Premier League Footballers Facing Bankruptcy?
5 February 2015 by Sarah Rankin
Over 100 former Premier League footballers who have participated in tax-planning schemes have received accelerated payment notices from HM Revenue and Customs and are now said to be in financial ‘dire straits’ and some facing possible bankruptcy.
Many of the footballers joined tax-planning schemes based on film production company relief, or schemes that generated artificial trading losses. It is said that about 100 are seeking help from the Professional Footballer’s Association and about 40 of them have requested help from Xpro, a welfare organisation for former players – 20 of whom are at risk of bankruptcy. Research by Xpro suggests that three out of five Premier League Players – who earn an average of £30,000 a week, declare bankruptcy within five years of retirement.
Receiving extremely high salaries along with a culture of seeking to minimize tax bills, and with the lifestyle of investing in depreciating assets (a different league of keeping up with the Jones’!) like £15,000 watches and expensive cars and then the divorce-rate, which can halve their net worth, they also relied on untrustworthy advisers thinking their job was on the pitch.
London Firm, Ingenious Media, the main promoter of film partnership relief schemes are currently at the First-Tier Tax Tribunal in the Royal Courts of Justice defending their case against HMRC stating that the schemes have helped launched many profitable movies, resulting in tax being paid. The case hinges on the question of whether the partnerships of investors can be said to have “carried on a trade”. The case started in November and a decision is due next month.
The Finance Act 2014 introduced the accelerated payments system. The footballers receiving these notices under this power requires them as users of a tax-planning scheme, to pay the disputed tax immediately, if the scheme falls under the Disclosure of Tax Avoidance Scheme (DOTAS) rules, or is similar to one that has already been defeated in court, or has been disallowed under the general anti-abuse rule. Payment must be made within 90 days, with no right of appeal. The only recourse is litigation against the tax assessment at a tribunal or court (more £££). So a person who has received a notice, who cannot pay, for example, because his income has fallen sharply due to retirement, can be made bankrupt.
In a tax avoidance clamp down, HMRC published a list of several hundred tax-planning schemes which it considered invalid, then in September 2014 it began issuing payment notices to the 43,000 current users of the schemes.