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Context of '(March 2011): Revenue and Customs Wins £100m from Premier League Clubs for Overuse of Image Rights Tax Avoidance Scheme'

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Arsenal pays £7.5m to sign Dutch striker Dennis Bergkamp from Internazionale. The fee is three times the club’s previous record and the move ends Bergkamp’s unhappy time in Italy, where he scored just 11 goals in 54 Serie A games. Bergkamp is reportedly to be paid £25,000 a week, making him the highest paid player in Britain. [Independent, 6/21/1995] Bergkamp’s contract is apparently the first for a British footballer to include a provision that part of the money Arsenal pays him is for image rights. This money is paid into an account in an offshore tax haven and taxed at a lower rate than the salary for playing football. David Platt, also signed by Arsenal around this time (see July 10, 1995), has a similar provision in his contract. [SportsPro, 2/25/2011] The Inland Revenue will challenge the image rights payments, but will be unsuccesful (see April 2000). However, it will later win a significant settlement from British football clubs (see (March 2011)).

Entity Tags: Internazionale, Arsenal F.C., Dennis Bergkamp

Timeline Tags: Football Business and Politics

Arsenal pays £4.75m to sign veteran England international David Platt from the Italian club Sampdoria. [Independent, 7/11/1995] Platt’s contract is reportedly the second for a British footballer to include a provision that part of the money Arsenal pays him is for image rights. This money is paid into an account in an offshore tax haven and taxed at a lower rate than the salary for playing football. Dennis Bergkamp, also signed by Arsenal around this time (see June 20, 1995), has a similar provision in his contract. [SportsPro, 2/25/2011] The Inland Revenue will challenge the image rights payments, but will be unsuccesful (see April 2000). However, it will later win a significant settlement from British football clubs (see (March 2011)).

Entity Tags: Unione Calcio Sampdoria, SpA, Arsenal F.C., David Platt

Timeline Tags: Football Business and Politics

The Inland Revenue loses a test case against Arsenal and two of its players, Dennis Bergkamp and David Platt, over the use of image rights provisions in playing contracts to avoid tax. Bergkamp (see June 20, 1995) and Platt (see July 10, 1995) receive a portion of the money Arsenal pays them not as salary, but as compensation for the use of their image rights. The Inland Revenue claims to the Tax Special Commissioners hearing the case that this is a “smokescreen” for paying them money offshore to avoid tax, and that Arsenal, Platt, and Bergkamp should be subjected to income tax and national insurance contributions via Arsenal’s payroll. However, the commissioners decide that the payments are legitimately made in return for allowing Arsenal to exploit the players’ images, a purpose different to playing football. [SportsPro, 2/25/2011] The making of payments to footballers for image rights will grow in future years, although the British tax authorities will win a settlement for the scheme’s over-use in 2011 (see (March 2011)).

Entity Tags: Arsenal F.C., David Platt, Dennis Bergkamp

Timeline Tags: Football Business and Politics

Chelsea FC owner Ken Bates agrees to sell the club to Russian oil and aluminum mogul Roman Abramovich for £140m. £80m of the money will be spent paying down debts Chelsea has recently accrued. £59.3m will be used to buy shares in the parent company, Chelsea Village, which are valued at a mere 35p each. Bates bought the club for £1 in 1982. The deal is the biggest in British football history. A statement issued for Abramovich pledges that he will invest in the team. [BBC, 7/2/2003]

Entity Tags: Chelsea F.C., Roman Abramovich, Ken Bates

Timeline Tags: Football Business and Politics

HM Revenue and Customs comes to an agreement with Premier League clubs that they will pay it £100m for overusing image rights clauses in players’ contracts. In addition to salary for paying football, clubs have increasingly been paying players compensation for use of their image rights, which is taxed at a lower rate. However, Revenue and Customs now successfully argues that a portion of the image rights payments were disguised salary, and the clubs pay around £100m to avoid legal proceedings. [SportsPro, 2/25/2011] The exact date of the agreement is unknown, although the agreement is reported as being imminent in February 2011 and to have been signed by 2012. [SportsPro, 2/25/2011; Guardian, 2/8/2012] The exact amounts paid by all clubs are unknown. However, Chelsea will later reveal their portion of the bill is £6.4m. [Guardian, 2/8/2012]

Entity Tags: Chelsea F.C., Her Majesty’s Revenue and Customs

Timeline Tags: Football Business and Politics

Chelsea announce a loss of £67.7m for the 2010-2011 season, slightly less than the previous one (see January 31, 2011). There was a modest increase in revenues to £222.3m from £205.8m, thanks to Champions League and television income. Wages were down by £4.4m on last year and operating expenses down by £7m. The accounts contain an extraordinary item of £28m relating to the replacement of manager Carlo Ancelotti with André Villas-Boas in the summer. This means that Chelsea’s manager replacement costs have been around £64m in the last four years. In addition, the accounts reveal Chelsea paid £6.4m to Her Majesty’s Revenue and Customs to settle claims arising from a failed tax avoidance scheme that involved paying players not salary, but compensation for use of their image rights. The size and repeated nature of the loss means that Chelsea may have difficulty complying with UEFA’s financial fair play regulations, although the consequences of this are unclear. [Guardian, 2/8/2012]

Entity Tags: Chelsea F.C.

Timeline Tags: Football Business and Politics

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