[urlhttp://www.guardian.co.uk/sport/2009/apr/01/super-league-inland-revenue-offshore-payments[/url

looks like a few clubs could be in trouble. This is the loophole that its common knowledge several clubs have been using for last few years. Pretty certain caisley/hood made a statement a couple of years back that although we were aware of it we refused to use it in case the inland revenue clamped down in th future so hopefully we arent affected.

I remember something along these lines being mentioned too. If so we may have dodged a bullet. Perhaps the club might confirm? It'd be a feather in their cap if they'd been proved correct.

This has been bubbling and has been commented on for a while, so its not really breaking news.

Would be a big plus if the club could confirm we've not been availing ourselves of the Singapore Parachute (referred to in the article), or any other similar scheme. Our squad for the (supposed) same salary cap as say Wire and Stains may hint at that?

I've been banging on for ages about reasons why some clubs seem to be able to get more out of the salary cap than others - this is one such reason. There are others, of course.

Whats MORE interesting is the salary cap implication. Any monies any club has to settle with HMRC must surely count towards the salary cap (I'll happily explain why in more detail if anyone really wants me to). Which would mean a number of very high profile significant historic and maybe current cap breaches? Except the RFL will no doubt determine that they don't count...

This has been blowing up for a while, and has a long way to run; and the implications are likely to be very profound indeed.

I've just this moment read this in the paper. Very interesting. I thought that this had always been counted as part of the salary cap. Didn't we get done ofr something similar (image rights?) over Iestyn?
It will be interesting to see what happens. Or not as the case may be.

No, the Iestyn case was different (as far as I am aware). IIRC, Iestyn was paid for "image rights" by a supposedly unconnected third party, which the club believed fell outside the cap provisions. For whatever reason (I don't know the details) the Salary Cap Commissioner determined otherwise. I doubt there were tax issues involved because it was not the club paying for the "image rights", and Harris is anyway a UK resident for tax purposes.

As far as I am aware, anyway!

The whole issue of payments to players by "unconnected" third parties, especially if that then results in the clubs paying lower amounts to the players concerned, is a huge unexploded bomb under the salary cap IMO. After all, what about e.g.g Scully and Gilette, or when Harris played for Leeds, Tissot? Or indeed, this mysterious third party who was apparently set up ready to pay for Harris on his return to Leeds, hence various of their fans saying they would not be in breach of the cap if he returned? I suspect this tactic is widely used, and I can think of one example where it may be in use by the Bulls - although Bulls will almost certainly have much less scope for it than various other clubs now.

Interesting times, indeed. I live in hope that what was indicated to us in the past was true, and that Bulls have not used the likes of the Singapore Parachute and so are not exposed here.

from memory it was because the third party who bought iestyns image rights at a later stage took out an advert in a matchday program. At this point under the rules they also became a club sponsor and hence their payment for the image rights counted under the cap.

That rings a bell.

So go on Adey, for us laymen, what are the implications of this to any club that is, or has been, paying a proportion of a players wages this way?

Sure does. I could not remember if the Tetleys advert issue was Harris-related so I did not refer to it.

I'm sure we'll never see an advert for Lexus in the programme.

Simply, its down to whether payments made to players are subject to UK tax and NIC. If its determined that they are - and after due process and appeals or whatever - then what I would expect to happen is that the amounts the players received will be treated as the net amount after tax and NIC (to the extent applicable) had been deducted. The payments are then "grossed-up" to the gross amounts that would have had to be paid to enable the players to receive those net amounts. That difference, plus employers' NIC on the gross amount if NIC applies, is the tax and NIC underpaid.

Add interest and penalties (from memory, ranging from 30% to 100%) and that's what you'd have to settle with HMRC. Subject of course to any horse-trading.

The deemed GROSS amounts would then be the player salary costs to be counted under the salary cap, not the net amounts actually received. For a club at the salary cap, that would mean an immediate breach of course.

That's my simplistic take on the situation, without doing any research. We may have some contributors on here (some quite clued-up guys post on other boards) who can improve on my analysis, and I'd invite them to do so cos I'll not pretend to have the whole story here.

But the basic point must be right, as if the Revenue declare that the payment made to the player was "net", then the club, which has declared the net figure as if it were a gross figure, is as Adey says immediately in breach of the salary cap.

Because (using a notional tax/NI rate of 40% for easy illustration) if the payment actually made to the player was £60,000

and if the club declared £60,000 on the salary cap

but Revenue now says "no, if he got £60K that is net of tax/NI, Dear Club, where's the £40K tax and NI that you deducted, or should have deducted?"

... the effect is that the player actually got a payment of £100K, less tax / NI, which the club didn't - but should have - paid the Revenue.

The club's ignorance - perhaps having been advised by some accountant that the wheeze would work - [imight[/i be taken into account as a mitigating factor by the RFL, but that's all. It would be no defence to a salary cap breach.

The reason though why I can't see the RFL doing anything about it is if it does involve 2/3rds of all SL clubs, they will be scared of the repercussions and will simply fudge and bottle it.

As I have said in another place. And especially if it transpired that one of the clubs was Leeds.

As much as the RFL won't do anything you can be damn sure that HMRC will.

If they can get the clubs for this cash, they will.

Interesting times lay ahead - granted it won't probably affect Leeds, Wire and Wigan as they've got a few quid but Saints might be found wanting......

Cut price sale, all offers welcome?

Good point but the rules are the rules, if some clubs haven't done this why should they effectively be punished for not taking advantage over the years?

The clubs involved have benefited from this and as a consequence should feel the pain. You take a calculated risk when you do something like this, in this case it may have gone wrong.

I'm now praying it isn't us

A rider to all this - my understanding is that HMRC are pursuing this as tax evasion. The Grauniad article certainly alludes to this, with e.g. the comment "...and there are suggestions that they may be forced to make retrospective payments which in a couple of cases could run well into six figures."

However, if in the event all we end up with is it being judged to be merely avoidance, with loopholes being closed, then it won't affect the past and there will be no salary cap breaches. The only issue then is what do the affected clubs do going forward, and what do they do if they are contractually committed to making net payments that they can no longer make within the cap?

That's really interesting. I can't see the RFL applying it retrospectively. How could they possibly enforce it if it meant clubs effectively breached the cap in the last few years? Retrospective points deductions? It's not going to happen is it?

No I don't think you can apply previously, I do think that if they are found guilty of tax evasion that the bit they haven't paid this year, is added to what they've claimed the cap is at and points deducted appropriatly.

I think the RFL can do what they like! They usually do.

I doubt the RFL would re-open prior years, although to not do so would surely lead to serious challenge by clubs who felt others had "cheated" and got away with it. But, in answer, those clubs would say that they made full and frank disclosure of what they paid to the salary cap auditor so if he was happy then he can't be unhappy now.

I'll reserve judgment anyway until we see what comes out of all this and which clubs are implicated. I'll admit though that I will be absolutely sickened if it transpires that we were not involved, it proves to have indeed been evasion and therefore cheating on the cap by the clubs involved, but no action is taken - after what happened to us and all the vicious vitriol we were on the end of.

Even if 10 other teams get deducted pts we`d still finish season bottom.

A guy on Southstander says Leeds are implicated - which surprised me. On Hull one or two think maybe likewise (ditto). I'd always assumed the two biggest utilisers were Stains and Wire, with the Pies stating they did not do it a bit ago.

All supposition at this stage, anyway.

I do hope we have not been implicated also (think the club implied that a bit ago when asked?) - and the fact that we are widely perceived - by our own fans - as getting less bang for our bucks might add support to that - but I guess we have to be prepared for implications if we are.

It does seem likely to me that quite a few clubs will be seen to have cheated the cap because of this. Would be of little comfort to us if it transpired that we had not, although I'm sure we'd seek to ram the noses in it of those who slagged us off so vociferously for "cheating" when we had our accidental breaches. But silly to make any assumptions at this stage.

If, perchance, we are NOT implicated but various other big clubs are, I hope those who have slagged the club off for not seeming to get the same value for their money in signings as certain other clubs will come on here and apologise? Equally, if it transpires that we HAVE been as implicated (would surprise me but who knows?) then I'll have to acknowledge and admit that one of my explanations for comparative squads is shot down. (still leaves some others though...

)

Whatever happens, its pretty inconceivable that the RFL would take any retrospective action - especially if Leeds are implicated. It would make the game a laughing stock. Cans of worms here regardless of what they do, though!

It is against "the spirit of the cap" isn't it?

I wonder what will happen to the players who are STILL under contract to a club who have image rights and offshore accounts as part of their current contracts.

I can't wait to see the pompous Mr. Hetherington squeal.

There's a thread on Southstander asking people to sign a petition to have Leeds Utd retrospectively declared winners of the 1973 European cup Winners cup. It made me laugh when I saw it.

I had a similar response when Hood asked Leeds to hand back 2 points after MM

Only IIRC the third party had a relationship with the club. Advertiser?