[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.