By David Conn and Daniel Beizsley/The Guardian
More than 100 footballers including recently retired Premier League players are in severe financial difficulties and even face bankruptcy, due to demands from Her Majesty’s Revenue and Customs for repayment of huge disputed tax reliefs, the Guardian has learned. Some players who earned six-figure and million-pound-plus salaries during good careers in English football’s current boom time face losing everything.
Around 100 players, said to be in financial “dire straits”, are understood to have sought help from the players’ union, the Professional Footballers Association. Xpro, the welfare organisation for former players, is representing 40 more, according to its chief executive, Geoff Scott. He said all 40 are seriously affected by HMRC demands for the repayment of tax reliefs granted on various investment schemes, with around 20 facing potential bankruptcy and some even homelessness.
Scott said the players signed up to the schemes, which gave them large reductions in tax bills, because financial advisers targeted high-earning footballers and it became a culture within the game.
“Many entered into them because they saw their team-mates doing it,” Scott said. “They considered their job was on the pitch, and their advisers were looking after them off it. We are representing 40 players, many are divorced, houses are being repossessed, some guys have gone bankrupt already, and we know of 20 facing bankruptcy or an individual [insolvency] voluntary arrangement principally because of tax demands.”
The footballers, who include stars of the game and solid ex-professionals, have become targets for a crackdown by HMRC on what it sees as tax avoidance. HMRC has challenged a number of schemes that, it argues, took advantage of reliefs aimed at boosting investment in the British film industry.
Two of the film schemes being disputed, which were set up and run by the London firm Ingenious Media, had around 70 former and current footballers signed up, including stellar names, which are publicly recorded at Companies House, such as Gary Lineker, David Beckham, Steven Gerrard and Wayne Rooney. Those stars are all thought to be wealthy enough to cover any HMRC demands but the investors also included lesser famed and earning players, some of whom are seriously struggling to pay.
One footballer who invested with Ingenious, and spoke to the Guardian on the condition of anonymity, said he had played for a Premier League club for several years. He said he signed up for the investment schemes when he was earning his Premier League salary, on the recommendation of financial advisers and because “everybody else was doing it”. He has received four large demands for tax repayment from HMRC and, only recently retired from football, is divorced, facing bankruptcy and needed the PFA to help provide him with somewhere to live.
At the time he signed up, the player said, financial advisers were attaching themselves to high-earning footballers, winning their trust and friendship, and were frequent visitors to training grounds. He acknowledged there was “a little bit of greed” about investing in a scheme that resulted in large tax reliefs but argues he did so quite casually, without fully understanding them, and said his advisers did not fully explain that HMRC could rule such a scheme invalid.
“I am in trouble; there is no way I can pay the sums being demanded,” he said. “It is a really difficult period for me. I wouldn’t say it cost me my marriage but the pressure contributed to it. Your career comes to a very abrupt end and now, if I don’t go bankrupt, I will be close to it.”
The player, who did not want to be named because he is concerned it will affect the low-level employment he has recently found in football, said that after divorcing and leaving the family home, he found himself in severe trouble and asked the PFA for help. Five or six former players at his old club are suffering similar financial wipeout from tax relief claw-back demands, he said.
“There are so many of us in trouble; with my ex-colleagues, we want to be talking about the good times, but this is the topic of conversation everywhere. I am not looking for sympathy, I blame myself for trusting advisers – and I do think something should be done about them – and probably for being greedy as well, making a few grand from the taxman.”
The footballers were among hundreds of wealthy investors who signed up in the early 2000s for similar investment schemes. The standard schemes gave a large upfront payment of public money, but it was effectively only deferring tax due in later years, and many investors found they did not have the money when the demands rolled in.
The Ingenious Media schemes, which the company is determinedly defending in the upper tax tribunal in the royal courts of justice, were different, operating more as standard investments in the British film industry. Large numbers of people, including the footballers, invested some of their own money which was often, although not always, matched by almost double the money in the form of a loan. The value of each film was written down substantially in the first year, on the basis that films are risky ventures, and this produced a tax relief at the then higher rate of tax, 40%, of that first-year loss. In a standard example, this tax relief was as much as the actual cash the investor had put in, and could be used to reduce tax owing on other investments.
XPro chief Geoff Scott
