HMRC to investigate grass-roots clubs over payments to players

Accusation of ‘playing fast and loose’ with rules Probe into companies offering ‘spurious jobs’

Grass-roots clubs in England are facing an investigation by HM Revenue and Customs into their tax affairs as part of a crackdown on improper payments to players.

HMRC has written to all clubs in National League One and Two after concerns that some are not adhering to PAYE and benefit-inkind rules.

The move comes after news that more than 40 football clubs and 170 professional footballers were having their tax affairs investigated.

HMRC said in October it had clawed back more than £330million in tax revenue from the football industry since 2015-16.

The Rugby Football Union has been notified by the tax authorities about the move, while club sources warned that it could expose a number of wrongdoings.

“There is no doubt there are a few clubs who are playing fast and loose with the regulations,” said one source. “HMRC is also looking at companies associated with clubs who may be employing players in spurious jobs.”

The probe is expected to be expanded to clubs at Level Five and below from next season, with a particular focus on overseas players.

Clubs in those leagues cannot sign overseas players as professionals as they can come to England only on visitor visas. Whether clubs are paying air fares or providing jobs or accommodation instead will be looked into. “We carefully scrutinise the individual arrangements between clubs and their players to ensure the right tax is being paid, as part of ongoing compliance activity,” an HMRC spokesperson said.

“As part of our risk-assessment processes, we identified that some clubs affiliated to the RFU may not be applying the PAYE regulations correctly, so we are seeking to work with them to ensure their processes and payroll is correct.

“We have informed the RFU and National Clubs Association, and have written to all clubs in National League One and Two to confirm their compliance with PAYE and offer assistance. Where we believe there is a risk that the PAYE regulations are not being followed with regard to payments to players, we will undertake inquiries to ensure the correct tax is paid.”

The inquiry is being seen by some as a further blow to the morale of the grass-roots game amid growing concerns there will be further cuts to RFU investment because of falling revenues at Twickenham.

The RFU annual report published last month showed that investment in rugby will fall by £13million over the next two years.

John Owen, a former RFU president who was also chairman of its community rugby standing committee for five years, last month warned cuts would have a devastating impact on the grassroots game.

Owen said the majority of the 64 redundancies made by the RFU over the summer as part of a cost-cutting exercise were from the community department and he claimed further cuts in investment could see grass-roots clubs “dwindle away” in a plight similar to their football counterparts.