HMRC’s VAR: valuing agents’ remuneration

New HMRC guidance on football agents’ fees and dual representation contracts has been issued. Here Patrick Way KC offers some interpretative analysis.

On 13 May 2024, HMRC issued a publication entitled ‘Help with Football Agents’ Fees and Dual Representation Contracts’.

This publication has “upped the ante” in relation to the taxation of football agents’ fees.

A short history may help.

July 2009: Since July 2009 Football Association regulations have allowed dual representation by agents so that a football agent can represent both a player and a club during the same contract negotiations, provided that the representation arrangement is agreed to by all parties.

Accordingly, as a broad proposition HMRC does recognise the concept of dual representation. What they do not accept, however, is that the split of the agent’s fee between player services and club services can default to 50:50. Indeed, HMRC’s current view is that the football agent will typically be working more or less exclusively for the player to place them (or keep them at) their preferred football club and to secure the best terms possible. So the player is treated by HMRC as having a tax bill (by reference to the benefit in kind rules) for all the fees charged by the agent unless evidence to the contrary can be produced.

March 2021: It was not always like this. Indeed, until the issuing of guidance on 31 March 2021 HMRC widely accepted that fees payable in respect of dual representation were equally split (50:50) between the player and the club so that the player would be responsible for tax on 50% of the total fees but not the remaining portion, which would be attributed to services provided by the agent to the club.

However, with effect from 31 March 2021, as the guidance issued at that time, stated: “HMRC does not accept a default split (e.g. 50:50). Instead it expects an evidenced and commercial justification for payments made.”

January 2024: On 1 January 2024, the FA’s Football Agent Regulations came into force and superseded the previous FA’s Working with Intermediaries Regulations. HMRC consider that all parties will follow these Regulations in the future and they accept that the Regulations do not impose any restrictions on agents representing more than one party during a transfer.

As will be seen from this article, however, HMRC do not accept the default split of 50:50 between club and player services. Instead, HMRC are looking to see evidence and commercial rationale for the payments that are made.

May 2024: As foreshadowed above, on 15 May 2024, HMRC published new guidelines for compliance aimed at football agents and clubs which set out their view on dual representation contracts.

The essence of the new guidelines is that HMRC’s view is that agents work primarily for the player, and accordingly fees for the agent’s services should be apportioned accordingly with the lion’s share (if not all of the share) being treated as payments for services provided to the footballer exclusively: so a significant benefit in kind charge results in the hands of the player.

How did we get here?

The football world has seen an explosion in the quantum of fees paid to agents.

For example, according to Sky Sports the late football agent, Mino Raiola, was paid £24m for brokering the transfer of Paul Pogba from Juventus to Manchester United in the summer of 2016.

At the time Juventus’s general manager, Giuseppe Marotta, said (at the club’s AGM in October 2016): “The price tag [for Pogba] we asked was €105m (£94m) plus €5m (£4.5m) bonus in the case that the player renews his contract with the club or is sold for more than €50m (£44.7m).

“We made around €95m. Mino Raiola, his representative, will be paid €27m (£24m). The profit on Pogba is around €72m (£64.5m).”

Further, according to The Athletic, Manchester City spent over £51.5m on agents’ fees for the 2022-23 season and, if you would like to see how much your club spent on agents, you can look at the schedule to this article.

What’s the problem?

HMRC’s May 2024 publication explains the problem identified by HMRC succinctly by reference to an example which they have produced showing the difference between an agent acting for a player on the one hand and the same agent acting for the transferee club in relation to the same transaction, on the other hand.

Agent acting for playerTax impact
Agent’s fee£1m
Amount paid to agent plus VAT£1.2m
Income tax on player £1.2m at 45%£540,000
Employer’s Class 1A National Insurance Contribution £1.2m at 13.8%£165,600
Club cannot reclaim VAT£200,000
Total tax£905,600
Agent acting for clubTax impact
Agent’s fees£1m
Amount paid to agent plus VAT£1.2m
Income tax on player£0
Employer’s Class 1A National Insurance Contribution£0
Club can claim VAT£200,000
Total tax£0

So you can see why HMRC want to try to say that all of the services provided by the agent are for the player and not the club.

What do HMRC want to see?

HMRC do accept that there can be circumstances where there may be genuine dual representation and in these circumstances HMRC expect to see a comprehensive audit trail and documentation to demonstrate the true contractual and commercial value of the relationships involved.

The documentation and evidence must be retained to support any claims to the effect that the value of the services (to any extent) is for the benefit of the club rather than the player.

In particular, HMRC would expect to see the following:

he player-agent representation agreement;

  • permission given by the club holding the player’s registration to the potential buying club to approach the player and their agent, when the potential buying club wishes to recruit that player;
  • the potential buying club’s initial approach to the player and the player’s agent, including any terms offered to the player and agent;
  • the club’s request for:
  • the agent to provide the club with services;
  • the specific services the club requires the agent to provide to the club;
  • the amount the club would be
  • content to pay to the agent in return
  • for those services;
  • the agent’s agreement to enter into a dual representation contract, including the types of services to be provided, the initial terms on which any such agreement was negotiated, and the final terms agreed — this information should also make clear the valuation that the agent itself placed on its services to the player and club respectively;
  • he player’s agreement to enter into a dual representation contract;
  • the dual representation contract between agent, player and club;
  • the player’s agreement to enter into an employment contract with the club, including initial terms on which any such agreement was negotiated, as well as the final terms agreed.

It is to be noted that HMRC would expectthis evidence to be obtained before theagent provides their services. The onlyexception to this is the player’s agreementto enter into an employment contractwith the club as, of course, the agent willhave provided their services beforehand. HMRC say that if they see dual representation documentation dated on the same date as the player’s actual employment contract itself then they regard that as an indicator that the values attributed to the player and the club may not reflect the commercial reality.

HMRC also expect all relevant evidence to be kept, and the sort of evidence which they are looking for is to show that the services provided by the agent are consistent with what was originally agreed.

This evidence can include:

a. emails;
b. contracts;
c. letters;
d. faxes;
e. memos;
f. meeting notes;
g. notes of telephone calls;
h. text messages (including WhatsApp messages).

HMRC, not surprisingly, want all the evidence to be retained.

They would also expect the agent to separately invoice the player and the club and for those invoices to show in detail what the services were.
HMRC say that the type of services they would accept as being club services can vary. They would expect dual representation contracts to be part of a club’s or agent’s internal tax assurance processes. They would also expect all parties to have confirmed with each other that they have given the same values to any split of player and club services when making returns to the relevant tax authorities.

Finally, the amounts of outputs and output tax on the agent’s VAT return, which relate to club services, should match the amount the club has reclaimed on its VAT return, subject to normal VAT exceptions.

How does this work in practice?

The first observation to make, of course, is the football transfers move fast and very often do not occur until deadline day.

So to get all the information which HMRC want to see in place beforehand can be very difficult. Nevertheless, the relevant parties should do their best, at the very least, to agree beforehand that there is dual representation contract and what the terms are. In addition as mentioned extraneous evidence is very helpful. So notes of telephone discussions and texts and WhatsApps will be very useful.

Are HMRC correct?

As can be seen there has been a big shift by HMRC from a 50:50 split being acceptable, to the possibility of none of the services being provided for the benefit of the club with a large tax bill for the player as a result under the benefit in kind rules.

In my experience life is not like this.

A simple example based on a case which I have seen may explain this.

In the particular case the well-known footballer was happy to continue to play in Italy, but at that time the Premier League was growing in stature and the amounts that Premier League clubs would pay for footballers to join them was increasing astronomically. The particular player had no special interest in leaving Italy but if he was going to do that then he would have been happy to go to any club in one of the top leagues, which would include the Spanish League and the English Premier League.

Offers were received for his services from a well-known Spanish club but then, at the last minute, an English club moved in at a time when they were building a team which they hoped would be ‘world beaters’.

It made no difference to the footballer whether he stayed in Italy, went to Spain or went to England. The agent involved spoke to the English club and spoke to the Spanish club. In the end, without any prompting from the football agent, the English club offered 50% more by way of a transfer fee over and above what the Spanish club were offering. The transferring Italian club preferred therefore to accept the offer from the English club and asked the player if he would be prepared to move to the English club. The English club offered terms to the player on a ‘take-it-or-leave-it’ basis (i.e. the football agent was not involved in negotiating those terms) and as a favour to the transferring Italian club (with whom the footballer had a good relationship) the player agreed to move to the English club: the Italian club thereby obtaining a larger transfer fee for itself. The English club rewarded the agent on the basis that they felt that the services in question were very much for their own benefit because they wanted the footballer to join them regardless. The agent did not negotiate on behalf of the player and, indeed, as mentioned all the terms were agreed beforehand.

On that basis one can see that virtually none of the agent’s services (perhaps none whatsoever) of the services were provided for the benefit of the player. The player could have stayed in Italy or gone to Spain but simply went to the English club as a favour to the Italian club. So why should there be a benefit in kind charge, of any substantial amount, in the hands of the player?

For the future – in this sort of situation – there would need to be a full representation contract disclosed to HMRC and all of the information provided as described above. If, however, the matter was to go to trial then the evidence of the parties (particularly under cross examination) would be helpful and might be more persuasive than anything else: oral evidence from a good witness in front of a judge can be very persuasive and can have much more force than written documents from time to time.

One can see, however, that if transfers happen at the last minute it will be difficult to marshal everything in time and have everything available but one simply must do this. So agents must make sure that they have dual representation contracts ready but as mentioned this will be a little bit difficult if they are “jumping around” from one potential transferee club to another in the run in to deadline day. Do they keep producing a separate dual representation contract with each potential transferee club just in case? But if one is to avoid the aggravation of going to court having all the evidence available and producing it to HMRC is going to be important.


HMRC are definitely ‘on the warpath’ and are approaching this matter from the point of view that they consider that virtually all of the services now, of an agent, are provided for the benefit of the player and not the club. This gives rise to significant tax issues in the hands of the player and therefore if this risk is to be minimised the terms of the HMRC’s publication must be carefully considered.