The Guardian highlights the financial plight of many retired footballers this morning, saying:
One accountancy professional with detailed knowledge of many players' financial problems told the Guardian that approximately 500 former players from the first generation to play in the Premier League may have lost up to £1bn because of disastrous investments, based on financial advice, and HMRC demands following their involvement in investment schemes promoted as tax-efficient.
The irony of an accountant pointing this out is something I have to ignore, as I too am an accountant. The suggestion is an average loss of £2 million, which in the overall scheme of footballer pay is still a substantial sum.
How has this happened? It's happened because accountancy and financial services regulators failed to protect those without specialist knowledge from abuse by those who believed not paying tax was the right thing to do, at any cost or risk. I have to presume that is because the regulators shared that view.
I feel genuinely sorry for those that have lost. Their chance of recovery from those who advised them is remote. They were gullible, greedy and maybe foolish. But they were not culpable. The advisers were. And so far they are not being brought to book in any serious way. The professional bodies are not bringing cases against them. They should hang their heads in shame. It is their public interest duty to do so.
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Presumably many have been duped by so called professionals operating from their safe havens in the Crown Dependencies and the myriad of other “off-shore” locations around the world.
By whom and how might these be called before any tribunals? The “chartered” or other professional bodies don’t seem to be effective.
At least those in the medical professions are regularly called to London to answer before their professional tribunals for their failures.
What is the subtle difference?
I am a bit of a cynic so in my opinion a large part of the City has their main task as being separating the punters from their cash, whether that is dodgy investments, excessive fees or simple fraud. Back around 1980 I was at the University of Cape Town and my parents were living in Cape Town. My Mum had inherited some investments from my Granny and put a London stockbroker in charge of running the fairly modest portfolio. Unfortunately it later came to light he was more adept at forging signatures on share transfer certificates than he was at managing investments so quite a bit of money vanished. Almost impossible to prove anything and the only option my Mum seemed to have was a civil case. However it quickly became obvious that would cost tens of thousands if not more and far exceed the value of what had gone missing. So they got away with it.
Footballers are notorious for in most cases knowing nothing much about anything except the game (Eric Cantona being an exception), so if they are suddenly rich beyond the dreams of Croesus then they are easy prey, whether that be wine women and song, an agent or a financial ‘adviser’.
I certainly agree that in any tax case the advisers should be jointly and severally liable should it turn out to be illegal. The ‘nothing to do with us Guv – it was all the client’s idea’ does not wash. I rather suspect that selling crowbars and lock picking kits in the reasonable expectation they would be used for burglaries would get you in trouble quite quickly.
That Guardian article tells us nothing about the accountant making the claim, and how it breaks down into bad investments which would happen anyway in all likelihood and bad tax advice. As you’ve implied in your thoughts, the ‘up to £1bn’ figure should be regarded as the actual number, and all of the problem the players are having iss due to advice predicated on keeping tax out of HMRC’s coffers.
It really is time that the Guardian woke up and smelt the coffee on economics, because right now it is about as economically literate as the Mail, and that’s not a commendation.
I am not sure I wholly follow your criticism
These so-called ‘advisers’ knew exactly what they were doing and made significant income from selling these schemes. At one firm where I worked (briefly) there was an ignoble frenzy by some to get their snouts in the trough.
Their schemes were sold on the basis of questionable legal advice, which was never subject to proper scrutiny, greed beget greed and the vulnerable suffered.
They should be held to account; the regulators know who they are but refuse the act. Shameful.
Agreed
@noel Why didn’t you whistleblow then? Presumably you could have done it after you left?
This was considered good professional practice
What could be whistleblown on?
Richard is quite right, although distasteful to a number of professionals, including me, at the time these schemes were being promoted by firms big and small – some more aggressively than others. Some aspects, such as the way they were ‘sold’, were improper which I was able to bring to the attention of the relevant authorities, hastening my exit.