The taxman is cometh for off-shore banking Premier League players shaming football’s image
Foreign players can avoid tax by taking image-rights payments as untold millions of taxable earnings are squirrelled away through loop hole
Many an overseas star has landed on British shores and struggled with the lingo, their exotic accents and tongue-twisting idioms adding to the fun, dynamism and romance of the multicultural game, especially in the English Premier League.
Amid the eclectic mix of arrivals, a word hitherto unknown to the lay fan was added to the lexicon two decades ago.
“In the UK, money was paid gross. Suddenly the foreign players that were flooding in from around the world in the 1990s were asking for ‘netto’. That is when we [agents] had to work backward from that position. How do we get that [net wage] up there?” according to Jon Smith, football agent and author of The Deal: Inside the World of a Super Agent.
The agents and clubs told their bean counters to come up with clever accounting. “You started to add bonuses, benefits in kind, loyalty clauses, pensions – and image rights,” said Smith.
There became two wage-paying systems for players. Foreign players can avoid tax by taking image-rights payments to opaque accounts and companies in offshore tax havens.
Untold millions of taxable earnings were, and continue to be, squirrelled away through a loop hole in the UK tax law.
Now, thanks to a probe by journalists that revealed current Manchester United boss, José Mourinho, channelled £10 million (HK$98 million) of earnings from his image rights into a complex offshore trust in the decade to 2014, this tax dodge is in the cross hairs of Her Majesty’s Revenue and Customs (HMRC) service, aka the taxman.
Mourinho denies any wrongdoing. He is represented by Gestifute, the Portugal-based agency that manages dozens of other football stars with an army of accountants behind them.
Gestifute has cited an official declaration from the Spanish tax authority saying that Mourinho was “up to date with his tax obligations”.
Maybe, maybe not, which is why the HMRC are also shining a beam of light into his finances, and others.
Of course, you are not breaking the law if you spend hundreds of thousands on clever accountants to exploit legal loopholes to stash away millions.
But you are guilty of moral bankruptcy, and you fuel the backlash against the global, out-of-touch, wealthy elite with noses sunk deep in the trough.
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Lucky for supporters and the rest of the British public, we have a football fan on our side. The Norwich-supporting new chief executive of HMRC, Jon Thompson, said that as a football fan, he wanted to see the rules changed and urged the UK government to act.
He called for an urgent review into footballers shielding their image-rights earnings from tax by transferring them to offshore accounts,
His tax investigators are now looking into 43 players, eight agents and 12 football clubs under inquiry around the issue of image rights.
In some cases, “enormous” sums were going to players in image rights when the public would struggle to recognise who they were, Thompson said.
He told a committee of MPs looking at tax avoidance: “It’s very odd to think that you can essentially ply your trade here and that somehow this is the situation.”
And he described the scandal as “the most significant risk in football”.
Indeed it is. Footballers and their “people” have done well out of globalisation while the ordinary working family – the average loyal fan – has seen wages and living standards fall.
Greedy footballers and other professional sports stars are increasingly seen as part of the problem driving the great disconnect, digging out the soul of the game and creating a wealth divide.
This financial gap has manifested in an us-v-them mentality, and has of late given us shock elections results, the final outcome of which has yet to be determined.
Another UK tax investigation team set up two years ago to look into potential tax irregularities in football, other sports and entertainment, brought in £158 million – enough to pay for much-needed hundreds of nurses, social workers, carers and prison offices.
Hundreds of millions more remain hidden or untouchable, much of it accumulated via the abuse of the crazy image-right law.
We wish Thompson and his taxmen great success. It’s time for off-shore banking players and their leaching hangers-on who shame football’s image, to learn a new word: “Bustio!”