Premier League contributes £1bn in tax

Man United take on Arsenal in the Premier LeagueFor the first time, more than £1bn in tax revenues will go to the Treasury from Premier League (PL) clubs this season. That's an increase of more than a third over the previous two seasons, and it's being trumpeted as evidence of football's important contribution to the economy.
The figure comes from accountants Saffery Champness. The firm says that several factors fuel the increase, including a 30% increase in TV revenue that is helping to push wages up, the introduction of the 50% top rate of tax and a rate of 20% VAT on ticket sales.

The PL's spokesman Dan Johnson backed the firm's calculations and said this showed that "The money that goes out in PAYE is bigger than the cheque that the clubs write to the players." And Saffery Champness's Pete Hackleton said: "For all the criticism of ever increasing footballer's salaries, the unsung contribution that the industry is making to the UK economy is substantial."

Let's take another view

But let's hold on just a minute. Because when the world's richest league trumpets the contribution it makes to the economy, it raises a number of questions. Foremost among them is this. If the PL thinks the tax contributions its clubs make are so important to the economy, why are so many of those clubs registered in off-shore tax havens?

Last May, a report by Christian Aid that was backed by Supporters Direct and the Football Supporters Federation found that 14 of the 20 clubs in the PL for the 2009/10 season were registered offshore in secrecy jurisdictions. With turnover alone for that season put at £2.03bn by Deloitte, a detailed breakdown would help to put the tax figure into its true perspective.

Unfortunately is it difficult to get all that information, because the thing about secrecy jurisdictions is that they allow those using them to keep things secret. So while a £1bn contribution should not be sniffed at, it is not possible to se accurately how that stacks up against what football makes.

Broadcasting rights

As with all statistics, you can slice and dice them to make whatever point you wish to. At risk of doing the same, I'd also ask whether, for example, the 30% uplift in wages attributed to the increased broadcasting rights fees can more accurately be seen as a 'contribution from football' or as passing money from the customer through the system to the Treasury.

The same observation can be made of the VAT 'contribution', because VAT is added to the price a consumer pays for a ticket and passed direct to the Treasury. Let's throw some other figures in too, such as the £3.bn of debt attributed to 18 English PL clubs in 2007/08 by UEFA. Or HMRC's estimate of the total unpaid tax bill for all English league clubs at £25m.

The claim about the wage bill and PAYE is also interesting. It's possible to add the 40% tax rate to the 12% National insurance contribution to get 52%, and to factor in the 50% rate paid on salaries over £150,000 a year. But the "cheque the clubs write to players" also includes a number of other elements. One concerns image rights, and the taxable status of those rights are currently the subject of a legal dispute between the football authorities and HMRC.

Incentivised

Tax industry sources I spoke to also made the point that much of what is identified as over-spending in football is incentivised by the way the tax system operates. Let's say, for example, you own a business and are also the owner of a football club.

If your business makes a profit, you can pay tax on that profit, or you can invest the profit into a football club. One course of action makes you a good citizen, the other makes you a hero to the supporters of the club you finance.

The football authorities will no doubt see much of this as ungrateful nit-picking. But if football wants to make a virtue of its contribution to society, it should not be surprised when people ask for the full picture. Or when they how praiseworthy making a virtue of a requirement really is.

Football takes every opportunity to say it is the national sport. With that reputation comes responsibility, and that responsibility includes doing the right thing because it is the right thing to do, and not blurring the lines between tax efficiency and tax evasion. If football wants to be taking seriously, it will make itself more transparent.

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