UK tax laws repel top athletes

But this might be about to change.

Hydration, shoes, sponsorship, training, diet… tax rules? The last item in that list will not have been weighing heavily on the minds of many runners in the London marathon last weekend.

They are, however rather more of a consideration for international athletes competing in UK pro-sports events. Thanks to current Treasury policy, entry could easily leave them seriously out of pocket.

The HMRC Foreign Entertainers Unit levies tax on foreign sportsmen and women not simply by reference to earnings made from the events they enter the UK to take part in, but also by looking at global sponsorship income.

At the highest levels of sport, the majority of annual earnings are in the form of such sponsorship arrangements. Sellers of training equipment, drinks, perfumes, watches — even broadband (thank you, Mr Branson) — want a sprinkling of top quality athletic shimmer to help shift their wares. The remuneration for many such favoured athletes makes some of their event winnings look positively mean by comparison.

The UK and US revenues are alone in plundering this branding income of international guests at their championships, matches, games, and competitions — with the result that participation in UK events can appear on stars’ books as a loss-making endeavour.

This policy has in recent years found many top athletes deciding against entering UK events. There is a difficult call to be made as to whether the reputational capital they accrue from appearing in UK events is worth the tax payable. The value a major sponsor may put on their man’s profile in the UK is often quite intangible; the prospect of a bill from HMRC running to tens, or even hundreds of thousands of pounds, is not.

This difficult decision has been averted, however, for two upcoming athletics meetings as after years of lobbying by the sports industry, the Treasury has at last issued a concession to their policy. Buried in the 629 pages of Finance Bill 2013 (only slightly down from last year’s record-breaking 686) lie two clauses that grant exemptions from income tax to accredited competitors at the 2013 Olympic Anniversary Games and 2014 Commonwealth Games. News that Usain Bolt will make his first non-Olympic UK appearance in four years indicates the concession is timely.

This year’s concession is stand-alone, but could augur wider change. The case has long been made that UK plc loses out from its current approach to international sport. The Treasury may see the arrival to our shores of itinerant stars as a cash cow to be milked, but the taxes raised are coming at the expense of more significant opportunities (including the 2010 Champions League final which went to Madrid instead).

The economic rally of Q3 last year demonstrated the value to the UK of hosting international sport. Stand-alone tax breaks encourage competitors to help make such events the international displays of expertise they should be. However, the fiscal atmosphere surrounding them remains tense and the UK could benefit hugely from a permanent softening of its policy.

Edward Keene is from private client law firm Maurice Turnor Gardner LLP. This story first appeared on Spear's magazine

Usain Bolt. Photograph: Getty Images

This is a story from the team at Spears magazine.

Photo: Getty Images
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I'm far from convinced by Cameron's plans for Syria

The Prime Minister has a plan for when the bombs drop. But what about after?

In the House of Commons today, the Prime Minister set out a powerful case for Britain to join air strikes against Isil in Syria.  Isil, he argued, poses a direct threat to Britain and its people, and Britain should not be in the business of “outsourcing our security to our allies”. And while he conceded that further airstrikes alone would not be sufficient to beat Isil, he made the case for an “Isil first” strategy – attacking Isil now, while continuing to do what we can diplomatically to help secure a lasting settlement for Syria in which Assad (eventually) plays no part.

I agreed with much of David Cameron’s analysis. And no-one should doubt either the murderous barbarism of Isil in the region, or the barbarism they foment and inspire in others across the world.  But at the end of his lengthy Q&A session with MPs, I remained unconvinced that UK involvement in airstrikes in Syria was the right option. Because the case for action has to be a case for action that has a chance of succeeding.  And David Cameron’s case contained neither a plan for winning the war, nor a plan for winning the peace.

The Prime Minister, along with military experts and analysts across the world, concedes that air strikes alone will not defeat Isil, and that (as in Iraq) ground forces are essential if we want to rid Syria of Isil. But what is the plan to assemble these ground forces so necessary for a successful mission?  David Cameron’s answer today was more a hope than a plan. He referred to “70,000 Syrian opposition fighters - principally the Free Syrian Army (FSA) – with whom we can co-ordinate attacks on Isil”.

But it is an illusion to think that these fighters can provide the ground forces needed to complement aerial bombardment of Isil.  Many commentators have begun to doubt whether the FSA continues to exist as a coherent operational entity over the past few months. Coralling the myriad rebel groups into a disciplined force capable of fighting and occupying Isil territory is a heroic ambition, not a plan. And previous efforts to mobilize the rebels against Isil have been utter failures. Last month the Americans abandoned a $500m programme to train and turn 5,400 rebel fighters into a disciplined force to fight Isil. They succeeded in training just 60 fighters. And there have been incidents of American-trained fighters giving some of their US-provided equipment to the Nusra Front, an affiliate of Al Qaeda.

Why has it proven so hard to co-opt rebel forces in the fight against Isil? Because most of the various rebel groups are fighting a war against Assad, not against Isil.  Syria’s civil war is gruesome and complex, but it is fundamentally a Civil War between Assad’s forces and a variety of opponents of Assad’s regime. It would be a mistake for Britain to base a case for military action against Isil on the hope that thousands of disparate rebel forces can be persuaded to change their enemy – especially when the evidence so far is that they won’t.

This is a plan for military action that, at present, looks highly unlikely to succeed.  But what of the plan for peace? David Cameron today argued for the separation of the immediate task at hand - to strike against Isil in Syria – from the longer-term ambition of achieving a settlement in Syria and removing Assad.  But for Isil to be beaten, the two cannot be separated. Because it is only by making progress in developing a credible and internationally-backed plan for a post-Assad Syria that we will persuade Syrian Sunnis that fighting Isil will not end up helping Assad win the Civil War.  If we want not only to rely on rebel Sunnis to provide ground troops against Isil, but also provide stable governance in Isil-occupied areas when the bombing stops, progress on a settlement to Syria’s Civil War is more not less urgent.  Without it, the reluctance of Syrian Sunnis to think that our fight is their fight will undermine the chances of military efforts to beat Isil and bring basic order to the regions they control. 

This points us towards doubling down on the progress that has already been made in Vienna: working with the USA, France, Syria’s neighbours and the Gulf states, as well as Russia and Iran. We need not just a combined approach to ending the conflict, but the prospect of a post-war Syria that offers a place for those whose cooperation we seek to defeat Isil. No doubt this will strike some as insufficient in the face of the horrors perpetrated by Isil. But I fear that if we want not just to take action against Isil but to defeat them and prevent their return, it offers a better chance of succeeding than David Cameron’s proposal today. 

Stewart Wood is a former Shadow Cabinet minister and adviser to Ed Miliband. He tweets as @StewartWood.