From the Wakefield board.



Any ideas what or when?

There is an update due to be issued to all SL clubs very soon on Leeds progress. I understand Leeds case is very strong and it might only ever get to the High Court steps and the HMRC will do a deal! HMRC look destined to have to give RL the same deal as RU but only time will tell! I suspect your bill is quite large as well BTW!

That is one of two key legal arguments Leeds are using by the way, how is it legal to tax the same company differently over the same issue... answers on a High Court writ please?

The righteous Leeds club yet again fighting to protect it's weaker rivals against tyranny and evil.

Why are we not liked?

Adeybull will tell you, when Leeds litigate, they are always in the right.

Because... at HMRC, the left hand doesn't know what the right hand is doing.

I've spoken to several different people about various tax issues (mainly corporation tax) and it very much depends who you get on the phone on the day as to what way you should be doing stuff. Ridiculous really considering I'm doing my best to get it right and doing things based on the say so of a HMRC employee who, in theory, could be wrong and I could get the book thrown at me. Our accountants (who are excellent!) are also saying the same thing.

They change a rule, 20 people miss the memo, so now 99% are telling you one thing and 1% another. They change another rule, a different 20 people miss the memo, etc etc, increase that exponentially based on the number of rules that get changed and there lies your problem.

Most issues (certainly the debatable ones) are pretty unique to each situation, meaning they don't come up that much, meaning the person you're speaking to hasn't dealt with your particular situation since 1996 (if ever!!), since when the rule has changed 4 times and nobody knows what the current regulation for your issue is.

How on earth you're expected to comply when nobody is 100% sure what it is you're supposed to be complying to is anybody's guess!

Having the largest potential bill to pay might be making Leeds feel a little more committed to the cause as well!



HMRC are actually refusing to do a deal at all with RL because they say that RL players don't have an image to trade on at all... but RU players do!!! Do you think someone high-up at the HMRC sits on the board of the RFU?

This is Leeds other argument, that is total rubbish and in our primary location of operation... Leeds... our RL players do have an image that can be commercial exploited and it is our RU players who enjoy more anonymity!

I seem to recall the odd Bulls fan getting getting quite excited, prematurely, over this, thinking we may lose and also have a retrospective cap breach because of it. You'd think they'd have learned from past that we have the fortitude to search for justice and not throw in the towel when the going gets tough, whether the foe is HMRC or any other entity we may have litigated against



I'll freely admit I know little to nothing about this case, the arguments or how the've been presented but I do now how the HMRC approach litigation tactically and it's not the way they would if it were their own money they were playing with. I am glad Leeds have the fortitude to stand up to them and if the case is as you put it I'd hope for a decent outcome.

It is still a little over my head to be honest, but I have some recent inside info from a reliable source. As I understand this will not put anyone over the cap because the RFL are aware of the issues and at the time is was considered to be legitimate (in their eyes) as it was being done in other areas of sport and in both RU and football. The prevailing issue is HMRC reluctance to do any deal as well as the one the RFL want, the same as RU.

Just found this here [urlhttp://www.frontrowlegal.com/blogs/blog/the-big-freeze-how-hm-treasury%E2%80%99s-freeze-on-ebts-efrbs-will-leave-overseas-players-skating-on-thin-ice/[/url

"This legislation is not just an accounting exercise; it will have deep seated repercussions that will change the landscape of English sport, including Rugby Union, Rugby League and Football, which are notorious for attracting overseas players. The English tax system is already unfavourable compared with France and Spain the Government, in closing what they perceive as another loophole has effectively blocked off overseas players from forging English careers as it simply will not be worth their while.

Whilst image rights remain legal, HMRC have narrowed their scope in Rugby Union limiting the amount that can be paid as image rights to 15% to all past and present international players and 10% to any player that has attained junior/B or representative status. Exceptional players and coaches can make a specific case for a higher percentage capped at 25%, although clubs may be hesitant to make such a case as they do not want to be put under the microscope. Rather than being seen as a tax efficient method for players and clubs, HMRC are viewing image rights as devices to avoid PAYE and NIC obligations and are trying to impose tighter controls on such measures.

[iThe status of image rights in Rugby League remains uncertain with the limit yet to be determined. Clubs which were advised to transfer image rights to pensions will now have further headaches on how to treat contractual salary sacrifice arrangements.

With the death of EBTs, EFRBS and restricted use of image right schemes, the prospect of playing for England clubs will undoubtedly be less attractive for overseas players especially given the weak pound against overseas currencies[/i."

Brilliant info RG, thanks!

Like I posted before, I have been told HMRC don't want to do any sort of deal with RL and the RL just want the same deal as the RU. I think trying to treat the two codes of Rugby separately is a huge mistake and of course Leeds case therefore of treating the same company with different rules for different employees a strong one! Football of course should, in theory, get higher percentages allowed.

Maybe HMRC will succeed where the RFLs Federation Trained policy was meant to

A couple of questions.

Do you think any HMRC claims would be retrospective and if so how far can they go back?
Will it be the players they go after and / or the clubs?
Do you think it's a reason we have seen a few players return to Australia?

It will be hard for RL to argue that their players images have the same "value" as an International RU player and it's one of the reasons we need to elevate the status of our International game (and players)

Sorry to be a pain, but I do find it fascinating (morbid sod that I am).

Maybe not the same value in £, but in salary percentage they should be equal

They are retrospective I understand, going back maybe 8 or 10 years (I would have to check with my source). Leeds are rumoured to owe a cool £2m ish if HMRC don't back down.

Yes, tax is effectively owing from overseas players as well as I understand it, but as to whether HMRC will pursue them is another matter... probably not!

I think when it comes to international RL yes and no. In the local market of RL, then RL players enjoy huge 'image' and profile IMO and being an international actual extends that across the whole game. As this is all about overseas players, we are talking about Aussie/NZ players as they come from the NRL in the main, so you could argue that RL players who have played in the NRL and played for Aus/NZ enjoy a huge image in Aus (certainly more than RU players) but it only travels as far as Australasia and the North of England, but RU has more overall international impact!

The answer is HMRC just need to give them both the same deal and move on... but they seem to being a bunch of ignorant pedants!

I think this and the poor exchange rate is probably making a difference yes.

If they are looking at closing the loop-hole now i don't see how they can go back because at the time these deals were done they were all legal and above board.
Of course the future impact on contracts will be felt by the clubs and players etc and i reckon the newcomers to SL will have some sort of clause included to account for this legislation change.

Surely it depends on how the business wants to utilise that image? After all, Leeds aren't trying to market themselves in the South of England - their marketing barely leaves West Yorkshire. As has been inferred earlier, Danny McGuire is much more marketable in Leeds than Hendre Fourie, even though the latter is a full England RU international. The two people are both employed by the same employer yet the (arguably) least valuable of the two is subject to more favourable tax agreements.

I am not sure they are legal or illegal as they have not been tested in court or the law changed, HMRC just want the tax because they think it has been a tax avoidance scam (which it sort of has) and until someone does (take it to court) then that will be that. This is why RU did a deal, I also understand that a deal was done on the retrospective payments and they don't want to do that with RL either! Leeds are not challenging them on the legal issue of the actual issues of tax and image rights, just the current and future deal for image right percentage... well in RL's case... none at all!

Spot on! That is exactly the argument Leeds are going to make to the High Court... if it gets that far!

I still don't see how it can be tagged "Tax Avoidence" unless it was shady and done in brown paper bags in the SS car park.


Either way i hope HMRC get hammered in court they are completely unreasonable when dealing with issues re-sports clubs imo.

This is not the NRL salary cap we are talking about here you know, this is the HMRC, brown bags indeed!



This is getting too deep, even for me, but other people who know these things better say HMRC work to their own warped tax-man logic!

IMO they rightly should be. Its not like the sports clubs are whiter than white, and the number of times the tax man is the last to be paid when they go to the wall

How many times in recent years have they squandered Tax money on Court cases involving Sports Clubs and ended up getting the same knid of settlement/outcome that the Culb in question were originally offering?
We as a club who employ both RU and RL sides have a very good case in terms of the image rights deals and can prove that the RL image rights are bigger here than the RU one yet they are seeking not to do the same deal as the RU have ironed out complete madness and a waste of money.
Half the time if they'd accept a restructered deal/offer they would'nt be losing out when the clubs go to the wall.
Lets see if their as keen to get the "money men" who blatantly avoid Tax payments.

They aren't "the last to be paid" when any club or business is liquidated, they stand in line with the rest of the creditors as per the law of the land and they all share out what is left (if anything), they do not hold preferential creditor status anymore and haven't done for some years.

You'd think that the loss of their preferential status would make them more pro-active in collecting overdue taxes wouldn't you ?

You'd think that they would, for instance, have a collections department that actually collected overdue tax in the same way that all businesses have to collect money owed to them, ie its the most important part of any business is the collection of overdue accounts for without that cash any "normal" business would also go to the wall.

You'd think all that wouldn't you ?

Now just think of how many times you've read of business and sports club failures where several years worth of tax are due to the Revenue, just think of last years debacle where the Revenue promised to concentrate harder on those accounts that were due up to five years ago.

Five years.

Any "normal" business with accounts due from five years ago would deserve to go bust.

The Revenue don't deserve preferential status nor do they work hard enough for "normal" status, when they can't even calculate properly what Joe Bloggs on a fixed salary owes on his PAYE (has anyone got one of those "revised" demands yet ?) then how much more proof do you need that the department is not fit for purpose ?

Hasn't that just recently been changed? I thought I heard on the news lately that the tax man now gets priority?

[url=http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/con_doc_archive/consultation/condoc/posofcrownaspref.htmOriginal consultation case for removing preferential status[/url, basically was done to introduce "a more commercial attitude" to the tax collection department, (that worked well then didn't it ) preferential status was removed in 2003 and as far as I know is still the case (certainly was last year from personal knowledge

)

Note that document was issued by The Insolvency Service - if you could imagine a government department adrift in a sea of bewildering rules and regulations, rudderless and without sail or mechanical power, the captain fallen overboard and all the crew drunk at their stations - then the Insolvency Service is worse than that.

My personal contact with them these past nine months has convinced me that there is an office in Edinburgh where all of lifes simpletons, barmpots, and blocks of wood are offered jobs with good pensions as long as they sometimes answer the phone and spout random bollacks, even putting their random bollacks in writing on occasion - I wrote to my MP and recommended that if they wanted to look for areas of the civil service to cut first then I had one department in mind that could be erased in its entirety without detrimental effect to anyone except the buffoons who work there.