HMRC have issued 'Help with football agents' fees and dual representation contracts'. These are guidelines on dealing with fees charged by football agents when a player transfers from one club to another or when a playing contract is negotiated with their current club.
The new guidelines outline HMRC's views on dual representation contracts:
- To help all parties understand HMRC's view on matters seen as increasing or lowering Compliance risk.
- Provide advice on audit trails, evidence and documents that should be retained by the parties.
- Explain HMRC's view of the latest Football Association (FA) Football Agent Regulations published on 1 January 2024.
- Set out any employment reporting obligations.
A dual representation contract is when the agent represents both a player and a club during contract negotiations. HMRC have found there is often insufficient commercial evidence provided to justify the split of the agent's fee between the two interests and it does not accept a 50/50 split as the default position.
Agents often suggest they have provided a service to both parties which justifies apportioning the fee. HMRC's view is that where a representation agreement exists between a player and an agent, the agent primarily represents the player. Whilst this may be valuable to a club, it is not an automatic indicator of the services being provided to that club.
HMRC acknowledge there can be genuine dual representation. In those circumstances they expect original documentation and evidence to be retained by all parties to support such a claim which they anticipate will be gathered before any services were provided by the agent.
The only exception relates to the player's agreement to enter into an employment contract with a club where the agent will have provided services to the player or club before that agreement.
On the other hand, if a dual representation document has the same date as a player's employment contract, HMRC view this as a situation where the values attributed to the player and club are unlikely to reflect the commercial reality.
HMRC is known to have stepped up its Enquiry activity in the area of football clubs in recent years and these guidelines are doubtless a reflection of that.
Useful guides on this topic
The Football Governance Bill
The government has published draft legislation which will establish the Independent Football Regulator; make provision for the licensing of football clubs; make provision about the the distribution of revenue received by organisers of football competitions; and for connected purposes.
HMRC step up investigations of football industry
HMRC have stepped up their investigations into the tax affairs of the football industry, tripling investigations of individual professional footballers and more than doubling its tax takings from investigations in 2019/2020.
External sources
Help with football agents' fees and dual representation contracts
