A tax row has kicked off about millions of pounds English Premier League footballers and managers earn as image rights.
Image rights are payments for advertising and endorsements paid to the players and managers for lending their name to promote a product or service.
The money comes from activities such as having names printed on shirts, appearing in games and books, kit endorsements and appearing in TV adverts.
HM Revenue and Customs (HMRC) has revealed almost 200 footballers and managers have companies for collecting these earnings – and that 43 players, eight agents and 12 clubs were subject of tax investigations relating to image rights payments.
HMRC CEO Jon Thompson was speaking to MPs on the Commons Public Accounts Committee. He explained that the money often went to offshore companies without deducting any tax and that a review of financial arrangements was underway.
£158 million undeclared tax
She told the committee that HMRC had recovered around £158 million in unpaid tax from football rights companies.
The companies allow footballers to pay corporation tax on their earnings instead of higher rate tax.
Many are accruing the income as pension funds to withdraw once they have finished playing to pay income tax at a potentially lower rate.
HMRC appears to have an arrangement with Premier League clubs that stars and managers can transfer no more than 20% of pay or 15% of commercial revenue into an image rights company.
An HMRC spokesman said: “We do not comment on the tax affairs of named individuals, but consider all allegations of tax evasion extremely seriously and always investigates allegations of fraud together with any intelligence provided.”
High profile tax allegations
Tax avoidance allegations have been made against Manchester United manager Jose Mourinho and Real Madrid forward Cristiano Ronaldo, a former United player. Both are accused of moving millions of pounds into offshore companies without declaring the money to tax authorities.
Argentine football star Lionel Messi and Brazilian Neymar have been embroiled in tax avoidance allegations. Both were found guilty of failing to pay tax on their earnings and were fined millions of euros each.
Messi was also sentenced to 21 months in jail, but will not serve the sentence under Spanish legal rules.