Retired Liverpool and England winger John Barnes, who was never banned during the entirety of his football career, has now been banned as a company director, following his limited company’s failure to pay nearly £200,000 in corporation tax and VAT.
Tax Touchline Ban: What did ‘Digger’ Barnes fail to do?
The silky-smooth footballer and ‘World in Motion’ rapper has been judged ‘offside’ by the Insolvency Service after he paid zero tax to HMRC between November 2018 and October 2020, despite his company having a turnover of £441,798.
Barnes, who provided media services through John Barnes Media Limited, was disqualified following an investigation from the Insolvency Service after his company went into liquidation in September last year.
An Insolvency Service investigation found that the Liverpool legend did not pay a penny in corporation tax between August 2018 until the company ceased trading in January 2020, even though his company owed £78,839. He also failed to make any VAT payments, which totalled £115,272. The football legend’s company had altogether failed to pay a whopping £194,111 in tax, which rose to nearly £250,000 once interest and penalties are added.
Barnes is now banned from being a company director until 1st November 2027, with Mike Smith, the chief investigator at the Insolvency Service, saying: “John Barnes had a legal duty to ensure his company paid the correct amount of Corporation Tax and VAT. Instead, his company paid no tax whatsoever between November 2018 and October 2020, despite receiving earnings of well over £400,000. “This disqualification should serve as a deterrent to other directors that if you do not pay your taxes while directing money elsewhere, you are at risk of being banned.”
Barnes’ Tax Touchline Ban: Other footballers have failed to beat the offside rule
John Barnes isn’t the only footballer to have been caught offside with tax. Former Everton forward Oumar Niasse recently lost a first-tier tax tribunal after he tried to deduct agent fees from his employment income. The striker attempted to argue that he was an ‘entertainer’, since entertainers are allowed to deduct agency fees from their employment income.
Also, an investigation by the Daily Mirror found that over 300 professional footballers are reportedly under investigation for suspected tax avoidance, most from the Premier League. This is three times the number that were investigated the previous year,
HMRC are also said to be investigating 31 clubs and 91 agents after appointing a team of fraud experts to work with the FA’s Football Compliance Project. It’s claimed HMRC’s new team will focus on tax avoidance linked to image rights.
Clubs are alleged to have paid players extra fees for using their image in various endorsements. This is usually done by paying a limited company the player has set up rather than to him directly and thus avoiding around 26% of tax due (the difference between Corporation Tax rates and the 45% tax rate for high-earners.
Barnes’ Tax Touchline Ban: IR35 rules also trip up footballers
The tax which has tripped over footballers in the penalty box the most, has been the IR35 rules. TV football pundits Neil McCann, Phil Thompson and Match of the Day presenter Gary Lineker, to name but a few, have all stood at the defensive line against long-running IR35 investigations into their tax affairs.
Thompson and McCann lost their appeals against HMRC; with only Gary Lineker winning his dispute against HMRC over a £4.9m tax bill. As for John Barnes, he was clearly inspired by a verse from his famous World in Motion terrace anthem, “Don’t get caught, Make your own play, Express yourself, Don’t give it away.”
But perhaps, he should have acted on his own words from a different verse of the anthem when taking advice when it comes to paying tax: “You’ve got to hold and give, But do it at the right time…”
Tax Accountant’s view
I believe Digger Barnes’s red card, in truth has only been a yellow. This is because the 3½ year ban, whilst probably inconvenient for Digger, is much easier to stomach when you realise that he has personally saved most of the near £250,000 owed, which is hardly a deterrent!
Personally, I believe that top footballers who are often paid obscene amounts of money, such as Kevin De Bruyne of Manchester City, who is paid an eye-watering basic salary of £400,000 per week before image rights, should not deliberately try to avoid the taxman. After all he will still be left with nearly a quarter of a million pound a week after tax, plus his image rights, which isn’t too shabby!
If you would like to see John Barners rapping one more time, watch below:
