Football clubs are in a league of their own when it comes to running up tax debts. The trouble for the chancellor seems to be that these "paper debts" are just the tip of the iceberg.

Whilst an estimated 70% of English Premier League clubs are in debt. In terms of tax debt it is Scottish Premier League club Rangers FC who tower above their English counterparts, as the table below reveals.

Business guru Lord Sugar "tackled" the football industry back in 2011 in order to see what could be done to make it commercially viable. He discovered that the (not unsurprising) primary cause of many team's financial woes is the payment of excessive wages to players. 

As those selling "tax strategies" (a.k.a. tax avoidance schemes) will vouch, many top footballers are extremely keen to avoid paying taxes. Clubs too have been very enthusiastic about getting in on the action, especially if this means that they can save tax and NICs on their wage bill. It seems that this all further calls into question the economic benefits of this industry, at least in tax terms.

Rangers has also been having an ongoing battle with HMRC over unpaid taxes and its Employee Benefit Trust (EBT) having lost it's EBT case in the Supreme Court. Its potential tax liabilities are estimated to be in excess of £75 million in relation to the EBT and HMRC is now hoping to pursue the management personally. It seems like stretching anyone's imagination to believe that other clubs have not been engaged in similar tax saving strategies, so the table of tax debt (below) quite possibly represents just the tip of a massive iceberg of lost employee taxes.

Club

Tax debt

Rangers FC

21,000,000*

Portsmouth

17,276,315

Leeds

7,703,272

Ipswich Town

4,540,000

Crystal Palace

2,760,788

Luton Town

2,732,635

* Rangers debt may extend to some £75,000,000 if its EBT scheme failed to avoid players PAYE and NICs

English Premier tax debt table source: www.sportingintelligence.com from a leaked copy of a report prepared by HMRC in 2012.

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