Sportsmen and women who earn money in the UK while not resident have been targeted by HMRC after it won a high-profile case against Andre Agassi four years ago. The implications are now being felt. Previously HM Revenue & Customs had only gone after a portion of “active income”, earnings from prize money or appearance fees. But the so-called “passive income” – mainly from endorsements – was not deemed liable for UK tax. Now attempts are made to claim tax not just on a foreign sportsperson’s direct earnings on British soil (for example, prize money) but also on a proportion of the sportsperson’s |global endorsement earnings. The Independent understands that leading players have voiced their concerns to the European Tour, the organisers of the Ryder Cup, and a Tour spokesman last night confirmed that they are in “discussions” with HMRC. HMRC told The Independent yesterday that Woods and the other players would still probably be liable on their equipment sponsorships.
“Product endorsements that are directly connected to the sportsperson’s performances are subject to UK tax,” explained an HMRC spokesperson. “Though full UK expenses arising from the performance can be claimed against the income chargeable to UK tax.”
Woods’ deal with Nike is rumoured to pay $40m a year. So if he played 14 events this year, and one of those is the Ryder Cup, he would be billed to pay tax, at 50 per cent, on one-fourteenth of that amount, leaving the potential tax bill as high as £900,000. The taxman would no doubt also be interested in the reported $10m he receives from EA Sports, for whom his name and images appear in a computer game based on the Ryder Cup.