EIM01150 - Football clubs: payments to intermediaries
Football clubs may use the services of an intermediary (also known as agents) in their negotiations with players. Typically, those services will be either contract renegotiations of current club players or negotiations to sign new players; they may also include negotiations for players to leave and join new clubs. The same agent may represent the player or prospective player in those negotiations (“dual representation”) and exceptionally might also represent the selling club as well. The club will pay the agent for the services the agent provides to the club, and the club may also pay the agent on behalf of the player. Payments which a club makes on behalf of the player are taxable as employment income of the player. For the purposes of this guidance the term payment includes gratuities and gifts and amounts paid regardless of the outcome of the negotiations.
In cases of dual representation, it may be necessary to split the payment made by the club to the agent to reflect the extent to which the agent represented the club and the player and how much of that payment is therefore attributable to the services provided by the agent to each of them. The club should retain documentation to demonstrate the reasoning behind any split it makes. That includes but is not limited to meeting notes, emails, details of time spent and other documentation to substantiate its payments; further detail of the evidence HMRC would expect to be kept is shown at EIM01152. HMRC does not accept a default split (e.g. 50:50). Instead it expects an evidenced and commercial justification for payments made.
Clubs may enter into contractual arrangements with agents and players which contain the terms of their negotiations. The contract may, amongst other things, agree the agent fee to be paid by the club and player. Clubs who rely on such contracts should be able to demonstrate those contracts reflect the substance of the negotiations. Specifically, the work and services provided by the agent to the club. HMRC expect the club to retain an audit trail in that regard. The audit trail may include details of discussions of how the fee and its split were arrived at. Clubs should retain telephone notes, meeting notes, emails and other relevant supporting documentation (see EIM01152).
Where multiple agents are paid in respect of the same player, HMRC expect clubs to retain documentation to sufficiently evidence the work and services provided by each agent. Services include but are not limited to negotiations, payments made for player recruitment, scouting services, consultancy work and introductions. The club should also be able to demonstrate the duties carried out by the agents were commensurate with the payments made. Similarly, where the club is aware that a registered agent has assigned or subcontracted agent duties to a third party, the clubs should retain all evidence relating to this arrangement.
Clubs should not enter into arrangements or tax planning which is contrary to the intentions of Parliament. A club or its employees may become aware its payments to agents were in full or in part ultimately transferred to its player or prospective player, their family or other connected parties. HMRC expect the club and its employees to consider the tax implications of entering into arrangements and to calculate and report the taxation on those payments to HMRC in a timely manner. HMRC expects clubs to employ adequate governance regarding money laundering requirements, specifically concerning its payments to overseas individuals or entities.