Stars of the England cricket team, such as test captain Andrew Strauss and Kevin Pietersen could be investigated by HMRC following suspicions that they may be making use of a loophole to pay less tax.
The Daily Mail has reported that some England squad members will be quizzed as part of a HMRC enquiry into the use of image rights by cricketers. This follows a similar investigation into the tax affairs of Premier League footballers and will concentrate on service companies set up by cricketers to channel income from commercial deals and sponsorship.
A host of top England players have formed these service companies, including James Anderson, Ian Bell, Tim Bresnan, Stuart Broad, Alastair Cook, Eoin Morgan, Steven Finn, Kevin Pietersen, Matt Prior, Andrew Strauss and Graham Swann.
Image rights works on the basis that a sports stars name has a distinctive separate value to their ability to earn income through their playing skills. The Revenue is concerned that some players are channelling too high a proportion of their salaries as image rights income through their service companies, thereby only paying 24% corporation tax rather than suffering PAYE tax at 50% for those earning in excess of £150,000 per annum.
Virtually all county cricketers hold England & Wales Cricket Board (ECB) approved contracts, which stipulate that their club owns their image rights. HMRC now want the county cricket clubs to explain why they believe image rights payments are acceptable but have stressed that no formal investigation has been initiated for the time being. Having met with ECB representatives, the Revenue have also written to the 18 counties to request details of remuneration structures for their players.
Agents representing the players have not yet been contacted by HMRC regarding this issue and they maintain that their clients' earnings derived from playing have not been passed through service companies.
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