HMRC Wins Tribunal Over Image Rights Payments
Newcastle United faces a £10 million tax bill after a tribunal ruled that payments made to players for image rights during Mike Ashley's ownership should have been subject to income tax and national insurance contributions. HM Revenue and Customs (HMRC) challenged the club's classification of these payments as commercial income rather than employment earnings.
How the Scheme Operated
The dispute centered on payments made to players between 2015 and 2019, where the club diverted a portion of salaries into image rights contracts. These contracts were structured as separate commercial agreements, meaning they were not subject to PAYE or National Insurance contributions. HMRC argued that the payments were effectively remuneration for playing services and should be taxed as such. The tribunal agreed, stating that the image rights payments were 'disguised remuneration.'
Financial Impact on the Club
The ruling means Newcastle must pay the £10 million in back taxes, plus potential interest and penalties. The club's current ownership, led by the Saudi Arabian Public Investment Fund, has inherited the liability. The decision could also set a precedent for other Premier League clubs using similar structures. According to a tax expert, 'This is a significant win for HMRC in clamping down on tax avoidance in football.'
Club's Response and Next Steps
Newcastle United has said it is considering an appeal, arguing that the payments were legitimate commercial arrangements. A club spokesperson stated, 'We believe the payments were correctly classified and will review the tribunal's decision carefully.' The case highlights ongoing scrutiny of image rights payments across the sport, with HMRC actively investigating other clubs.
