As tax advisers to elite athletes, we have seen the UK’s tax authority, HMRC, make some significant moves in the past few years to focus on the tax affairs of sportspeople living or competing in the UK.   For example, HMRC have taskforces currently focusing on the following; foreign sportspeople in the UK, individuals earning up to £2m and a team for earners over £20m. In addition to this in 2017 HMRC set up a Football Compliance Team to specifically look into the tax affairs of footballers & agents.  In addition to these taskforces, HMRC have tightened up their guidance on how sportspeople are taxed, the most recent being the significant changes to how agents fees are treated.

This focus on sports exists in the wider context of the UK’s economy. In the post COVID world there is a huge focus on recovering any underpaid tax and ensuring compliance reviews are undertaken to check that people have paid the right amount of tax.  If HMRC believe that an individual has underpaid tax they are likely to reach out to the individual and possibly open an investigation into their tax affairs.  Recent statistics show that HMRC were issuing on average 1,062 investigations per day.

All of this means that elite athletes are more likely than ever to come under investigation by HMRC.  An investigation from HMRC can be overwhelming, costly and exhausting. At Juno Sports Tax, we work with our clients primarily in two ways; (1) supporting clients with their ongoing filing responsibilities and ensuring that the correct taxes are paid at the right time – thereby mitigating the chances of an enquiry (2) dealing with HMRC investigations on behalf of clients (& we can take these over at any stage of the process).

How far back can HMRC investigate my tax?

It’s not only recent tax filings that can come under investigation, HMRC have the power to open investigations going back up to 20 years.  This means that athletes can receive a letter advising them that they are under investigation for a transaction that occurred at the height of their career and when their earnings were at their highest. They may not have the necessary documentation or understanding of how best to deal with the enquiry. It’s important to seek guidance from a CTA or ATT qualified tax adviser before replying to any HMRC investigation requests as we have seen many athletes suffer with longer investigations by replying without the right advice.

How much will I have to pay HMRC?

If HMRC suspect that there has been some wrong doing they also have the power to apply penalties to any unpaid tax. The maximum penalties are up to 200% of the tax due. So for a tax liability of £10,000 this could have a £20,000 penalty, meaning total tax and penalties payable of £30,000.  It’s easy to see how quickly these amounts can spiral and can leave players feeling extremely concerned and in need of reassurance and certainty.  We are experts in supporting current and former elite athlete who are under HMRC investigation.  We manage all communications with HMRC and give the client cost certainty on our fees.

We work closely with the individuals, clubs and agents to try and close down any enquiry as quickly as possible. If this cannot be achieved, we will ascertain the amount of tax payable, negotiate with HMRC on penalties and work with the individual and HMRC to put in place a payment plan so that the total liability can be paid in smaller amounts each month. 

We are absolutely delighted to be partnering with The Lighthouse Group. Their ethos and dedication to excellence and player care resonates with our values and we are grateful to them for trusting us with their clients. We look forward to a long relationship with them.