It's what we all knew

[TCCANARY 263]

From the BBC site

http://www.bbc.co.uk/sport/football/36266364

This bit at the end describes a club not too far from us.

"Tax doesn''t have to be taxing

Finally, there may be some in the lower leagues who may have another, totally legal motive for owning a club.

Pete Hackleton, tax partner at Saffery Champness, explains: "What can be quite popular is if you have a profitable company which is already paying tax in the UK or anywhere else on its profits and you were to buy a football club which is making losses, then the profitable company can sponsor the football club.

"You could be the main shirt sponsor, stand sponsor or whatever else. Let''s say the profitable company pays £1m a year for that privilege. The profitable company has an extra £1m for expenditure, so effectively it saves tax on that £1m, and the football club has an extra £1m of income, which, because it has other losses, probably doesn''t have to pay tax.

"But the other way for the owners is quite often if they''ve got a profitable company, they will acquire the football club underneath that company. Then what you can do is, when the football club makes a loss, you can surrender those losses to the profitable company.

"If that company is making £5m a year of profit, it would have £1m of tax to pay in the UK. But if the company is making a £5m profit and a football club underneath it making a £5m loss, you can just offset the two. Overall there''s no profit and no tax to pay."

[It's Character Forming 1,160]

While this is true, any shirt sponsor can claim the payment to the football club as deductible for tax.  But there have been some cases where sports sponsorship was excessive and HMRC denied the deduction, so it would be easier to justify for a Prem club than if you''re paying excessive amounts for sponsorship by some low-level rugby league club.

 

And yes, companies with trading losses can offset them against taxable profits by other group companies, but this doesn''t change the fact that the rest of the losses still need to be funded, one way or the other, by the owners.

 

Also people need to remember that player  and staff wages will be subject to income tax/PAYE (45% for most footballers you''d expect) plus employee NIC plus employer NIC (13.8%) plus of course VAT is charged on tickets at 20%.  So given their wage bills, I expect football clubs pay a high proportion of their turnover in tax, compared to a lot of other businesses.