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Bankruptcy threat to tax-planning footballers

Thursday, 29 January, 2015

More than 100 former Premier League footballers are said to be in serious financial difficulties after receiving accelerated payment notices from HM Revenue and Customs regarding their participation in tax-planning schemes.

The accelerated payments system was introduced in the Finance Act 2014. A notice issued under the power requires a user of a tax-planning scheme to pay the disputed tax immediately, if the scheme falls under the Disclosure of Tax Avoidance Scheme (DOTAS) rules, or resembles one that has already been defeated in court, or has been disallowed under the general anti-abuse rule.

In July 2014 HMRC published a list of several hundred tax-planning schemes which it considered invalid. In September 2014 it began issuing accelerated payment notices to the 43,000 current users of the schemes.

Payment must be made in 90 days, with no right of appeal. The only recourse is litigation against the tax assessment at a tribunal or court. A recipient who cannot pay – for example, because his income has fallen sharply due to retirement – can be made bankrupt.

Even if the taxpayer later wins at a tribunal, he or she will only receive their money back plus a tiny amount of interest, and probably after many years of litigation.

This is the situation now facing some former top-rank professional footballers, many of whom enrolled in tax-planning schemes based on film production company relief, or schemes that generated artificial trading losses. Reports say that about 100 are seeking help from the Professional Footballer's Association. Xpro, a welfare organisation for former players, says it has received requests for help from 40 players – 20 of whom are at risk of bankruptcy.

The main promoter of film partnership relief schemes, Ingenious Media, is defending its case at the First-tier Tax Tribunal to try to deflect the demands. It claims that its schemes are legitimate and have helped launch many important movies, many of them profitable. The cases turn on whether the partnerships were carrying on a trade, which HMRC disputes.

The tribunal hearings began in November, with a decision due next month – although HMRC will probably appeal if it loses.