In this article we look at issues that are likely to affect sportspeople in their dealings with the UK tax authority, HM Revenue and Customs (HMRC).
Sportspeople, whether already at their peak or heading there come under additional scrutiny by HMRC by virtue of their wealth. High Net Worth Individuals contribute significant amounts of tax to the UK Exchequer and HMRC see this group of people as one to be monitored. In August this year, Sky News ran a story on how HMRC is specifically focusing their investigations on young professional footballers who may not be receiving all the tax advice they need.
There are approximately 6,200 people in the UK who have assets of over £20m. These High Net Worth Individuals (HNWIs) “collectively pay £3 to £4 billion a year in personal income and Capital Gains Tax” according to HMRC. The numbers clearly explain HMRC’s focus on this area and in this article, we discuss their approach to enquiries and investigations. In particular we look at how to respond to HMRC’s queries and information requests, as well as reputational risks and how to mitigate them. The full article is available to subscribers of the Sports Law and Taxation Journal.
The key to protecting your clients is to ensure that they are seen to have taken sufficient and correct advice. Guide your clients as to what their obligations are and as far as possible protect them from HMRC by knowing where the thresholds lie.