UK High Court Rules Against Agassi In Tax Case

by Robin Pilgrim, LawAndTax-News.com, London

19 March 2004

Entertainers and sports personalities will have been disappointed by a recent High Court ruling issued by Mr Justice Lightman regarding a tax bill presented to tennis star Andre Agassi for earnings from sports companies, Nike and Head.

Mr Agassi had appealed against a decision by the Special Tax Commissioners in favour of the UK's Inland Revenue. The tax authority had argued that the fact that he was playing in the UK whilst endorsing products for Nike and Head represented a "relevant activity", and that he should therefore pay UK tax on the payments that he received from the companies.

Handing down his ruling, Justice Lightman explained that:

"It is common ground that section 556 of the 1988 [Income and Corporation Taxes] Act subjects non-residents to tax, if the payment is made by an English company or a foreign one with a tax presence here. The question raised is whether they are intended to be excused from liability if, instead, they are paid by a foreign company with no tax presence here."

He went on to observe that:

"In my judgment it would be absurd to attribute to the legislature the intention that liability could in any and all cases be avoided by channelling the payment through a foreign company with no tax presence here. If this were the case, the tax would effectively become voluntary," and concluded that:

"As it seems to me, the plain and obvious intention of the legislature was to impose an obligation on the person making the payment irrespective of his tax presence here."

Recommended