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By Redslo,
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Glassesbloke

Glassesbloke

Posted
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can anyone direct me to a source of information that would explain the tax consequences of profitable or unprofitable dealings in the football transfer market under UK law?

 

Not quite as such, and the complexities are beyond me, but there's an interesting article from the Independent on Sunday a few years back that explains how little corporation tax was then being paid by PL clubs, including assertions that the transfer accounting arrangements are a fair part of this: http://www.independent.co.uk/sport/football/premier-league/ios-investigation-footballs-tax-shame-8373895.html

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Redslo

Redslo

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Not quite as such, and the complexities are beyond me, but there's an interesting article from the Independent on Sunday a few years back that explains how little corporation tax was then being paid by PL clubs, including assertions that the transfer accounting arrangements are a fair part of this: http://www.independent.co.uk/sport/football/premier-league/ios-investigation-footballs-tax-shame-8373895.html

 

Thank you. That article was interesting, but as you recognized, does not clearly answer my question. The funny thing is that I basically know how the question would be answered under American law, but I couldn't direct someone to an easily understandable source for that information. I guess there was no reason to expect an easier answer in the UK.

 

I did just find this which had some information.

 

http://www.dailymail.co.uk/sport/football/article-3219853/How-clubs-navigate-financial-minefields-transfer-deadline-day.html

Edited by Redslo
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angelman

angelman

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can anyone direct me to a source of information that would explain the tax consequences of profitable or unprofitable dealings in the football transfer market under UK law?

 

No idea, but why not look here and contact them: http://www.lawinsport.com/articles/tax-law

 

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L_O_Z

L_O_Z

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can anyone direct me to a source of information that would explain the tax consequences of profitable or unprofitable dealings in the football transfer market under UK law?

 

What are you wanting to know specifically?

 

Consequences of profitable or unprofitable dealings in the football transfer market are subject to the same UK law as other profitable and unprofitable areas in the football industry. If you make a profit you pay tax if you don't you don't.

 

Are you looking for a more in depth answer?

 

Sales of players are not accounted for in the same way as say ticket sales. Footballers are treated as both an employee and as an intangible fixed asset. They are paid a wage which is put through cost of sales on the profit and loss account and their purchase value is treated as an asset on the balance sheet and put through intangible fixed assets. The players value is amortised based on the length of their contract.

 

When a player is sold for a profit, an entry is made into the profit and loss account to reflect this. The entry is after Gross profit but before interest payable/receivable.

 

The profit from player sales is then added to other profits so that corporation tax can be applied.

 

We don't currently make corporation tax payments as we are using unutilised losses from previous tax years to reduce our tax bill to Nil.

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Redslo

Redslo

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What are you wanting to know specifically?

 

Consequences of profitable or unprofitable dealings in the football transfer market are subject to the same UK law as other profitable and unprofitable areas in the football industry. If you make a profit you pay tax if you don't you don't.

 

Are you looking for a more in depth answer?

 

Sales of players are not accounted for in the same way as say ticket sales. Footballers are treated as both an employee and as an intangible fixed asset. They are paid a wage which is put through cost of sales on the profit and loss account and their purchase value is treated as an asset on the balance sheet and put through intangible fixed assets. The players value is amortised based on the length of their contract.

 

When a player is sold for a profit, an entry is made into the profit and loss account to reflect this. The entry is after Gross profit but before interest payable/receivable.

 

The profit from player sales is then added to other profits so that corporation tax can be applied.

 

We don't currently make corporation tax payments as we are using unutilised losses from previous tax years to reduce our tax bill to Nil.

 

That is basically what I wanted to know. My concern was whether profitable transactions on the sales of players was taxed on the level of the individual transaction or whether it was just the overall profit for the club that was taxed. Also, whether prior year losses are carried over.

 

Thank you.

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L_O_Z

L_O_Z

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That is basically what I wanted to know. My concern was whether profitable transactions on the sales of players was taxed on the level of the individual transaction or whether it was just the overall profit for the club that was taxed. Also, whether prior year losses are carried over.

 

Thank you.

 

OK no problem, yes the overall profit for the club is taxed but the profit on player sales is calculated separately, then lumped in with the other profits before being taxed and yes losses are carried forward.

 

So the likes of Osvaldo can be written off against profit???

 

Osvaldo will literally go down as an "Exceptional item" :lol: and will be shown in the profit and loss as an expense under player trading. Exceptional items are either an impaired asset (where an assets actual value is less than its value on the balance sheet) or an Onerous Contract (where fulfilling a contract is greater than the financial benefit of keeping it).

 

Osvaldo's wages would have also been "used" as they were paid. So his weekly cost would have also been used to reduce profits (up until the point at which his contract was terminated and depending on whether we paid his wages whilst on loan).

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Over land and sea

Over land and sea

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Redslo

 

Excellent analysis as ever. I’d done a similar analysis in the Europa League thread a few weeks ago and generally came to similar conclusions about categories of players. I also included the scholars though I agree with you that doing so was probably going a bit too far and that just looking at the professionals is more sensible (last season all those that qualified for inclusion who were professionals were given Europa League squad numbers but none of the non-pro scholars). Strictly if you are listing all professionals then Thomas O'Connor, Christoph Klarer and Aaron O'Driscoll should also be included in your list – though that would be academic as none have been at the club long enough to make the B list!

 

In my analysis I came up with some differences though I think two are probably just omissions from your list, namely Maya Yoshida is missing from your ‘Other’ list and Olufela Olomola is missing from your ‘B’ list – he signed pro recently and joined the club in summer 2014 so qualifies for the B list.

 

The two players where I came to a different conclusion were Harry Lewis and Richard Bakary.

 

I don’t think Lewis qualifies as a B list player as he has not been at the club for 2 full seasons (joined from Shrewsbury at start of last season) - so he would need to be an A list player or excluded from the Europa League squad. Like Hojbjerg he qualifies as an U21 for the Premier League.

 

You have listed Richard Bakary as an A list player but I don’t see why he doesn’t qualify as a B list player. As far as I know nationality is not relevant to inclusion on the list, he is under 21 and he has been registered with the club since April 2014 i.e. more than 2 years.

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Redslo

Redslo

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Redslo

 

Excellent analysis as ever. I’d done a similar analysis in the Europa League thread a few weeks ago and generally came to similar conclusions about categories of players. I also included the scholars though I agree with you that doing so was probably going a bit too far and that just looking at the professionals is more sensible (last season all those that qualified for inclusion who were professionals were given Europa League squad numbers but none of the non-pro scholars). Strictly if you are listing all professionals then Thomas O'Connor, Christoph Klarer and Aaron O'Driscoll should also be included in your list – though that would be academic as none have been at the club long enough to make the B list!

 

In my analysis I came up with some differences though I think two are probably just omissions from your list, namely Maya Yoshida is missing from your ‘Other’ list and Olufela Olomola is missing from your ‘B’ list – he signed pro recently and joined the club in summer 2014 so qualifies for the B list.

 

The two players where I came to a different conclusion were Harry Lewis and Richard Bakary.

 

I don’t think Lewis qualifies as a B list player as he has not been at the club for 2 full seasons (joined from Shrewsbury at start of last season) - so he would need to be an A list player or excluded from the Europa League squad. Like Hojbjerg he qualifies as an U21 for the Premier League.

 

You have listed Richard Bakary as an A list player but I don’t see why he doesn’t qualify as a B list player. As far as I know nationality is not relevant to inclusion on the list, he is under 21 and he has been registered with the club since April 2014 i.e. more than 2 years.

 

Yoshida was a mistake. I don't know how he go dropped from the list he was in the earlier drafts of the article. I will fix that. Of course, it changes my numbers so that will be a pain. You are also right about Backary. I think I got mixed up and forgot to treat him as B list eligible when I was not sure he was association trained. I know that makes no sense. As for Olomola, I misread the clubs official web site which to be fair to me, is unclearly written here.

 

I should have checked my information against your post.

Edited by Redslo
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Redslo

Redslo

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I just posted:

 

"The Completely Unproofed and Long Out-of-Date Transcript of Les Reed's May 26, 2016 Interview"

 

Just in case anyone is interested or still cares. The Unproofed state of the transcript is the result of me being too busy back then and not thinking it was worth the time now. Also, too busy now too.

 

http://redsloscf.blogspot.com/

 

http://redsloscf.blogspot.co.uk/

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