And the winner of the 2015 Rugby World Cup is ... HMRC

23 September 2015

Bill Longe

The record-breaking attendances at the 2015 Rugby World Cup coupled with some truly gripping games means this flagship event will be an undoubted success and a marvellous advertisement for the UK. I do however wonder whether now is the perfect time for George Osborne to make a small change in tax legislation and help deliver similar events and perhaps even increase much needed tax receipts. In doing so he could even be hailed as a most unlikely sporting hero.

HMRC does very well out of sporting events. First of all there is the VAT on ticket sales to the fans and then there are further receipts from hospitality, travel and the half-time pies. In addition we should not forget there is no tax relief for business entertaining at sporting events and so it is very easy to see why HMRC is always the biggest winner when it comes to dishing out the prize fund. Perhaps though HMRC should take a half-time breather and consider whether it should kick into touch the foreign entertainers tax scheme first introduced back in 1986.

If you pay an entertainer or sportsman who does not live in the UK for making an appearance or performing in the UK and the total payment is more than the personal tax allowance, you must deduct withholding tax from the payment. It is well known that this tax deduction scheme puts off many entertainers and sportsmen from appearing in the UK.

Famously Rafael Nadal and Sergio Garcia are known to restrict their appearances in the UK precisely because of this tax charge. More recently even David Cassidy claimed that he would not be touring in the UK again after his last tour left him with just £600 after deducting the tax he had to pay on his tour earnings.

The government has on a number of occasions acknowledged the effect the scheme has on making the UK attractive to sportsmen and has granted specific exemptions for certain events including the Olympics, the UEFA Champions League finals and the Commonwealth Games. More recently an exemption was granted for the Anniversary Games held in London earlier this year with speculation being that the exemption was necessary to secure the attendance of Usain Bolt.

Whilst it is difficult to know exactly how much tax is collected from this scheme each year reports put the number between £7m and £70m. Regardless of the exact amount collected it is self-evident that if the government is prepared to grant exemptions from the tax it must accept the scheme does put a block on sportsmen coming to the UK.

If the reports of the amounts collected are correct then it is indeed time for George Osborne to blow the whistle on this tax and make the UK an even more attractive venue for such global sporting events. The additional tax collected would easily exceed the amounts received from the withholding tax and I for one would look forward to even more weekends glued to the TV watching the very best events being hosted here in the UK.

George Osborne a sporting hero – perhaps?