Chelsea stars face £12m tax bill for image right deals

05 February 2011 23:32
Chelsea take on Liverpool today with their biggest stars knowing they face a potential tax bill of almost ?12million after the club announced that the taxman is investigating their image rights contracts. [LNB]British record signing ?50m Fernando Torres will make his Chelsea debut alongside Didier Drogba, as the Blues bid to kick-start their faltering title challenge against the club who sold Torres to them. [LNB]But in a week when Chelsea announced losses of ?70.9m while spending another ?70m on David Luiz and Torres, the club have now revealed they are being investigating by HM Revenue and Customs for image rights contracts awarded to players between 2003-04 and 2008-09. [LNB] Cough up: The Chelsea stars could be forced to shell out huge sums to HMRC[LNB]HMRC have launched a crackdown on super-rich footballers dodging tax with specialist image-rights deals and Manchester United have already admitted that they are in talks with the taxman over the issue. [LNB]Premier League players as a whole could be facing a tax bill of up to ?200m if the taxman goes ahead with his threat of taking legal action to declare that image rights deals popular with many stars are invalid. [LNB]In the clear: HMRC will not be investigating Torres' payments[LNB]Under the image rights scheme, a portionof a player's wages is paid as salary and taxed under PAYE, now 50 per cent for Premier League footballers. [LNB]The rest is paid into an image rights company, often housed offshore. That income is taxed at corporation tax levels, currently 28 per cent but potentially as low as 21 per cent if profits of the company are ?1.5m or less. [LNB]Foreign players often pay even less on such arrangements as they claim non-domicile status on some image rights earnings. [LNB]Chelsea admitted in accounts published on Friday that if HMRC's case is successful the club will be liable for payment of 'approximately ?3.8m'. [LNB]But this figure relates only to National Insurance payments, which is charged at 12.8 per cent. With the players due for 40 per cent tax for the period under investigation, leading stars could face back-tax payments running into millions of pounds, depending on how much tax they have already paid on their image rights. [LNB]The potential tax liability of United players if almost no tax has been paid on image rights is around ?16.5m and Chelsea the figure is around ?11.8m. Both clubs are contesting the amounts involved with HMRC and argue that the schemes are legitimate.  Roman Abramovich must learn when to keep his wad in his pocketTorres: I knew my time at Anfield was over when Liverpool got rid of Alonso and MascheranoI tried to convince Torres to stay at Anfield, reveals Kenny DalglishAll the latest Chelsea news, features and opinion [LNB]  Explore more:People: Fernando Torres, Didier Drogba Places: Liverpool

Source: Daily_Mail