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Premiership Players Using "tax Avoidance" Loopholes To Save Millions In Tax

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http://www.dailymail.co.uk/news/article-1347677/Top-footballers-like-Wayne-Rooney-dodge-millions-tax-cashing-loophole.html#

Top Premiership footballers like Wayne Rooney and Gareth Barry are avoiding millions of pounds in tax - and it's all legal. They are using complex tax avoidance schemes that allow them to pay as little as two per cent on the earnings.

Manchester United star Rooney has saved almost £600,000 over the past two years by using the tax loophole. Manchester City's Barry took home £135,000 more than if he had paid income tax at 40 per cent. Now the taxman has demanded the clubs pay £100 million on behalf of their players as HM Revenue & Customs (HMRC) investigates how to stop the arrangement.

The Sunday Times has uncovered 55 players who are taxed at just 22 per cent because they get a large proportion of their total earnings from their image rights companies. These include England and Chelsea defender Ashley Cole, former husband of singer Cheryl, Manchester United's Rio Ferdinand, and his team-mate Michael Owen whose company Owen Promotions owns 11 racehorses.

Arsenal's Theo Walcott has TJW (Promotions) while David James, the former England goalkeeper has Toocoo. Scores of top footballers launched their own companies eligible to take image rights payments after Labour Chancellor announced the 50p top rate tax.

The players have two contracts with their clubs. They get a salary as a player and the other is for 'image rights' - earnings from shirts and other merchandising. These royalties are paid into a company which is only liable for 28 per cent corporation tax rather than the 50 per cent income tax.

And players can take out loans from their companies where they only pay two per cent tax on the sum because it is regarded as a benefit in kind. Investigations by the Sunday Times showed the £200,000-a-week Rooney, Barry and Chelsea's Daniel Sturridge took advantage of this tax loophole.

HMRC have confirmed they are looking at players' companies as part of their probe into image rights and tax avoidance. They have demanded the money from the soccer clubs to make up for the shortfall in tax revenues after they overstated the proportion of players' income that was coming from image rights.

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Are they breaking the law?

No, it's typical LTD company stuff.

Corporation tax, dividends, use of directors loans etc. Millions of people doing it.

This is just another set of high earners which the media and the government can demonise and send abroad a'la the bankers.

Why don't we just round up anybody who dares to earn lots of money and ship them out?

Edited by Kyoto

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Are they breaking the law?

If they are using "offshore" image rights payments to only pay 22% then yes.

This works for non-doms, but it doesn't work for UK domiciled workers.

It will save them from NI payments.

Having read further I see that they are taking it as loans. This works in the short term but not in the long term, because that 2% is paid *every* year, not just once. Eventually it should all add up to more than they have saved

tim

Edited by tim123

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Having read further I see that they are taking it as loans. This works in the short term but not in the long term, because that 2% is paid *every* year, not just once. Eventually it should all add up to more than they have saved

Unless the company writes the loans off.

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If they are using "offshore" image rights payments to only pay 22% then yes.

This works for non-doms, but it doesn't work for UK domiciled workers.

It will save them from NI payments.

Having read further I see that they are taking it as loans. This works in the short term but not in the long term, because that 2% is paid *every* year, not just once. Eventually it should all add up to more than they have saved

tim

Very interesting. I know UK taxpayers working abroad who pay their bonuses off shore in this manner and take loans against their credit balances.

Interesting that it doesn't pay long term.

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Do you define 'right' and 'wrong' as to whether it breaks the Law or not?

How far do you go then in paying tax voluntarily?

Are ISA s ok?

Are Pension contributions ok?

Is it ok to leave any cash in your Ltd Co or should you take it all out under PAYE?

The law is surprisingly good at NOT leaving loopholes, and I believe even these Co. loans have to be paid back within a given period not to qualify as income. Or rolled over I guess. Not spent on hookers anyrate.

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Well clearly if we think it is wrong then it is perfectly reasonable for things to be changed. That's called progress. It requires action.

The way the politicians can discern this is if footballers are villified for these actions and if politicians are shouted at for doing nothing.

Sometimes things that are preceived as wrong lead to the law of unintended consequences.

Should one say for example that keeping a dog in a high rise is wrong, or the owned to infirm to exercise it? Probably it is wrong. But should the law be changed? Just where do we draw the line?

Progress sadly does not always mean improvement or indeed fairness.

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Not at all. Unilateralism was a much discredited policy for nuclear disarmament. It simply does not work. You can't expect individuals to act morally because they won't.

However, as I stated in the post above, moral outrage is all part of the process to changing things should we think things need changing.

Moral outrage has failed so far in many things. Stoning adulterers for eaxmple.

Back home moral outrage has failed to stop Asian men grooming young white girls.

Moral outrage has failed to stop corruption in local Govt.

The list is endless.

If 55 footballers want to "cheat" the system so be it.

What about Stamp Duty on property avoidance? I don't hear too many on here complaining about it.

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Manchester United star Rooney has saved almost £600,000 over the past two years by using the tax loophole. Manchester City's Barry took home £135,000 more than if he had paid income tax at 40 per cent. Now the taxman has demanded the clubs pay £100 million on behalf of their players as HM Revenue & Customs (HMRC) investigates how to stop the arrangement.

Well Ladies of the Night come quite expensive these days but a ****** **** could save him even more. :D

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What about IR35 then?

How come I can't set up a Ltd company to take money from my employer, because I only work for one company, and I'm clearly considered to be an "employee" regardless of how I'd like to be viewed?

So Rooney is an independent contractor is he, and plays for Tottenham and Arsenal as well?

Does he feck as like. Sooner they clobber these tossers, like they'd clobber someone on £35K a year for pretty much the same thing, the better IMHO.

B

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Are they breaking the law?

No, but when UK PLC is wringing every penny of tax it can out of us who have got next to nothing, there is nothing immoral about making those fortunate enough to earn an astronomical amount pay their fair share.

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If they are using "offshore" image rights payments to only pay 22% then yes.

This works for non-doms, but it doesn't work for UK domiciled workers.

It will save them from NI payments.

Having read further I see that they are taking it as loans. This works in the short term but not in the long term, because that 2% is paid *every* year, not just once. Eventually it should all add up to more than they have saved

tim

Not a problem, as they are paying the interest to their own company.

Edited by bogbrush

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I can't see how they are going to nail these guys on this. Bottom line, Wayne Rooneys image rights really are worth a fortune - how many shirts are sold because they have his name on the back? That money goes to the club so it's actually fairly reasonable that he argues that he's paid so much for kicking the ball (not that well this year) and so much for hiring out his name for Man Uniteds commercial ventures.

Exactly how is the IR going to prove that's not what's happening?

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A loophole that is immoral and needs to be closed down.

And if you're doing it too, I suggest that all perpetrator's hands are cut off...retrospectively. :D

Nope I'm not up to that, though I have no problem with people minimising their tax bill. :D

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I can't see how they are going to nail these guys on this. Bottom line, Wayne Rooneys image rights really are worth a fortune - how many shirts are sold because they have his name on the back? That money goes to the club so it's actually fairly reasonable that he argues that he's paid so much for kicking the ball (not that well this year) and so much for hiring out his name for Man Uniteds commercial ventures.

Exactly how is the IR going to prove that's not what's happening?

Yes, but wherever the money is earned, the proper amount of tax should be paid on it.

What's to disagree with?

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No difference between this and benefits cheats.

Funny how these "loopholes" never get closed - almost makes me think the rich elite who formed these laws put them there intentionally... :lol:

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I can't see how they are going to nail these guys on this. Bottom line, Wayne Rooneys image rights really are worth a fortune - how many shirts are sold because they have his name on the back? That money goes to the club so it's actually fairly reasonable that he argues that he's paid so much for kicking the ball (not that well this year) and so much for hiring out his name for Man Uniteds commercial ventures.

Exactly how is the IR going to prove that's not what's happening?

They don't have to. They just have to bully a little in the hope that a mutually agreeable settlement is reached - say £30 million. Not a bad return for the cost of a couple of HMRC salaries.

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No difference between this and benefits cheats.

Except that while HPCers queue up to vilify benefits cheats earning a tenner on the side, they form an even longer queue to brown-nose tax-dodging millionaires and justify thier cheating.

The vast majority of lower-class people are forelock-tuggers, it was ever thus.

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