UK Tax-Man Threatens Wimbledon's Future

by Amanda Banks, Tax-News.com, London

28 June 2006

Wimbledon got off to a rain-soaked start on Monday, but according to niche tax planning boutique International Fiscal Solutions the recent House of Lords judgement against Andre Agassi could mean that he is only one of many top stars who will avoid the torunament in future.

The recent House of Lords decision found that Andre Agassi is liable to pay UK tax on all sponsorship income accrued at the British tournament. This extra-territorial taxation, which will threaten many foreign stars with higher tax rates, may discourage them from competing in the UK claims Miles Dean, managing director of IFS. The impact of such a talent drain would be disastrous, effectively relegating Wimbledon from its position as the “jewel in the crown” of the international tennis circuit to a niche tournament for UK based players and rising stars, says Mr Dean.

He explains: “The Lords’ decision to give the Revenue carte blanche to assess the tax due on sponsorship payments made from one non-UK company to another - in respect of UK based activity such as Wimbledon - could backfire massively if it deters the best in international sporting talent from performing in the UK.”

“On the face of it, the Revenue could make millions from this judgement. However, as the principles of this landmark ruling are applied to other international sports stars and entertainers performing in UK it will ultimately prove to be very counter productive, seriously damaging the UK’s reputation as a destination for top sporting and entertainment events.

“If the Germans were to adopt the same approach for the World Cup, players could be liable to tax in excess of 40%. In the event, they have taken a more pragmatic approach, leaving taxing rights to those countries where both the payor and payee were resident – after all, the German economy is receiving a terrific boost from hosting the World Cup.”

International Fiscal Services (IFS) specialise in international tax law and structuring. Formed 30 years ago as a niche practise based in London, Amsterdam and Jersey, IFS minimises all forms of foreign tax for their clients (companies and individuals), deferring domestic tax and the legal avoidance of tax wherever possible.

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