Premier League: experts say clubs dodged £250m in tax - what is dual representation?
and live on Freeview channel 276
A new report released from financial experts has estimated that Premier League clubs could well have avoided paying around £250 million in tax over a three-year period.
Tax Policy Associates led the research and have looked into how football agents are often paid to represent both players and clubs in negotiations, most notably transfers. This practice, known as ‘dual representation’ reduces the amount of tax paid on agent payments.
Advertisement
Hide AdAdvertisement
Hide AdA statement from HM Revenue and Customs (HMRC) has said that they are investigating “a number of clubs” and while it is not yet known which clubs are being investigated, the BBC has reported that the clubs thought to have benefited most from this system are Manchester City, Manchester United, Arsenal and Chelsea.
Manchester City have already been in trouble recently after being charged with breaking financial fair play rules around 100 times over a nine-year period between 2009 and 2018. Many Premier League Clubs have reportedly wanted City to be relegated but it is currently not known what their punishment is set to be.
As City potentially prepares to fight two financial battles, here is all you need to know about dual representation and what has been said by HMRC…
What is 'dual representation'?
Dual representation relates to the agent of a player who is involved in the transfer. When footballers move clubs or are in the process of negotiating a new contract, an agent represents the player involved and will hope to secure the best terms for their client. This agent then receives a fee or commission and the whole transaction will then have to be taxed by income tax, National Insurance and VAT.
Advertisement
Hide AdAdvertisement
Hide AdHowever, through “dual representation”, an agent is paid for acting both for the club and the player involved in the deal. In this instance, half of the agent’s fees are then paid for by the club and consequently avoid being taxed.
![City are already caught up in legal trouble](https://www.nationalworld.com/jpim-static/image/2023/03/30/13/GettyImages-1474442068.jpg?crop=3:2,smart&width=640&quality=65)
![City are already caught up in legal trouble](/img/placeholder.png)
If an agent’s fee is paid solely by the player, HMRC can expect around 60% of the total payment in tax. If “dual representation” is used and the fee is split between player and club, the amount of tax HMRC will receive falls to about 30%.
The use of “dual representation” has become relatively standard practice in football and some top flight clubs are said to use it in all of their deals. In fact, FA data published in 2021 revealed that around 68% of Premier League player deals were negotiated through dual representation. The FA has rules against the agent acting for both player and club, but if all parties provide written consent to use the practice then it is technically allowed.
How much tax has been avoided?
Tax Policy Associates have estimated - based on the assumption that player and club split the agent’s fees 50/50 - that by using “dual representation”, more than £250 million has been saved over three years - £81 million in 2019; £91 million in 2020 and £81 million in 2021.
What has HMRC said?
Advertisement
Hide AdAdvertisement
Hide AdNew guidance was sent out by HMRC in April 2021 regarding the use of dual representation which said that clubs would need to keep evidence that agents are legitimately working for both sides of the contract. Fees should not also be split 50/50 but should instead reflect the extent to which the agent represented either the club or player.
It is believed that HMRC could issue penalties and demands for repayments if it finds that an agent has not been working proficiently for both player and club but they have also noted that they do not find it to be a form of tax avoidance.
A spokesperson for HMRC speaking to the BBC said: “Dual representation cannot be assumed to be a tax avoidance scheme; its use can be tax compliant. However, we carefully scrutinise arrangements between clubs and employees and we work closely with the football industry to educate and deal with tax risk head on.
“Our actions and the money brought in from this industry speak for themselves. Since 2015, from across all tax areas in the football industry, we’ve recovered £573 million that would otherwise have gone unpaid.”
What has the Premier League said?
Advertisement
Hide AdAdvertisement
Hide AdWhile specific clubs have not commented on the findings, a Premier League spokesperson said: “We believe that the overall figure suggested here is based on assumptions that do not recognise the individual circumstances of each transaction.
“During the 2019/20 season, Premier League football contributed £7.6 billion to the UK economy. In the same season, the Premier League and its clubs generated a total tax contribution of £3.6 billion to the UK Exchequer, £1.4 billion of which was accounted for by Premier League players.”
Comment Guidelines
National World encourages reader discussion on our stories. User feedback, insights and back-and-forth exchanges add a rich layer of context to reporting. Please review our Community Guidelines before commenting.