Great rumour

[burke]

I love a rumour and find it impossible not to tell everyone I know. There are three forms of communication Television, Telephone and tell me. Anyway I wondered if anyone on here could shed light on the tale I was told last night. It goes like this :

HMRC reached an agreement with the Rugby Union for the Union clubs to only have to pay 15 % of the back tax owed on the image rights paid to players over the last six years.

All SL clubs also owe back tax on image rights. The RL got wind of the 15 % agreement reached between the Rugby Union and HMRC and approached HMRC to obtain a similar agreement. HMRC turned us down.

So now Leeds ( financed by the RL ) are challenging the HMRC decision in court.

Also the RL is unhappy with the lack of consistency in the way that different HMRC tax inspectors are treating each club. Wakefield are at the head of the list, they apparently owe the least in image rights tax ( apart from Crusaders and Catalans ) of any SL club and yet their tax man is demanding immeadiate full payment. Whilst other clubs who owe the tax man far larger ammounts are not under as much pressure from their tax man. Apparently HMRC likes to set a precedent in court, ie go after a club that only owes a comparatively small amount, force payment then go after the big boys once the precedent has been set.

Can anybody out there add anything to this tale, I mean would be good if we could prove that the establishment , HMRC, was treating RL in a different way to their mates at the Rugby Union. I suspect that the above may be a load of tosh as surely the RL would have made this information public.

[Shadow]

Some facts to go with your rumour

[Derwent]

HMRC reached an agreement with the Rugby Union for the Union clubs to only have to pay 15 % of the back tax owed on the image rights paid to players over the last six years.

I don't think that it correct. As I understand it the 15% is an agreed cap between RU & HMRC on the portion of a players earnings that can be paid as image rights in future and doesn't relate to back taxes.

[Shadow]

I don't think that it correct. As I understand it the 15% is an agreed cap between RU & HMRC on the portion of a players earnings that can be paid as image rights in future and doesn't relate to back taxes.

A compromise cap of 15% of remuneration payable for image right exploitation was agreed in rugby union

That's how I'd read it as well

[Bulliac]

No mention of the Philippines parachute then?

[Bulliac]

Double post

Edited September 22, 2010 by Bulliac

[Adeybull]

My understanding: the 15% is the percentage of the total package that HMRC have indicated they are prepared to treat as being justifiable image rights in non-superstar cases (superstars have to be looked at individually). Clubs who paid more than 15% to non-superstar players for image rights are targeted. HMRC is seeking to treat payments in excess of 15% as being net pay to the player, and therefore seeks grossing-up for tax and NIC as well as interest and penalties. They can go back a fair way, and for some clubs the amounts at risk are understood to be very substantial.

I have posted at length about the image rights tax issue in the past - not least because of the implications for retrospective salary cap breaches.

[Adeybull]

No mention of the Philippines parachute then?

Or Singapore Sling, or teh "Singapore Parachute" as I labelled it a while ago.

I think that is a separate issue altogether, relating to residence (or otherwise) for tax purposes? And where (if anywhere) a player is actually resident when he is domiciled in Oz/NZ/etc but has been resident in the UK but is now permanently on his way back home - but is not yet resident there. He is in the air somewhere over Singapore, and the payment is dropped into a bank at that time. When he is not actually resident for tax purposes anywhere...

[Gregory Peccary]

I wonder how much tax Guscott, Carling et al paid before RU "went professional".

[JohnM]

I expect that they declared their income on their tax returns.

[WearyRhino]

I wonder how much tax Guscott, Carling et al paid before RU "went professional".

Probably got a tax deduction for old rope.