If its ruled to be evasion, they can and will claim the arrears of tax - going back six years. The Grauniad article indeed alludes to to HMRC pursuing this as evasion - e.g. "...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."

Regarding the bit I highlighted - Not so.

IF these payments are ruled to amount to tax evasion, then HMRC will recover (inter alia) the tax and NIC that should have been deducted from the players. This means that, under the salary cap rules THAT EXISTED AT THE TIME the player payments would be grossed-up to reflect this. And therefore, under the salary cap rules THAT EXISTED AT THE TIME a club at or near the cap will then have exceeded the cap under the rules THAT EXISTED AT THE TIME. No different to what would happen if it was suddenly discovered that a club had paid additional monies to a player that had not been declared to the salary cap auditor.

As for club accountants being busy (only) this week - hardly! This issue has been running for many months now - it started in soccer - and I think you will find the accountants for the implicated clubs - and for the RFL, as is indicated in the Grauniad article - have been on the case for some time.

My guess FWIW is that the clubs that should be most worried about all this are on the other side of the Pennines.

I think that's a rather naive POV.

I also doubt that the RFL will do anything whatsoever regarding possible retrospective SC breaches. It would be a huge can of worms to open and impossible to implement without making the entire competition a joke.

How come? Unless you know more than me about which clubs have utilised this device - quite possible given I am only surmising. It HAS been widely discussed in RL circles that Stains have used the Singapore Parachute (inter alia) although that of course still remains anecdotal, and the other club who seemed to be able to fund a squad of much higher paper quality than most others for supposedly the same cap is Wire.

I believe the Pies went on record saying they would not, because of concerns over the tax treatment being allowable, and I recall the Bulls likewise - assuming of course the truth was being told. As for Leeds, I'd be surprised to be honest given how Hetherington rails at those whose conduct does not measure up to his whiter-than-white standards (and anyway, they have the dual-code set-up). Can't really speculate on most other clubs, but my speculation was based on whats already floating round the public domain plus looking at whose squads seem to have more bang for their bucks.

As for your second point - my best guess is that you will be proved to be spot-on.

This was certainly referred to in the press when Wigan shattered the salary cap at the time when they took on Fielden. After "imposing" their penalty the RL were still supposedly looking into off-shore payments then to see if any furhter action needed to be taken.

Surely the tax liability of a players contract his down to the individual player, the club are not responsible for it, they just deduct under the rules as they are. I suspect if I was found to owe money my employer would not be liable for it.

No but they would be liable for NI Contributions upon it. And if they were found to have aided and abetted an evaison they could be fined say the equivalent amount. But that would be far to logical so is probably not the law!

I suspect the top earners are set up as limited companies as they are in Football, which would mean they are responsible for all tax & NI payments. I have a mate who set himself up as a limited company and pay next to nowt on the 100k+ per annum he gets as a consultant.

Sorry, but wrong.

The responsibility is totally on the employer to apply the PAYE system to payments to employees. If the employer gets it wrong, HMRC will look to the employer for any shortfall.

This Image Rights business is basically about whether certain payments to employees should be subject to PAYE or not. The clubs that availed themselves of the system believed they should not. HMRC believe otherwise, and are pursuing investigations on that basis. My understanding is that this started off into investigations into (much bigger) payments in soccer, and has been rolled out to RL now. My further understanding is that HMRC believe they have a strong case, and that the offending clubs will be invited to make a settlement.

In your case, if a tax inspection showed that the employer had under-deducted tax from your pay, HMRC would require your employer to pay the shortfall. It would then be up to your employer whether to try and recover the relevant amount from you. Few do.

Doesn't quite work that way either, although you can save substantial amounts by using a limited company as a vehicle if you are a self-employed contractor. Ask your mate if he is IR35-compliant - if he says he is, then he'll be taking advantage of being able to pay himself the minimum wage through the company, and the rest as dividend so saving a load of NIC and maybe some tax.

You cannot normally be IR35-compliant if you only really work for one company.

I think not, when I started for my company I was given a car and for two years I was deducted the tax rate by the company that was deemed the correct one (when it was emmisssions based), even to the point where the benefits in kind form was issued and ok'd by the tax office. I was then informed that my company had given the wrong details to the tax office and I owed money, which was deducted by means of giving me a negative tax code.

I was not at fault in my eyes, it was the company and the tax office, but when I took it up with the tax office they told me that ALL tax liabilities were the responsibility of the individual and we had an obligation to ensue we were having the corect tax deducted.

Different situation - what you describe relates to benefits in kind. Because the employer is not responsible for calculating and deducting the tax due on that directly (its part of your tax code) HMRC can't pursue the employer for that. They WILL have recovered the underpaid class 1A NIC from the employer though, as that WAS their responsibility.

I agree that seems unfair; but had they (say) made actual payments to you (say for image rights...) and not deducted the correct tax and NIC then HMRC would go against the employer.

Amongst other things, I've run payrolls and dealt with HMRC at all levels for 35 years.

Thats what he does, pays less than I do on 3 times the money

I'll shut up then

He will also be paying Corporation Tax rover49.

Fact is Rule was on radio some time ago bleating on about the payment as players fly home. We've done it with loads of Aussies in SL era. Plus payments to jersey bank accounts. While the players are here they only receive v small payments which cover day to day living. Tax is paid on this income. But I know £100,000 of income has "missed" the uk tax system with some players.
As the article says it was a loop hole. But now it's shut. Maybe something to do with the £40million tax gap in this country. Expect more gravy boats to run dry.

HMRC are contending (and look to have won the argument as far as I can tell) that it was never even a loophole, just evasion. But either way, its the end of the Singapore Parachute (as I termed it ages ago) where the offshore-held cash is effectively parachuted down to the player while he is permanently on his way back and changing planes at Singapore...

Well I've discovered over the years that the best way to deal with HMRC inspections is to talk at them solid for hours, and bring out piles and piles of documents to overwhelm them, and basically give them a bad head while they form the view that you are a totally honest, tediously precise and utterly pedantic pain in the neck. Especially as they get nearer to the questions you'd rather they stepped on through pretty quickly.

Usually works, too...they can't wait to get out!

Of course, it would be totally unprofessional of me to resort to similar tactics on message boards...

And most Tax Inspectors will let you hang yourself with paperwork, then whack an assesment in which would cripple you........

Not happened to me yet...!

A most excellent & underused tactic, works with a lot of plc's too I've had massive deductions from my water bill for the last 13 years due to me proving that 50% of my water use went on the garden & so didn't run into the sewerage drain. They couldn't disprove it so they had to give the discount. However a lot of government offices are starting to get on the ball.

Hull have definitely paid their overseas players in this way for some time (I was told by our former CEO). I doubt if any aussie/nz player who earns enough isn't paid under this system as you'd be stupid not to use it. I suppose it depends on what % of the salary each club have paid in this way? Does anyone remember the offer letter that supposedly came from saints to SBW a couple of years ago (that saints denied) which detailed it.

I thought that was why the salary cap was lowered to get round these offshore loopholes

[url=http://www.sportinglife.com/rugbyleague/news/story_get.cgi?STORY_NAME=rleague/09/04/08/RUGBYL_Tax.htmlMore here[/url

Big problems may be piling up for some clubs

I refer the honourable gentleman to the information and opinions I provided earlier.

The only surprise for me was that it seems at least one club (the one I always assumed was most at risk) wrote its contracts in a way that enabled it to make the player responsible for the risks of changes in tax treatments.

That will be smart work by the club, less so by the agent.

Would not affect what's already happened - liability would fall on the clubs for underpaid PAYE/NIC - but could have a bearing on how the issue is resolved going forward. It may be that existing players will not take affected clubs over the cap - as they will be the ones to suffer in the pocket and be pretty hacked off about it. But either way, it will make overseas players rather more expensive now.

Not directly. It was lowered when employers' NIC was removed from qualifying cap expenditure - probably because of the myriad ways clubs could structure a deal to avoid NIC, not necessarily using offshore arrangements. The change helped level the playing field. A bit.