Generally speaking, there are a lot of similarities. So when you’re structuring offshore income activities through endorsement and sponsorship, these things called image rights, then you may have a corporate structure that’s involved to manage that particular process and it does have some tax breaks to it as well. And that’s pretty portable, that can [...]
Generally speaking, there are a lot of similarities. So when you’re structuring offshore income activities through endorsement and sponsorship, these things called image rights, then you may have a corporate structure that’s involved to manage that particular process and it does have some tax breaks to it as well. And that’s pretty portable, that can [...]
I think to be a totally successful sports person you need minimal distractions in your life apart from the thing you’re supposed to be doing and you’re quite good at.
So if you’re a footballer, tennis player, you need to be out there training, practicing, looking after your diet, eat well, drink well, hydration, all that sort of stuff. So to have this trusted advisor that can suddenly come along and say, “Leave the other bits just to me and I’ll take care of that engaging with yourself and your parents, your agents, or whoever it might be, just leave that stuff to us because that’s what we’re good at.
And we’ll leave you to do the stuff that you’re good at.” So it’s a partnership.
It’s an ongoing issue to keep sort of grappling with and keep up-to-date with. It’s … I mean tax is never straightforward usually, there’s various shades of grey all the time in a lot of things that we deal with.
And as I said earlier, tax changes from one year to the next. So it’s just keeping abreast of what the current issues are, but not losing sight of what’s gone on in the past.
Can I answer that by quoting an example that I’ve dealt with some of the motor GP motorcycle riders in the past.
And because they’re usually UK residents, they travel around all over the globe, but when they come to Donnington and more latterly, Silverstone, then if the tax man hasn't had receipt of tax returns and hasn’t had their taxation paid, then they’ll send the bailiff along to the track to try and take away some of the boys toys that the riders that might have.
And all of a sudden if you’re being distracted by some bailiff knocking on your trailer door saying,
“I’d like to take your laptop and your boys’ toys to pay at auction for the tax you haven’t personally settled”, then I’d suggest that perhaps the rider’s mind’s not quite going to be on what he should be doing.
And I’ve had the conversation with some of the team managers and it was a case of, “Yeah, we need to get this sorted so that he’s focused 110% on qualifying initially and then the race itself.”
So going wrong, I mean it can seriously impact if your mind’s not focused 110% on the race and qualifying then yeah, you’ve got some issues.
UK tax laws for sports stars who generally don’t focus on tax
Peter Fairchild, Partner - Private Client Tax Services, Smith & Williamson on UK tax laws for sports stars.
UK tax laws for sports stars can pose an issue for sportspeople who generally don’t focus on tax issues. Furthermore many receive the wrong kind of advice as to how the UK tax laws for sports stars apply.
According to Peter Fairchild, a Partner specialising in Private Client Tax Services at Smith & Williamson, it is often not until the first investigation from HMRC that sportspeople realise they have a problem.
I think at the young age, I’ve certainly got some young footballers who perhaps think that they can take on the world, shut the lights out, all that sort of stuff, which perhaps we’re all guilty of at, you know, in our late teens, early twenties.
However, once perhaps they’ve had one investigation from HM Revenue & Customs and it hasn’t quite gone as they thought they would because of the arrangements they’ve got into without seeking proper advice upfront, then it’s a bit of a reality check and it’s, “Okay, I do need to talk to you.
I do recognise the value that you bring to the relationship we have.
And I’ve learnt my lesson, I won’t do it again.”
For further information on the impact of UK tax laws for sports stars, watch more of Peter's videos.
The key it to get proper advice as to which arrangements are appropriate and not to wait until potential difficulties with HM Revenue & Customs arise.
There have been plenty of examples, in football in particular, where footballers as well as clubs have entered into tax arrangements that have been found to be inappropriate by HM Revenue & Customs.
In the case of famous footballers, this can result in unnecessary embarrassment and expense later in their careers when an investigation has an unfavorable outcome.
