England did not lose its football game against Italy on Monday night; they simply deferred likely defeat by the Germans in the Euro semi-finals to the 2014 World Cup.
In fact, it would seem that several members of the Three Lions squad know more than a thing or two about ‘deferrals’ both on and off the pitch.
Not Evasion or Avoidance.
Reports are that at least six of them have made sizeable investments in schemes which in exchange allow them to defer their tax bills to Her Majesty’s Revenue and Customs (HMRC).
So significant are the sums to be deferred that the HMRC has challenged at least one of them to determine whether the schemes present a bona fide commercial risk – a requirement for claiming the tax relief.
There has been no allegation made against any of the English players of impropriety or malfeasance. Certainly the schemes are not designed to ‘evade’ or ‘avoid’ tax; merely to postpone their payment. Indeed, in defence of the plans, Ingenious Media, one of the schemes promoters, has said that it was “not in the business of tax avoidance” and asserted that “all our activities are bona fide commercial ventures, as evidenced by the film profits we have generated for investors.”
How do they work?
The schemes involve investors buying rights to a film, which they then lease back to the studio for a number of years. This creates a loss in the scheme’s first year – often several times greater than the total sum invested – which gives the investor twelve tax-free months in which to make other investments and enabling them to claim tax rebates larger than their initial contributions.
That the investment choices of Joe Hart, Wayne Rooney, Jolean Lescott, Danny Welbeck, Scott Parker, Glen Johnson, Ashley Cole and England’s new manger Roy Hodgson should be newsworthy is largely a result of the present-day fixation on how the very rich – the super rich in fact – are able to keep their wealth using avenues unavailable to the not so rich.
The size of the ‘cash’ investments and the professional fees incurred for access to these plans illustrates the point that the business of tax mitigation is not a cheap endeavour. Such activities are certainly not open to the average tax-payer whose tax burden in aggregate terms is not so significant nor are the potential savings.
Questions of morality and fairness aside, it remains the case that for every scheme which is a success or is successfully challenged by national revenue authorities, others will fill the void – precisely because of what is at stake.
Perspective, they say is everything.
Eventually tax deferred will have to be paid at some uncertain date in the future making the object of the ‘game’ played by tax professionals the world overall to prolong the postponement of the tax bill, which one would presume must inevitably be paid.
In like manner England’s players who understand the benefits of the ‘deferral system’ might also find it useful to adjust their perspective on their Euro ‘exit’ and think of it, not as a loss, but the postponement of a match with matchdie Mannschaft which, depending on the time-frame, might well see their chances of a successful outcome increase seven-fold.