior football officials.

The new revelations will also lead to fury over HMRC’s apparent willingness to grant ‘sweetheart deals’ for the richest individuals and businesses, while ordinary taxpayers are hounded for every penny they owe.

Under the deal, HMRC have told clubs that up to a fifth of the players’ total package can be treated as ‘image rights’ payments, as long as the club can show that amount of money really was generated making commercial use of the player’s ‘image’.

Such an arrangement means the player can avoid paying income tax – usually at 45 per cent – on the money.

The money will instead go to the company which handles the player’s ‘image rights’ – and will be taxed at just 20 per cent, the current rate of corporation tax.

Daniel Geey, a specialist football lawyer and partner at Sheridans, said the taxman had struck the deal to try to curb the disproportionate amounts paid to players for their image rights between 1997 and 2010. In 1997 a tax tribunal had ruled that clubs could treat ‘image rights’ payments differently to wages.

HMRC are thought to have found some premier league clubs paying their players up to 60 per cent of their total pay as ‘image rights’ to a company.

But instead banning the practice, HMRC agreed it could continue – as long as the ‘image rights’ payments accounted for no more than a fifth of the footballers’ total packages, and no more than 15 per cent of the club’s commercial income.

Official sources insisted HMRC had had little choice but to allow the clubs to make use of image rights payments due to the decision of the 1997 tax tribunal.

They said HMRC was still closely scrutinising the deals to ensure that they were not being abused, with teams of inspectors dedicated solely to ensuring the highest paid were contributing their fair share of tax. But Mr Murphy pointed out that ‘plenty of people’ had their image used by their employer to promote the company they work for without receiving additional pay.

‘Most professionals would consider that an entirely normal part of their job,’ Mr Muphy added. ‘It seems entirely artificial to say that this element of your earnings is somehow separate.’

Mrs Hodge said it was ‘ nonsense’ to suggest that such a practice was for ‘any other reason than to avoid tax’.

The deal – agreed two years ago – was kept secret from the public. For the past five months, the Mail Investigations Unit has made repeated requests for details about it, under the Freedom of Information Act.

But HMRC insisted no information could be given on the confidential agreements it made with the clubs. Mrs Hodge said the fact the deal had been kept

‘Undoubtedly special treatment’ ‘HMRC does not do deals’

secret was another example of HMRC ‘hiding behind the veil of confidentiality’ instead of cracking down on unfairness.

According to figures produced by accountancy giant Deloitte, the big six clubs – Manchester United, Manchester City, Arsenal, Chelsea, Liverpool and Tottenham Hotspur – paid wages of £ 1.08billion for the 2014/15 season.

If 20 per cent of these wages were paid as image rights it would amount to £216million. If the club and the players paid full rates of income tax and national insurance on this, then it could generate £131million.

However, under the deal negotiated by HMRC, it would receive just £43million if the players only paid corporation tax.

An HMRC spokesman said: ‘HMRC does not do deals. Image rights payments are always taxable.’