Cheating is ubiquitous. Three sports — rugby, football and Formula One— are on the rack as coaches, players and drivers are discovered flagrantly flouting the rules. The world's top banks have hidden trillions of dollars of near-valueless securities in offshore tax-havens, deceiving taxpayers, regulators and investors. The consensus is that next year's rise in the top tax rate to 50% will raise hardly any extra revenue, for high earners will successfully cheat on their obligations.
Cheating is so common we don’t even notice.
Want an example? Take this:
HM Revenue & Customs, concerned that sports clubs and players might be using image rights as a means of tax evasion, are investigating all 12 Guinness Premiership rugby clubs. County cricket and rugby league are also under scrutiny and top football clubs could be the next target.
"It is clear that the Revenue sees this area as a potential tax loophole," said one rugby club official, who asked not to be named. "Some clubs face a potentially large bill if the Revenue finds instances of image rights being paid in lieu of salary, thus avoiding PAYE and National Insurance, but there is a feeling that it is using rugby and cricket to establish ground rules before moving on to the biggest football clubs where the potentially big money lies."
"I think there are instances where a player does not have any value to his image rights but still receives a payment," said Chris Caisley, a partner of the law firm Walker Morris and a former chairman of Bradford Bulls. "There are other examples where the image rights of a player are worth more to a club than his contribution on the field. I'd expect the Revenue to target those players whose image rights are not worth anything."
This whole thing is, let’s be candid, a fabrication. It’s normal to assign the benefits arising from your employment, including copyright and patents to your employer. So in this case, the split is artificial anyway.
And it’s more than that. It creates cheats. Clubs who cheat. Players who cheat. Accountants who cheat. And more. All complicit in what is fraud: not criminal fraud necessarily, but a deception to secure financial advantage nonetheless and fraud as a result.
The clubs say:
"What we need in this is clarification," said the Premier Rugby chief executive, Mark McCafferty. "It is about establishing ground rules, such the percentage of salary that can be paid into an image rights company."
The Professional Rugby Players' Association are not perturbed by the investigation. "The only issue we would have is if we felt unfair penalties were being imposed," said the chief executive, Damian Hopley. "Rugby union is enjoying a high profile and young players emerging are finding themselves f?â„¢ted in a way their predecessors were not. All we want from HMRC is clarity."
Let’s translate that: they’re saying “What can we get away with?”
Society cannot be built on this type of fraud. It creates cheats. It creates mistrust. It undermines trust.
And let’s be unambiguous about this: much of this is down to accountants still arguing tax avoidance is acceptable. It is not. It is outright abuse. It is getting round the law.
I look forward to the day I hear the Institute of Chartered Accountants in England and Wales, ACCA, and the Chartered Institute of Taxation say unambiguously “tax avoidance is unacceptable and an abuse of society”.
When will it happen? I don’t know. But I’m willing to work for it. Nothing else will do. And it damns the profession that none have done so.
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What obligation to the community is incurred when someone sells something they have produced? How is this obligation incurred? Where is the debt to society?
I don’t want to look at piccies of sportsmen but someone obviously thinks people do, but why and how should a tax liability arise in the process?
“This whole thing is, let’s be candid, a fabrication. It’s normal to assign the benefits arising from your employment, including copyright and patents to your employer. So in this case, the split is artificial anyway.”
Nonsense. Sportsmen playing in individual sports (tennis, golf etc.) are largely self employed and are free to exploit their own image as they see fit. Sportsmen playing team games are contractually bound to the team for which they appear, but obviously there are image exploitation opportunities for the stars in these sports just as there are for golfers and tennis players and this is reflected in the nature of their contracts.
To compare a Premiership footballer with, for example, a supermarket employees is ridiculous. When did Tesco ever pay transfer fees to buy in their staff from Waitrose?
Alex
I agree re many people
But a lot of people do have the capacity to be self employed, could own property rights made in their employment and do not get paid additionally for them
And a team member is not self employed, as a matter of fact
Try it
It does not work
So you can’t compare with golfers etc
Richard
Are you suggesting that Ronaldo, Tevez, Beckham, etc don’t have images that transcend the clubs they currently play for?
I think there are a few issues here, but the main point is valid. We have become a society obsessed with cheating. I think there are a few reasons for this: one is that the rewards on offer are so significant (for sports clubs) that it is seen to justify the risk of being caught. Without the amateur ethos in place, all that is perceived as being of importance is the result. So batsmen no longer walk in cricket, footballers dive, rugby players fake injuries etc. And clubs like Chelsea increasingly resemble the Harlem Globetrotters: global entertainers with no links to their place.
But the other reason is that the social compact is broken. I think those who work see a bloated welfare state that pays money to people who could work but don’t want to. The profligacy of the Labour government has created a climate of “them” and “us”. So benefits are no longer regarded as a safety net for people to rely on during setbacks in life but a way of life for an entire, largely criminal underclass. I have no doubt that the people who periodically burgle and rob Liverpool and Everton footballers (another one last week) are on benefits. So you cannot blame those same footballers for not wanting to fund the lifestyles of those who rob them.
And so we end up with a society in which everyone loses.
[…] September 28th, 2009 · No Comments The clubs say: […]
Mad, the reason “those who work see a bloated welfare state that pays money to people who could work but don’t want to” is because that is what they are fed day after day in the popular media. They don’t actually witness this themselves. It’s wonderful how the working class has been made to turn on itself instead of the capitalist class which steals their surplus labour. If only the Morning Star had the resources to ensure they could get the message to those who need it.
The fact that a team member is employed by a club does not mean that all of their income derives from their employment. Many sportsmen derive substantial income from outside sponsorship and associated image rights which specifically limit the amount and other terms of exposure that those sportsmen may receive from other sources. Consequently when a player’s image is used to promote a club or any other business, that player becomes entitled to image fees just as they would receive from any other product that they were promoting.
The argument runs that the value to the club derives from the value of the particular player rather than the contract of employment. I suspect that, although I am not aware of your footballing skills, if you were to play for Manchester United on the same contract as Christiano Ronaldo, you would not attract the same value of image rights, hence the value does not derive from your employment but from your respective footballing talents.
Alex
Weasel words
Most employees add a lot more in value to their employer than just what they do in employment
But I have not in my time paid staff separately for being charming, looking good, being downright innovative, going beyond the contract etc, or even inventing things. They got paid for all those things – under PAYE. Rightly so
You’re just exonerating cheating
And that’s all there is to say on this issue.
Sure, others may pay for out of work duties. The club should just pay for what it gets – an employee.
What could be more certain than that, if that’s what the clubs want?
Richard
how the actors/movie stars are taxed in the uk? also under paye system or somehow otherwise?
A complex question
It depends on the relationship
But if a member of a company generally employed
For a one off thyen self employed
If not from the Uk there is tax withholding at source
Richard
how the player transfer fees are taxed? is it possible to deduct as a revenue expense a fee if a club is buying a brasilian and pays the transfer fee of 50 mln euro to an offshore company representing the selling club? or if this transaction is made between two resident uk clubs then how do they usually pay taxes on those profits? as usual 40%?
Maybe, but they don’t get outside cash endorsements and sponsorship from third parties like sportsmen and some celebrities do. The reason the Brazilian Ronaldo was paid so much money by sponsors was not because he was playing for whatever Spanish or Italian club he was playing for at the time but because he played centre forward for Brazil, the #1 international team in the world.
If clubs want to use the players in the same way that Gillette, Nike and Coca-Cola use them to promote their brands and pay them for the right to do so, then there is little difference in the nature of the payments received by the player in each case.
“This whole thing is, let’s be candid, a fabrication. It’s normal to assign the benefits arising from your employment, including copyright and patents to your employer. So in this case, the split is artificial anyway.”
Not so. For scientific researchers and other developers that may be so, but for a good example, many musicians who play in professional bands are employed by the band through an employment company, but copyright to any songs they right is not assigned to the employer.