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Help with football agents' fees and dual representation contracts

Published 13 May 2024

Purpose and scope of the guidelines

HMRC recognises that dual representation contracts can be complex. The purpose of these guidelines is to set out our recommended approach to help customers pay the correct amount of tax.

These guidelines are for football agents, also known as intermediaries, and football clubs. They deal with football agents’ fees that are charged when a football player transfers from one club to another, or a playing contract is negotiated with their current club.

They may also be useful to:

• football players
• coaching staff
• professional bodies and advisers that represent and advise clients

These guidelines outline HMRC’s views on dual representation contracts by:

• helping clubs, players, coaching staff and agents understand approaches HMRC see as increasing or lowering compliance risk
• providing advice on the audit trails, evidence and documents that should be kept to support any tax position
• explaining HMRC’s view of the latest Football Association (FA) Football Agent Regulations which were published on 1 January 2024
• setting out any employment reporting obligations

These guidelines focus on the Employer Duties and VAT aspects of football agents’ fees and dual contract representation. They do not change our view of compliance risks in other taxes. 

For the remainder of this document any references to:

• ‘players’ also includes coaching staff
• ‘agents’ means football agents
• ‘club’ means the buying club, unless specifically stated otherwise
• ‘contract negotiations’ includes player transfers from one club to another or when a playing contract is negotiated with a player’s existing club

How to use these guidelines

You should read these guidelines alongside HMRC’s published guidance on:

• EIM01150 — Football clubs: payments to intermediaries
• EIM01151 — Football clubs: payments to intermediaries: indicators of risk
• EIM01152 — Football clubs: payments to intermediaries: retention of records

They are not designed to be used in isolation and you should apply these guidelines to help make informed decisions, based on individual circumstances.

Following these guidelines will help to reduce your risk of making errors, therefore reducing the risk of any penalty charges.

Background

Within professional football it’s common for football players to use the services of an agent. The services provided by the agent typically include the negotiation of an employment contract with a new football club or renegotiation of an employment contract with an existing club. This means football clubs are usually required to engage with agents if they wish to sign a particular player or renegotiate a contract with an existing player.

In contract negotiations, agents typically act on behalf of the players they represent, as their role is usually to negotiate the best possible contract and terms for the player.

Though the bulk of the agent’s services will generally be on behalf of the player, it may be possible for an agent to represent both a player (player services) and a club (club services) during contract negotiations. This is often referred to as ‘dual representation’.

In such cases, it will be necessary to allocate the agent’s fee between player and club services. This will reflect the extent to which the agent represented the player and the club, and how much of that payment applies to the services provided by the agent to each of them.

Normally, the club pays the agent directly for both the player services and any club services. The amount paid by the club to the agent on behalf of the player represents a taxable amount for the player.

HMRC often finds that not enough evidence of commercial justification has been provided to prove that any split in the agent fee reflects the actual facts of the case. In these instances we may need to have a more detailed review of arrangements to make sure that they accurately reflect the split in the agents fee.

HMRC’s view on dual representation contracts

Since July 2009, the Football Association (FA) Regulations have allowed dual representation by agents. This means an agent is allowed to represent both the player and the club during the same contract negotiations, provided that the representation arrangement is agreed to by all parties.

Whilst we recognise the concept of dual representation, the split of payment value of the agent fee between player services and the club services must represent the commercial reality of the services provided. HMRC does not accept a 50/50 split in agents’ fees as the default position — read EIM01150 — Football clubs: payments to intermediaries.

Historically, football clubs, players and agents have provided us with interpretations of the commercial reality behind the roles and values of services supplied by agents to players and clubs. This is often with limited evidence to support those interpretations and tax positions.

In HMRC’s view, the football agent, who generally has an existing relationship with the player, is working in that player’s interest to place them with (or keep them at) their preferred club, and secure the player the best employment terms. In these cases, HMRC’s view is that the majority of the value of the services are being provided to the player.

A view often provided to us by agents and clubs is that by negotiating the contract between the player and club, the agent has provided a valuable service to both parties which justifies apportionment of the fee. HMRC’s view is that when a representation agreement exists between the player and the football agent, the agent primarily represents the player and acts in the player’s interest. The agent providing services to the player may be of value to the club, but it is not an automatic indicator of the agent providing services to the club.

We acknowledge that in addition to player services, other services may be supplied to the club by the agent. These services may take a number of forms, and clubs should keep evidence to support any amount attributed to club services. See EIM01152 — Football clubs: payments to intermediaries: retention of records and ‘Documents, evidence and record keeping’ for further information.

It is essential that any split in an agent fee must be based on the commercial reality of the contract negotiations. This is because the allocation of the agent fee between player and club services can have a significant impact on the liability to income tax, National Insurance contributions, and VAT liability and entitlement to reclaim VAT.

Consequently, fees for services which are wholly allocated to the club, or which are split in such a manner that the player portion is less than stated in the player-agent agreement, significantly increases the potential for an HMRC Compliance Check. EIM01151 — Football clubs: payments to intermediaries: indicators of risk provides further information.

The following tables illustrate the tax impact of an agent’s fee paid directly by a club to an agent, and how this differs if it is declared as club or player services.

The example assumes the agent and club are VAT registered and any club payment on behalf of the player is declared on a P11D and Class 1A National Insurance contributions are due.

Agent acting for player	Tax impact
Agent’s fee	£1 million
Amount paid to agent plus VAT	£1.2 million
Income Tax on player £1.2 million at 45%	£540,000
Employers Class 1A National Insurance contribution £1.2 million at 13.8%	£165,600
Club cannot reclaim VAT	£200,000
Total tax	£905,600

Agent acting for club	Tax impact
Agent’s fee	£1 million
Amount paid to agent plus VAT	£1.2 million
Income Tax on player	£0
Employers Class 1A National Insurance contribution	£0
Club can reclaim VAT	£200,000
Total tax	£0

Documents, evidence and record keeping

In certain circumstances, HMRC accepts there may be genuine dual representation. We expect parties involved in a dual representation arrangement to retain a comprehensive audit trail and documentation to demonstrate the true contractual and commercial nature of their relationships.

HMRC expects original documentation and evidence to be retained to support any claims of dual representation contracts and values of player and club services, such as:

• the player-agent representation agreement
• permission given by the club holding the player’s registration to the potential buying club to approach the player and their agent, when the potential buying club wishes to recruit that player
• the potential buying club’s initial approach to the player and the player’s agent, including any terms offered to the player and agent
• the club’s request for:
  • the agent to provide the club with services
  • the specific services the club requires the agent to provide to the club
  • the amount the club would be content to pay to the agent in return for those services
• the agent’s agreement to enter into a dual representation contract, including the types of services to be provided, the initial terms on which any such agreement was negotiated, and the final terms agreed —  this information should also make clear the valuation that the agent itself placed on its services to the player and club respectively
• the player’s agreement to enter into a dual representation contract
• the dual representation contract between agent, player and club
• the player’s agreement to enter into an employment contract with the club, including initial terms on which any such agreement was negotiated, as well as the final terms agreed

EIM01152 — Football clubs: payments to intermediaries: retention of records should also be referenced. 

HMRC would expect this evidence to be obtained before the agent provided their services to the respective parties. The player’s agreement to enter into an employment contract with the club is the only exception to this, as the agent will have provided its services to the player or club prior to that agreement occurring.

Sometimes we see dual representation documents that are dated on the same date as the player’s employment contract is entered into. HMRC view this as an indicator that dual representation or any values attributed to player and club services may not reflect the commercial reality.

Evidence should also be retained by the club and the agent to demonstrate that the agreed club services by the agent were actually provided by the agent. The evidence should show the services provided by the agent are consistent with what was originally agreed.

Evidence can include:

• emails
• contracts
• letters
• faxes
• memos
• meeting notes
• notes of telephone calls
• text messages (including messaging apps)

It is important that clubs retain all the evidence stated to support any tax position they take, to clarify the club’s view on any split of agent fee.

We’d expect the agent to separately invoice the player and the club. The invoices should include a detailed description of the services provided to each.

The types of services that we would accept as being club services can vary, and each case has to be considered on its specific facts and the evidence provided.

HMRC would expect dual representation contracts to be part of a club’s or agent’s internal tax assurance processes. We would also expect all parties to have confirmed with each other that they have given the same values to any split of player and club services when making returns to their respective tax authorities.

The amounts of outputs and output tax on the agent’s VAT return which relate to club services should match the amount the club has reclaimed on their VAT return, subject to the normal VAT rules.

Retention of Records

Clubs, players and agents must keep their records in line with the following HMRC guidance:

• CH14700 — Record Keeping: How long must records be retained for: PAYE and Construction Industry Scheme
• PAYE and payroll for employers — keeping records
• CH15000 — Record Keeping: How long must records be retained for: VAT
• Self-Assessment — Keeping your pay and tax records

As with any other business, we expect clubs, agents and players operating within the football industry to exercise reasonable care when entering into business relations or contracts with other companies and individuals. 

We would also expect them to fully co-operate to help identify any issues regarding the commercial reality of any transactions.

FA Football Agent Regulations — 1 January 2024

The FA Football Agent Regulations came into force on 1 January 2024. We expect all parties will follow these regulations.

These regulations do not impose any restrictions on agents representing more than one party during a transfer.

Neither is there any restriction within these regulations, on the amount a club may pay in respect of club services. HMRC do not accept a default split of 50/50 between club and player services. Instead, we expect evidence and commercial justification for payments made.

It should not be assumed that compliance with these regulations removes the need to prove to HMRC the reasoning and commercial reality behind how an agent’s services have been split. Clubs should be able to provide the original documentation to evidence the value of an agent’s services provided to them.

Before entering into a representation agreement, the agent must inform all the parties of ‘the full particulars of the proposed arrangements’, including the proposed fee to be paid by all parties to the agent.

Shadow agents, players on loan, family members and reporting obligations

Shadow agents

We expect clubs to be certain of the services they are paying specific agents for and to be able to evidence this. Cases where payments are made to agents, who then immediately disperse the payment to one or more other agents, would increase the risk of HMRC compliance checks.

Where multiple agents are involved in a transfer or contract negotiation, the original documents should reflect the commercial reality of the situation, and not be prepared merely to satisfy industry regulations.

It is also important that any fees related to contract negotiations are described as such and not categorised as something else, such as scouting fees. We will critically examine such charges and services provided by football agents.

Players on loan

HMRC has identified that when a player is on loan, there can be confusion regarding which club (the parent club or the loanee club) is responsible for any employment reporting obligations, if the player’s agent’s fees are paid directly by a club.

The ultimate responsibility falls on the parent club to report this through normal payroll procedures.

To mitigate compliance risk, dialogue between both clubs is essential, to make sure that any taxable payments are provided to HMRC within reporting deadlines. 

Family members acting as intermediaries

HMRC are aware that football clubs may make payments to players’ family members, who state they are acting as intermediaries in player contract negotiations. These payments may be made directly to the family member or indirectly, for example, an entity controlled by the family member, or individuals connected to that family member.

If these payments are for services provided during the contract negotiations, then you should follow HMRC’s approach on dual representation as set out in these guidelines.

However, depending on the specific facts of each case, a payment to a family member may be a payment to induce the player to sign for a specific club. In this case, any payment to the family member would be taxable as employment income of the player.

HMRC may open a compliance check when they see payments made to a family member of a player to make sure that this represents a payment for services provided during contract negotiations.

If you have taken the position that a payment is for intermediary services provided during contract negotiations, you should keep detailed evidence which support the services that have been provided. There is further detail on this is in ‘Documents, evidence and record keeping’ and EIM01152 — Football clubs: payments to intermediaries: retention of records

Employment reporting obligations

If a player pays an agent’s fee directly (either personally or by a deduction from their net pay) and the club reimburses the player through an additional payment, this should be processed through the payroll (using Real Time Information) as payment of earnings and PAYE, and Class 1 National Insurance contributions paid.  

If a club pays the agent directly for the player services, the reporting method and whether Class 1 or Class 1A National Insurance contributions need to be paid will depend on the specific circumstances. 

Usually when an employer meets an employee’s liability this should be reported on a P11D or through the payroll if you payroll your benefits in kind and Class 1 National Insurance contributions are due through Real Time Information (RTI). However, this will depend on the specific facts of your case, and you should read the guidance to help you decide.

More information can be found at: 

• EIM00580 — pecuniary liability principle 
• EIM00590 — pecuniary liability principle: operation of PAYE manual 
• NIM02270 — Class 1 National Insurance contributions: Earnings of employees and office holders: Payment of bills manual 
• NIM13180 — Class 1A National Insurance contributions: liability for Class 1A NICs: establishing the contractual arrangements manual

Next steps

What you need to do — correcting an error

Clubs and agents should use these guidelines alongside existing HMRC guidance to help ensure they are compliant with our view of the law and are able to report the correct split in agent fees for dual representation contracts.

It is anticipated that customers will use these guidelines to help them understand HMRC’s view on the split of agent’s fees between player and club services. This will reduce compliance risk and increase the likelihood of arriving at the correct tax position.

Clubs are asked to take relevant steps to correct any errors found following the use of these Guidelines for Compliance. This includes correcting errors in the current and past years. There are certain steps you need to take depending on the error.

Where customers fail to meet their obligations, they may be subject to penalties, interest or a combination of both.

If you think you may have failed to meet your obligations, read the HMRC compliance factsheets on penalties to find out about:

• penalties HMRC could use
• when these penalties may apply

P11D errors

The P11D process can be used to deal with errors identified before 6 July following the end of the tax year in which the player’s fees were paid.

If any errors are identified after 6 July following the end of the tax year in which the player’s fees were paid then the deadline for submitting a P11D will have passed. The following would need to be done to rectify the error:

• if a P11D has been submitted, then an amended P11D should be filed with HMRC — you will also need to amend your P11D(b) to report any additional Class 1A National Insurance contributions — you must make any amendments online at ‘Expenses and benefits for employers: Correct an Error’

• if a P11D was not submitted for the player then you should submit one as soon as possible — in addition, if you’ve not submitted a P11D(b), you should submit a P11D(b) at the same time — if you have already submitted a P11D(b) then you should amend this to report any additional Class 1A National Insurance contributions

You may wish to contact your Customer Compliance Manager (CCM) before taking any actions, if you have one.

If you need further information you can find details on how to contact HMRC in the ‘Further Questions’ section.

PAYE and National Insurance contributions errors

If you identify an error in your RTI you sent to HMRC you can correct this by either:

• amending your RTI records — more information on how to do this is included in ‘Fix problems with running payroll’
• contacting your Customer Compliance Manager (CCM) if you have one
• referring to the information in the ‘further questions’ section for details on how to contact HMRC

VAT errors

If you read these guidelines and realise that you should correct an existing VAT return follow the error correction notice steps outlined in VAT Notice 700/45.

Voluntary disclosure

You may also make a voluntary disclosure to HMRC, explaining the errors and calculating the Income Tax, National Insurance contributions and VAT due. If you are making a voluntary disclosure after reading these guidelines, include the Guidelines for Compliance reference number (GfC6) as part of your disclosure. This will enable HMRC to evaluate the value of its education and support.

Further questions

If you have any further questions after reading these Guidelines for Compliance you can email ccgguidelinesforcompliance@hmrc.gov.uk.

Make sure you include the Guidelines for Compliance reference number (GfC6) in the subject line, and if you have a Customer Compliance Manager (CCM) then copy them into the email.

Sending information by email carries certain risks and HMRC will assume that by sending information by email you understand and accept these risks.

Give feedback on these guidelines

We’ve created a survey to help measure your experience of this Guidelines for Compliance product.

We’ll use the feedback from this survey to:

• measure customers’ experience of using these guidelines
• understand where we make improvements to these guidelines
• improve future Guidelines for Compliance products

You can only use this survey to give anonymous feedback about these guidelines. Do not provide any personal data that might identify you, your clients, or any specific case or enquiry with HMRC. The survey is not a route to contact HMRC for specific enquires. The replies will not be seen by anyone responsible for dealing with your tax affairs.  This survey has been created in accordance with the HMRC Privacy Notice.

Complete the survey to provide feedback on these guidelines.

Guidance

The main sources of available guidance include:

• EIM01150 — Football clubs: payments to intermediaries
• EIM01151 — Football clubs: payments to intermediaries: indicators of risk
• EIM01152 — Football clubs: payments to intermediaries: retention of records