Football's tax shame

[Steven]

Britain's Premier League football clubs are awash with money. They pay star players £250,000 a week, and turn over £2.2bn a year. Yet records show they paid only £3m in corporation tax last year

[davieG]

Everyday story of folk in the business world

It seems that the only people paying their fair share of the tax burden are individuals on PAYE (Pay as you earn).

[BunkMoreland]

Don't know about "shame". They appear to have done nothing at all wrong. Also I'm pretty sure the amount of tax driven through the paye system by football clubs dwarfs their corporation tax bills.

[davieG]

Don't know about "shame". They appear to have done nothing at all wrong. Also I'm pretty sure the amount of tax driven through the paye system by football clubs dwarfs their corporation tax bills.

That's a tax paid by the individual players not the clubs though so surely isn't that relevant to what business are "legally" avoiding. If businesses are finding it so easy to avoid paying this tax what is the point in having it?

[BunkMoreland]

That's a tax paid by the individual players not the clubs though so surely isn't that relevant to what business are "legally" avoiding. If businesses are finding it so easy to avoid paying this tax what is the point in having it?

You can see it as bring paid by the player or you can see it as being paid by the club. Doesn't make any difference, because either way without these.clubs the paye take would be significantly lower. One top premier league footballer pays more paye in a week than both of us put together do in a year.

I agree with your 2nd point. Maybe we should just scrap corporation tax altogether. The increase in business would probably offset the loss in tax take which are learning isn't very much anyway.

[FoxyPV]

Is anyone surprised by this?

[Rincewind]

No. You have to feel sorry for footballers though. Scraping a living on £2000 to £250,000 pw

[Bob Weasel Fox]

Is anyone surprised by this?

not at all

[Alexikokopops]

Is anyone surprised by this?

Not really, given that companies pay corporation tax on profits and only five clubs made a profit in 2010/11

[breadandcheese]

Such a non-story. Really poor journalism.

If any company makes a loss, big or small, then they can carry those losses forward and write them off against future profits. This is done to help companies survive if they have a bad year and has underpinned corporation tax for decades. This is not a case of big Premier League companies vs society, this is the way corporation tax works for all and is a level playing field for the smallest company to the biggest.

[Tommy G]

Jesus almost like the amazon and Starbucks debacle.

I expect to see the CEO's off all these companies marched out their offices for not complying with UK tax laws. Arrest the accountants as well.

Unfortunately until HMRC pay competitive rates to accountants then the best people will work against them and find every loophole in the book. Money talks, always has done and always will. People comment on all these stories without having an ounce of underpinning knowledge of the subject which gets my back up

[Guest ttfn]

Jesus almost like the amazon and Starbucks debacle.

I expect to see the CEO's off all these companies marched out their offices for not complying with UK tax laws. Arrest the accountants as well.

Unfortunately until HMRC pay competitive rates to accountants then the best people will work against them and find every loophole in the book. Money talks, always has done and always will. People comment on all these stories without having an ounce of underpinning knowledge of the subject which gets my back up

This isn't really like Amazon/Starbucks at all.

Premier League clubs are running up genuine losses.

Amazon and Starbucks are filtering their enormous operating profits through SPVs in low-rate jurisdictions across Europe.

Premier League clubs neither make the profits nor have the resources to manipulate the system in the same way.

Anyway, from a tax perspective, I'd rather see Premier League clubs paying no corporation tax and paying whopping great sums of NI and paying big salaries with the associated employee taxes which will go back into the economy at a rate of 40-50% rather than 21-24% corporation tax.

On a general point, you're right about HMRC being bound to be forever one step behind. The riches available in tax consultancy are such that the best people will always work for the dark side - you can't imagine HMRC ever being capable of matching the £1-2 million incomes of tax partners at the big 4. Nor should they, to be frank.

[Jon the Hat]

To be fair to Starbucks and google, they trade off brand names and coffee developed outside the UK and no doubt have access to lower funding costs in the US than the UK. Fair that they pay royalties and have interco lending.

[Guest ttfn]

To be fair to Starbucks and google, they trade off brand names and coffee developed outside the UK and no doubt have access to lower funding costs in the US than the UK. Fair that they pay royalties and have interco lending.

But they're trading in the UK, Jon.

I get your point, but they're taking UK consumers' money and sheltering it overseas. If they want to trade (and make enormous operating profits) in the UK they should be prepared to contribute to the economy beyond providing minimum wage jobs.

Clearly they're not doing anything illegal, but it is certainly immoral.

[Tommy G]

This isn't really like Amazon/Starbucks at all.

Premier League clubs are running up genuine losses.

Amazon and Starbucks are filtering their enormous operating profits through SPVs in low-rate jurisdictions across Europe.

Premier League clubs neither make the profits nor have the resources to manipulate the system in the same way.

Anyway, from a tax perspective, I'd rather see Premier League clubs paying no corporation tax and paying whopping great sums of NI and paying big salaries with the associated employee taxes which will go back into the economy at a rate of 40-50% rather than 21-24% corporation tax.

On a general point, you're right about HMRC being bound to be forever one step behind. The riches available in tax consultancy are such that the best people will always work for the dark side - you can't imagine HMRC ever being capable of matching the £1-2 million incomes of tax partners at the big 4. Nor should they, to be frank.

Interesting point, why is it the 'dark side'?

I think it is safe to say footballers were remunerated through the traditional way like 90% of us are 10 years ago, but times are changed and complex tax avoidance (not evasion) are around these days, or were since the recent budget. I think Cameron can throw as much as he wants at trying to reduce avoidance but its simply impossible.

I think it's more spin to make voters see the correlation of throwing money at the problem and that means it will go away. Clever approach by DC as it might see some fence sitters swing their way

[keithweller]

[Jon the Hat]

But they're trading in the UK, Jon.

I get your point, but they're taking UK consumers' money and sheltering it overseas. If they want to trade (and make enormous operating profits) in the UK they should be prepared to contribute to the economy beyond providing minimum wage jobs.

Clearly they're not doing anything illegal, but it is certainly immoral.

They are making profits of the back of an intangible asset they developed elsewhere. The UK is not recognisnig that development cost, so it should recognise some cost of access to that Intellectual property. The concept is important, and should equally see say Jaguar Land Rover make profits from their new overseas production in China. We need to create a tax environment where companies want to develop their IP in the UK to leverage this, not start flinging mud.

[breadandcheese]

They are making profits of the back of an intangible asset they developed elsewhere. The UK is not recognisnig that development cost, so it should recognise some cost of access to that Intellectual property. The concept is important, and should equally see say Jaguar Land Rover make profits from their new overseas production in China. We need to create a tax environment where companies want to develop their IP in the UK to leverage this, not start flinging mud.

I hear what you're saying but I tend to agree with the John Lewis chief exec about level playing field. A British competitor of Starbucks is always at a competive disadvantage as it cannot use the same tax saving techniques. Part of Starbucks intellectual property and brand awareness is developed by having a presence on every high street. In other words, quick expansion and fast growth. It is much easier for Starbucks to invest and expand aggressively when it is only paying a small percentage of corporation tax, as opposed to the British rival who has less retained profit due to it paying considerably more tax to the government.

I hear your argument that the fault is with the tax system, but it is impossible to fix in this case as it goes to the heart of controlled foreign companies tax law, which is very difficult as it is multi-national.

Currently, it is not a fair fight. If there was a British Amazon equivalent, paying British tax rates, they would be blown out the water by Amazon, due to the tax saving that Amazon can employ to then invest in their company and improve it.

[Jon the Hat]

It really isn't impossible to fix, we would simply have to reduce corporation tax to a level where it is not worth companies organsing themselves in this way, or even better where we are a low tax jurisdiction. Whether that is the right answer I dont know not having done the sums.

I am not saying these companies pay enough tax, they probably don't. We are basing this on little information though.