Football in the financial dock, a fraud against taxpayers?

There has been some very bad news for football over the last week. The fact that Glasgow Rangers have been put into administration, by the club’s owner, is an indication of the sorry state the Beautiful Game is in both financially and in terms of management.

This latest occurrence has come about as a result of Her Majesties Revenue and Customs (HMRC) demanding up to £50 million in unpaid taxes and National Insurance contributions due on money paid into Employee Benefit Trusts (EBTs).

EBTs where used as a way of avoiding tax liabilities on money paid to players as image rights. The cash was paid into the trusts and then the trust gave the player an interest free loan with the understanding that the money need never be paid back.

I’m neither an accountant nor a lawyer but even to me this looks, on the face of it, to be nothing more than a scam which defrauds HMRC and thereby the whole tax paying population.

Rangers are apparently not the only Football Club to use this fraudulent device, it is understood that up to eight clubs in the English Premier League have taken advantage of EBTs. Indeed Chelsea show, in their accounts published last week, a sum of £6.5 million paid to HMRC “in relation to an industry-wide investigation into the taxation of payments under image rights.”

Arsenal have used EBTs in the past to pay some players but are understood to have “resolved any issues with HMRC”.

This whole sorry scandal should come as a warning to those clubs, and fans, who want to sign and retain top class players on unrealistically high earnings. It is the weak management by the owners and administrators, urged on by the equally unrealistic demands of the fans, which allows footballers and their agents to dictate just how and how much they are to be paid.

This is not a “no victim” crime. Each and every tax and national insurance payer is affected. The treasury has been denied the money that could be used to pay for some of the equipment needed by our armed forces, or could pay towards a better standard of care for the elderly.

One loophole, EBTs, has been closed but it will not be long before the greed of players, the demands of fans and the weakness of owners leads to the invention of some other scam.

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