International Assignments: A new concealed tax on sport?

January 3, 2010

International athletes who attend sporting events in the UK may be
subjected to UK tax on a higher proportion of their worldwide earnings
than has previously been the case before. 

However, HM Revenue & Customs (HMRC) has denied a change in
practice and  has re-iterated  that any payment made to sports people,
regardless of where such a payment is made, should be taken into account
when calculating taxes due in the UK.

Non resident sports people

Non resident athletes are, as a general rule, only subject to tax in
the UK on any UK based performances.  This is in contrast to the tax
position for a non-resident employee who makes business trips to the UK,
who provided certain conditions are met, can seek exemption from UK tax
if he or she is only here for a limited period.

Agassi case

Following its success in the case against tennis star Andre Agassi
in 2006, HMRC has been seeking to charge UK tax not only on appearance
or tournament fees but also on a proportion of global endorsement and
sponsorship income.

Mr Aggasi, tax resident in the US, had filed a UK tax return,
declaring UK performance earnings only. In his view, income paid to him
by sponsors based outside the UK and paid outside the UK was not subject
to tax in the UK. HMRC argued successfully that as there was a
connection between an appearance in the UK and income obtained through
global sponsorship deals, a proportion of such endorsements were, in
fact, earned in the UK and should therefore be subject to tax in the UK.

Calculation of UK earnings

How to calculate the proportion of income earned in the UK is a
rather grey area which is subject to some debate (particularly given
that sporting seasons can vary in length).  HMRC is now taking a more
hard line stance and looking to calculate UK taxable earnings for non
resident sports people by reference to the total number of events
attended in the tax year (rather than using the number of days present
in the UK). On this basis, an individual attending 5 tournaments in a
tax year, of which 1 was held in the UK, would be taxed on one-fifth of
their global earnings and income from sponsorship deals compared with
2/52 for a two week attendance in the UK.


Extensive press coverage in this area has arisen, not least because a
number of high profile sports people have confirmed that they intend to
limit their attendance at sporting events in the UK.  It is regrettable
that the UK may lose the ability to host international sport events due
to athletes’ concern to present their winnings and international
sponsorship earnings from the UK taxman.

For further information or to discuss the issues raised, please
contact Guy Abbiss (
or  Bina Gayadien (
on +44 (0) 203 051 5711.


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