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| Quote [I'm actually wondering if that's part of the way Pearson's negotiated the liability down, as there'll possibly be Corporation Tax payments to offset because there are no longer profits to tax./quote
Haven't got the accounts in front of me so don't know for sure but I would be quite suprised if any profits the club has made aren't more than offset by prior year losses so I doubt they pay corporation tax at the moment anyway.
From a boring accountants point of view it will be intersting to see how they show the revenue settlement in the accounts. I don't expect they will actually rewrite prior years accounts.
Quote So either the Revenue have been slack in validating the oeration of these schemes, or they've not been properly notified, then?'" '"
To be fair to the Revenue (not something I'm often accused of!) I don't think it's a case of being slack. The scemes are very complicated and all are slightly different. I think its a case of them trying to get everything in a row before they launch their attack. I doubt very much that they have not been properly informed or the directors would be looking at something a bit more serious than just settling the liabillity
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| Quote carl_spackler="carl_spackler"Think he's getting more at the fact that there is now an additional tax liability for each of the last 10 years. If I'm understanding right, technically it should belong to the players concerned, but we'll be footing the bill instead so it's additional PAYE to pay. The accounts for the last 10 years will therefore be restated with additional tax (i.e. wages) expenses, which may make the last 6 years' worth of accounts now show losses. I'm actually wondering if that's part of the way Pearson's negotiated the liability down, as there'll possibly be Corporation Tax payments to offset because there are no longer profits to tax.'"
But to say we would have made a loss is pointless, if we hadn't ran with this high risk strategy we'd have just budgeted differently, I'm sure.
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| Apologies for messing the quote system up!
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| Quote east hull FC fan="east hull FC fan"But to say we would have made a loss is pointless, if we hadn't ran with this high risk strategy we'd have just budgeted differently, I'm sure.'"
His question was no more pointless than any other post on the thread.
And you asked why would this new liability mean we made losses instead of profits, so I just gave you a possible explanation.
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| I know Leeds have used EBTS, because they said so in the contingent liability note in their accounts. I know Bulls have NOT. Beyond that, I don't know.
The bigger exposure for the game is club-paid image rights. Most clubs are up for those.
EBTS and club-paid image rights and pension contributions DO count under the cap. The issue is that, using these, you can get a lot more net income (or equivalent) to a player for the same gross cost to the club (remember too that salary attracts employers' NIC, which is also avoided - or evaded -using these devices.
My argument for some years has been that club using these devices "to excess" - for example, paying over half a non-marquee antipodean player's package as image rights - has been effectively breaking the cap, since if - when - challenged by HMRC, if ANY amounts are "grossed up" - i.e. taxed as if they were net salary payments - then the amount of the grossing-up should be added to the cap spend. It won't happen, of course.
But, perhaps in an effort to evade the salary cap more than tax, the consequence has been to antagonise HMRC sufficiently for them to seek to tackle this issue once and for all. Although, as I said, RL is a mere fleabite to them compared with Soccer. RU reached an agreement a bit ago.
Unfortunately, RL as a game is skint, and most RL clubs are either skint or would be were it not for (or had it not been for) the support of their rich owner. A select group you guys have just joined - good luck to you. We will not be so lucky, and face a future that is at best uncertain.
Consequently, these large bills for back tax - and we were told a few days ago at a fans' forum, in response to questions I asked, that our club HAD agreed a settlement with HMRC over image rights - will either be picked up by the rich owners, or if no rich owner then God knows how they will be paid. At best, by condemning the clubs affected to continuing mediocrity for the foreseeable future.
It seems to me that all the clubs using these devices to excess did so in the knowledge that the principal effect was to avoid (or evade) tax and NIC, and therefore these devices were open to attack. Therefore it is hard to take issue with HMRC. Yet, if you were a club board seeking to build the best squad you could, and you saw other clubs seeming to be getting a lot more bang for their salary cap bucks, what would YOU do? Even if you were concerned that it could all go tìts up if or when HMRC got their teeth into it?
This whole tax disaster is a consequence of both having a salary cap AND a game that is desperately short of funding.
As for the comments about would you have made a loss had you not used EBTs? If you were spending to the cap, then only to the extent of any employers' NIC that you would otherwise have paid (which these days is outside the cap BECAUSE of all the avoidance devices) since you could not have paid any more in total than you did without exceeding the cap. The difference is probably that you would not have had such a good - expensive - team.
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| Quote Adeybull="Adeybull"Lots of interesting stuff'"
Cheers for that. It's good that at least Bradford have addressed and are transparent about the image rights issue. I worry that we have the same issues in addition to the EBT but on the other hand Pearson's said he was aware of the EBT stuff before the acquisition, so would imagine that if there's any image rights stuff kicking about he'll have taken that into account too.
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| Quote Adeybull="Adeybull"As for the comments about would you have made a loss had you not used EBTs? If you were spending to the cap, then only to the extent of any employers' NIC that you would otherwise have paid (which these days is outside the cap BECAUSE of all the avoidance devices) since you could not have paid any more in total than you did without exceeding the cap. The difference is probably that you would not have had such a good - expensive - team.'" This is what I'm trying to say, we'd have just pulled the difference back.
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| Quote east hull FC fan="east hull FC fan"This is what I'm trying to say, we'd have just pulled the difference back.'"
I think Jake is maybe making a different point to what you and Adeybull are responding to. I suspect he was not saying we would have made a loss at the time if the rules had been as they are now saying they are, he was asking if the resulting restatements from this situation mean that we have retrospectively made losses instead of profits. Obviously Jake would need to confirm if that is what he was getting at.
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Player Coach | 31467 | Hull FC |
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| Quote carl_spackler="carl_spackler"I think Jake is maybe making a different point to what you and Adeybull are responding to. I suspect he was not saying we would have made a loss at the time if the rules had been as they are now saying they are, he was asking if the resulting restatements from this situation mean that we have retrospectively made losses instead of profits. Obviously Jake would need to confirm if that is what he was getting at.'"
Had the tax and NIC been recognised in the years that it related to, then the profits for those years would have reduced by those amounts. BEFORE tax profits, since the employers' NIC is a cost of the business and the grossing up for tax and employees NIC would have been treated as part of player salaries.
Any interest and penalties would NOT have been reflected in those years, since they would not have arisen, although there would have been interest costs elsewhere as a result.
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Player Coach | 31467 | Hull FC |
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| Quote Mrs Barista="Mrs Barista"Completely agree with your sentiments on football, and like you fearful that we may be the casualties first. Would be very interested in seeing how many clubs have exposure and to what extent on both EBTs and image rights. It seems odd that as it stands Hull FC are the only team with declared liabilities re EBTs; can't imagine if guidelines on them are in the RFL's operational rules that we're the only ones using them.
'"
saints, wire and leeds must have hammered them
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