Are the Football stars avoiding tax?

By Vijay Kumar

Football fever is here from Kolkotta to Kentbut a row is brewing in Englandabout the patriotism of the English Soccer players – or the lack of it in paying taxes. David Beckham and many of his team-mates are able to use fancy financial footwork to minimise the amount they pay HM Revenue & Customs from the lucrative fees they earn by appearing in advertisements for Nike, Pepsi, Gillette and other big names. There is no suggestion that the players are acting improperly, and there is nothing illegal about tax avoidance schemes. But they are politically controversial, and fly in the face of Chancellor Gordon Brown's much-trumpeted campaign to crack down on avoidance. Tax experts have also confirmed that some of England's young millionaires may even be able to claim their haircuts, diamond earrings and sports cars as tax-free 'business expenses. Norman Lamb, the Liberal Democrat MP, said: 'I'm a massive football fan and I hope that Englanddo well in Germany. But in return I'd like to see the players act patriotically when it comes to resisting the temptation to manipulate tax loopholes. After all, everyEnglandfan has to pay his fair share of tax”. Each player in England's 23-man squad is thought to be eligible for up to £300,000 in wages and bonuses for playing in this summer's World Cup. The Football Association would not confirm this figure, but in any case it is dwarfed by the enormous salaries players receive from their clubs. Stars such as Beckham, John Terry and Rio Ferdinand receive in excess of £100,000 a week from Real Madrid, Chelsea and Manchester United respectively. These earnings are subject to income tax. It is in relation to a further income stream, however - earned from endorsing products such as football boots, video games and soft drinks - that footballers can use legal ruses to reduce their tax bill. Fees for commercial endorsements are paid to a player's private firm and treated as company profits, which are subject to corporation tax, ranging from 19 to 30 per cent. This is in contrast to the 40 per cent income tax rate players have to pay for kicking a ball around on the pitch and means that high-earners can avoid paying tax of several hundred thousand pounds a year. Because the commercial fees are for the use of a footballer's 'image rights', anything that contributes to that image - be it haircuts, body piercings, smart clothes, even sports cars - could also potentially be classed as a business expense and deducted from the company's tax bill. Mike Warburton of Grant Thornton, which advises a number of Manchester United players, says that the most tax-efficient way for a footballer to get money out of these companies is to let it accumulate there until he retires: 'Then all he has to do is live abroad for three years and he can take it all out in a dividend.' Will the tax man get a slice of all this booty?

And you thought the Indian Tax system was so cumbersome!