image rights payments count toward the cap: that was, iirc, the issue when Bradford (?) were done for a breach. And tney're specifically mentioned in the SC regulations. The alleged issue over pensions is unlawful deduction from wages, not additional payments

And, if that is true, effectively operating with a higher salary cap than clubs which correctly deduct Paye and NI (if such a club exists!)

That's not what he said and you're preaching to the converted if you think I don't understand the benefits that could be gained by clubs (and consequently the game as a whole) working in collaborative relationships. I've posted many times on that subject. Incidentally, and not surprisingly, I seem to recall you had a very different opinion on this matter in the past.

I do find it funny when you and GF manage to hold such forthright views in one regard and then completely change your stance when exactly the same principles are applied in a slightly different way. I suppose you are at least consistent in your inconsistency.

yes it is, read it again, it very very clearly says [iRugby League is a business[/i and talks in the context of the game as a whole and the RFLs administration of it. Nowhere does it mention clubs individually and only talks as the game as whole and the market it operates in. You then applied this to a totally different context and talked about the clubs and their competition against each other. It is the barnacle bill patented attacking of a strawman.

no you dont, you made it up, for the avoidence of doubt, here is what i said on the subject,

You see i even gave a few ideas on how clubs could collaborate. You literally couldnt have been more wrong.

This has been debated at great length over a couple of years, on here and elsewhere. Here is a summation of my understanding:

Image rights payments made by the club, and by "connected parties" and pension contributions count towards the cap. Have done for ages.

Image rights payments made by unconnected third parties do NOT count towards the cap. This is how Scully's payments from Gillette did not count towards Saints cap, and (I believe) how Harris' payments from Tissot did not count towards Leeds' cap. When Harris played (allegedly) for Bradford, he received image rights payments from pub operator Publico (and apparently did regular appearance work for them for it). However, seemingly because Publico once placed a small advert in a Bulls programme, they were retrospectively deemed to be "connected" to the Bulls, hence the retrospective cap breach. So goes the tale, anyway. There is plenty more probably best left unsaid.

The tax dodge with Image rights PAID BY THE CLUB is where HMRC contended a disproportionate percentage of an overseas (usually) player's total net earnings from a club were paid as image rights not salary. In some cases, seemingly over 50%, for players few had heard of before. HMRC has contended a max of 15% unless its a "Beckham" situation (ref a leading tax case a few years ago).

Why does this matter? Because image rights could e.g. be paid to a player's offshore Personal Service Company free of tax and NIC, so a club could pay an overseas player a lot more net pay for the same "gross" pay. Thereby squeezing a lot more out of the salary cap as well as depriving the exchequer of taxes. A bit like those nasty non-dom capitalists you keep hearing about - since that is precisely what such players were. No difference. (As an aside, do people hate these overseas players and they way they avoided paying UK tax the way they profess they do other non-doms?)

What is now happening is HMRC is arguing (and seemingly successfully, although I gather Leeds are fighting a test case with HMRC on behalf of the RFL) that "Excess" image rights payments were a tax evasion device, and that the "excess" payments made should be treated as net pay to the player, and grossed-up for tax and NIC. With interest and penalties, you are looking at potential liabilities of maybe twice the "excess" image rights payments. Going back a number of years. For some clubs, especially those who seemed to get a lot of "bang for their bucks" for reasons that were never fully understood at the time but are a bit more clear now, this could mean massive bills and in some cases possible oblivion.

Its a little different with Pensions, since the employer contributions would normally be fully tax-deductible provided the usual conditions were met. Some clubs (I know of one for certain) paid what HMRC allege was a disproportionate amount of a player's package as pension - even though that player was approaching the end of his career and was looking to secure a decent pension pot same as many in business do. This seems quite unfair, and it is to be hoped HMRC retracts.

There is a related issue with payments to Employee Benefit Trusts - I'll not bore you with that. EBT payments specifically fall within the cap too now, btw, although it was less clear earlier.

The real shame is that HMRC have been pursuing League, Yawnion and Cricket first, to establish the precedents, before they go for the REAL target - soccer. They reckon there are many hundreds of MILLIONS of tax to be recovered there.

No prisoners in this game - the stakes are massive - that is why HMRC are assaulting the "weaker" sports first as I understand it, and why I suspect they are especially assaulting the weaker clubs (financially) in SL.

And yes, if HMRC win the argument and big chunks of image rights payments prove to be taxable, then what SHOULD logically happen is that the grossed-up amounts should be used instead of the net payments for salary cap purposes. (The Operational Rules even state "Gross"amounts to be used). Retrospectively. Which would probably send a load of clubs well over the cap in previous years, retrospectively. Which is why no prior-year salary cap assessments will ever be re-opened IMO, and so those who "avoided" or "cheated" (take your pick) the most will retain the benefits of their actions. I suspect there is no alternative..."in the interests of the game".

But this is a retrospective action. I know i have spoken to you before on this, and as i said, there is no reason to suppose that because under accountancy practice these payments would generally be included in the year they should have been paid, there is no reason to expect this would be the case in SC, there is nothing in the rules of the SC that would lead you to believe these payments would be applicable in anything but the year they were paid and as most of these players arent at the same club, there would be minimal applicable SC £££££


In that case the only SC issues would be the players who were still at the clubs when this retrospective payment was made to HMRC.

Besides if the RFL did chase this down, wouldnt the clubs have cause to claim this money back from the players? If they didnt want to go through that and if the players are no longer at the club, the club can simply ask the player to pay it back to them to settle the HMRC debt which would leave them with no SC liability, then pay same amount back to the player as they are no longer contracted their wages wouldnt apply to the SC.

In fact, The SC rules make it clear that payments ARE attributed to the year/s to which they relate, not when they were paid (or, by extension, assessed). In that, they do follow normal accounting (and tax) rules. This was made completely clear after Wigan tried the argument when they breached the cap - seemingly because they tried to make payments in a later year to which they related, IIRC.

And, under the tax rules, the obligation is on the employer to deduct the tax. Whether the employer then seeks to recover it from the ex-employee (fat chance of an ex-employee stumping-up, would you agree?) is up to the employer.

BUT...regardless of all this tax, legal and accounting waknerage, does anyone realistically expect the RFL - by which read "The SL CLubs" - to seek to open up previous years? Of course not. The whole thing would fly apart at that - imagine for example what clubs previously done for cap breaches would say if it transpired many of the rest (including Leeds, of course) had also breached the cap, maybe for different reasons? Does not bear thinking about does it? Especially as there are strong arguments that the tax law was far from precise at the time. Its a huge elephant in the room that will be quietly shepherded out, and never raised again. And rightly so - there simply is no alternative! Even if maybe it does put the known cap breaches into a more appropriate perspective.

Of course, there is maybe hope that the Leeds test case will bear fruit. That would probably be better news for SL as a whole, as well as for some clubs in particular, than almost anything else that is presently on the horizon.

Wigan 2006

It makes clear by that it means that if a player is contracted to a payment for that year, that is his SC value, they cannot defer or carry over payment, it isnt clear if this would apply to a very specific circumstance like this.

The SC rules also make clear that the actual amount received by the player is 'irrelevant' to his value on the SC. His value on the SC is based on his contract with a value assigned to certain assumptions which if not accurate wouldnt matter. I would expect these 'assumptions' would include the tax liability anyway.


i do agree it wouldnt be likely, however any SC charges from the RFL would force clubs to chase players for this money, even if to move it around as i hypothesised before.


I would also say, since 2007 at least, the RFL have assessed and valued a players Image Rights payments for SC payments, and have approved all signings and payments.

HMRC's investigation is going back as far as 2005. I'd be surprised if the RFL would want to open a can of worms re the salary cap by going back that far, and anyway, if HMRC win I think possible retrospective salary cap breaches will be the least of the problems for the affected clubs. HMRC are determined to win this battle across all sports. Its estimated that the bill for the the Premier League collectively could be around £750 million, its not small beer, and RL and Cricket are seen as easy targets for establishing the precedence. I reckon there'll be some very nervous SL chairman at the moment.

thanks AB for the explanation. i agree that it is hugely unlikely that anyone will want to look at historical figures, however assuming this loophole has now (or will very shortly be) closed down by the taxman.
it poses the question whether the competition can legitimately maintain the current playing rosta.
if not the salary cap may be untenable going forward as clubs could no longer make the same payments under the current rules?

I'll not get into debate on your first point, since I don't sense violent disagreement. I am pretty clear in my own mind (and being sad enough to be pretty familiar with the salary cap rules) that - in principle - you'd gross -up the image rights payments for the tax and NIC that would have been deducted, and you'd do it for the year/s that those image rights payments were payable in respect of. But its totally academic anyway, since it will never - could never - happen.

Your reference to "actual amount received being irrelevant" - understand your meaning, but I suggest it is a little out of context? That clause was introduced with the Live Cap, and means that once you assess a player's value (from his contract) for a salary cap year, you don't then go and recalculate it if he ends up earning more or less than the initial salary cap value (with some stated exceptions). If, however, it transpired that the original salary cap value had been wrongly disclosed or calculated (e.g. excess image rights should have been assessed "gross", like salary) then that WOULD be relevant, by any measure? But, again, its never going to happen, and would anyway be open to all manner of challenges.

Your second point - indeed, although it would depend on the player's contract whether they could. I think some clubs (various fans from Wire said this applied to King etc, for example) had clauses which allowed them to chase the player for tax if it transpired the arrangement was not tax-effective. In such cases, the club would surely argue (I sure would!) that there was no cap breach anyway since the employee was obliged to stand the excess? Provided of course the club was seen to make some effort to effect recovery? (OK the club would still be liable for the employers' NIC, for the years until it was excluded from cap calculations for precisely these sort of reasons.)

Your last point is both powerful and irrefutable. How the hell could the RFL anyway argue a club retrospectively breached the cap (if, for some crazy reason they were ever minded to) when they themselves approved the figures and in full knowledge of the facts! Would be a non-starter!

What I DID hear, anecdotally so treat it as such, was that as part of the HMRC investigations payments to/for players may have come out that the SC commissioner was not necessarily made aware of. Probably a bit more sophisticated than the old "brown paper envelope"? Now, should that happen to be true - and I have no evidence one way or the other - then we are into a whole new ball-game: both SC and tax evasion. My guess is that we will never hear the truth or otherwise of this, and again probably best so.

Thanks for posting the £750m estimate - I'd known it once but could not remember other than it was many hundreds of millions. As we both say, stakes are very high and HMRC are on a campaign they do not aim to lose.

Exactly. I suspect no club has signed overseas players in the last year or two on contracts which do not make the player responsible for any additional tax etc due - or if they have, they are stupid!

And you'll have seen reports from the Oz media where they say a SL move is now far less attractive precisely because of "tax loopholes" being closed.

Add to that the plummet of Sterling against the AUD and NZD, and it will cost maybe twice what it did a couple of years ago to put a given net amount in AUD or NZD terms into a player's pocket. Yet the salary cap has hardly moved. So yes, as you rightly indicate: go figure!

And, of course, the increasing cost of antipodeans has in turn pushed up the cost of non-antipodean players...supply and demand and all that.