Taxing Sport 2: The Return of the Taxman

The FrontRow blog has already examined the issue of tax in UK sport – the reaction of Lewis Hamilton and Sergio Garcia following Andre Agassi’s court defeat at the hands of HMRC in 2006. The precedent set in the Agassi case was that appearing in one UK tournament alone can, in some cases, show you to be ‘carrying on a trade’ in the UK, and therefore a players earnings as a whole are accountable to the UK taxman.

Reports emerging this week suggest that triple Olympic champion Usain Bolt will not compete at the Diamond League meeting in Crystal Palace next month.

“I am definitely not going to run” Bolt said speaking about the scheduled London meeting. Asked if the reason was that he would lose money Bolt replied: “That’s what my agent told me.”

Bolt’s agent, Ricky Simms said that foreign sportsmen have to pay tax on their worldwide endorsements under British tax law, a law that “has kept a lot of the big stars in other sports away from Britain.”

Bolt would be taxed 50% on his appearance fee as well as a proportion of his worldwide earnings should he compete. The 100 and 200m world record holder will reportedly run in the Paris equivalent.

Earlier in the year a tax waiver was announced in the Budget for foreign-based footballer players appearing in the 2011 Champions League Final hosted at Wembley.

The resolution provided “to exempt certain persons from income tax in respect of certain income arising in connection with the 2011 Champions League Final.” The move was engineered by then Sports Minister Gerry Sutcliffe to overcome the barrier obstructing the Football Association’s bid to host the prestigious European Final.

The treasury had agreed to tax exemptions for officials of FIFA in the event that England should succeed in their bid to host the World Cup in 2018.

An exemption exclusive to football would undoubtedly prompt discrimination accusations.

UK Athletics (UKA) are lobbying for reforms to the UK tax laws. They issued a statement which read: “It is regrettable … that British fans are denied the chance to see this amazing talent.”

Sports Minister Hugh Robertson told BBC Radio that he was “happy to look at it and see if I can help” but conceded it unlikely any rule changes would come into effect prior to this year’s Diamond League meeting on 13-14 August.

He continued: “I’m pretty sure that at the back end of the 2012 Olympic bill is a commitment no to tax overseas stars who come over to compete in the Olympics.”

For the UK to remain at the forefront of world sport similar exemptions surely need to be made across the board.