Unwilling former Chelsea soccer player, Craig Burley, mandated to shell out £466,000 to HMRC (Her Majesty's Revenue and Customs)
Football Legend Craig Burley Ordered to Pay £466,000 in Tax
Craig Burley, the former footballer who played for Chelsea FC, Celtic, and Derby County, and represented Scotland in international tournaments, has been ordered to pay HMRC nearly £466,000 in unpaid income tax.
The tax dispute arose from Burley's investment in two film schemes, Bothwell Media I and Bothwell Media II, which later generated profits after initial losses. To fund his investment, Burley took out loans from banks.
In the UK, assigning one's interest in a Limited Liability Partnership (LLP) profit for tax purposes involves specific rules and implications. LLP members are taxed individually on their share of the LLP’s profits, which is treated as income for income tax and National Insurance contributions (NICs) purposes.
Burley sought to assign his interest from the profits to a limited liability partnership (LLP) of which he was a member. However, the First-Tier Tribunal, consisting of Judge Mark Baldwin and Mr. John Agboola, sided with HMRC and dismissed Burley's appeal last Thursday.
The Tribunal concluded that Craig Burley remained entitled to his share of the partnership's profits. The other member of the LLP was a company called Craig Burley Limited, which Burley argued was entitled to the profits and would be taxed at a lower corporate rate. However, the Tribunal ruled against this argument.
The assignment of LLP profit interest can trigger tax events, including income tax liability for the original member and capital gains tax (CGT) if it involves disposing of a partnership interest. Proper legal transfer and notification, accurate income and capital gains tax reporting, and consideration of any double taxation treaties are essential when assigning LLP profit interests.
This is not the first time HMRC has pursued tax misdemeanors in the sports world. In a previous case, former Liverpool player and Sky Sports pundit Phil Thompson was ordered to pay HMRC nearly £300,000 after losing an appeal related to IR35 rules.
Rebecca Seeley Harris, an expert at Re:Legal Consulting, stated that HMRC's pursuit of tax misdemeanors in the sports world continues with Craig Burley. Harris added that HMRC now has 5,500 more tax officers to help close the tax gap, implying increased compliance.
The partnerships' income was paid directly to the lenders to discharge Burley's liabilities. The exact details of the full legal framework of LLP profit interest assignment for UK tax were not explicitly detailed in the search results, but these are the broadly established principles based on standard UK partnership and LLP tax treatment.
Burley's case serves as a reminder of the importance of understanding the tax implications of LLP profit interest assignments and the need for proper legal transfer and notification, accurate income and capital gains tax reporting, and consideration of any double taxation treaties when assigning LLP profit interests.
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