HMRC's Taxation Of Foreign Sports Stars Is Just Not Cricket!

by Robert Lee, Tax-News.com, London

24 July 2006

HMRC's determination to tax foreign sportsmen has sparked a dispute between the tax authorities of the UK and Pakistan on the interpretation of the double taxation avoidance agreement between the two countries.

Asia News International reported last week that the Pakistan Cricket Board (PCB) has been informed by HMRC of its intention to tax the members of the Pakistan international cricket team, which is currently touring in the UK, because they are not exempted by the bilateral DTAA which has been in force since 1980.

The Pakistan team is playing four five-day test matches and five one-day internationals against England in a two-and-a-half month tour, which also sees them playing several county teams.

According to the report, the dispute centres on the definition of an "athlete". HMRC is treating the Pakistan team as individual athletes and therefore liable for tax. The Pakistan Central Board of Revenue says this interpretation is wrong, and has informed HMRC of its opinion in a letter.

The PCB has also pointed out that England's players were not taxed by Pakistan during the test and one-day international series between the two teams there last November.

HMRC's latest attempt to tax foreign athletes follows the recent House of Lords decision that former Wimbledon tennis champion Andre Agassi is liable to pay UK tax on all sponsorship income accrued at the British tournament.

According to experts, this extra-territorial taxation, which will threaten many foreign stars with higher tax rates, may discourage top athletes from competing in the UK.

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