Clubs face heavy tax burden pending tribunal ruling

The prospect of football clubs losing in excess of a million pounds could come about if a case on agent payments goes against English Newcastle United.
 
A tribunal’s decision is due in the next few weeks to determine whether clubs can claim back value added tax (VAT) from payments to agents.
 
HM Revenue & Customs are trying to deny clubs the right to claim back VAT by arguing that, as agents’ services are supplied to the individual player, the club has no right to deduct any VAT it incurs when making a payment to the agent.
 
If the tribunal rules in favour of the government, Premier League clubs face repaying hundreds of thousands of pounds apiece owed in backdated tax over the past three years.
 
Peter Williams, director of taxation at accountants Tenon, who advise several Premiership footballers and clubs, said: "FIFA regulations forbid a player's agent from representing more than one party in a transfer, but they don't prevent the agent from being paid by both the player and the club he joins.
 
"It is these payments made by the clubs to agents that the taxman is targeting, the issue being whether the VAT incurred by football clubs on the payments made to agents can be reclaimed.
 
"If the decision on the Newcastle case goes in favour of HMRC, many clubs will have to have to dig deep to cover the potential back-dated tax liabilities."

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