Inspiring A Generation

Tips for Start-ups

I can hardly let the month pass without trying to come up with an Olympic angle for this blog. So with only semi-sincere apologies to the London 2012 organising committee for pinching their headline, I thought it might be time for us to ask whether our tax system really walks the walk when it comes to inspiring a sporting generation.

You see in an age where any debate about taxation seems to be artificially skewed by pejorative and deliberately vague terms like “morality” and “fairness” – the definition of which seems to be that everyone else except me should pay more – we have to ask ourselves whether the way in which we tax visiting sports stars is really genuinely fair.
And we should ask that question in light of recent events. Because although the government specifically waived the rules for visiting sportsmen and women for London 2012 – it being a necessary commitment for the IOC to give the games to London – HMRC has made it clear that the rules will remain in place.

So why do we care that when the multi-millionaire Usain Bolt runs in Britain he immediately becomes liable to pay UK tax not just on the earnings he generates here in appearance fees and winnings but also on a share of his worldwide income from endorsements, sponsorships and the like? And when you are talking about a man who is receiving an estimated £12.5 million from Puma alone just to wear their kit who suddenly finds a sizeable proportion of that money liable to 50% UK income tax when he neither lives here nor visits for any significant amount of time, you have to ask whether that it is “fair” or “moral”.

But you might have gathered that I don’t like the modern day habit of mixing tax with either of those subjective notions so let’s consider things at a more practical level. The Aegon Tennis Championship at Queens Club is the traditional curtain raiser for the Wimbledon mens singles title and has a long history of being a good form guide for the main event. Only last year however, Rafa Nadal pulled out of Queens to play in Germany stating:
“The truth is, in the UK you have a big regime for tax, it’s not about the money for playing. They [HMRC] take from the sponsors, from Babolat, from Nike and from my watches. This is very difficult. I am playing in the UK and losing money. I did a lot more for the last four years but it is more and more difficult to play in the UK.”
Usain Bolt himself has said that he will not compete in the UK and until the Olympics had not done so for three years pulling out of the 2010 London Grand Prix specifically because of the effect it would have on his income. “As soon as the law changes I’ll be here all the time. I love being here, I have so many Jamaican fans here and it’s wonderful.”

For Bolt and Nadal, read a whole host of major sports stars. The Champions League final at Wembley in 2011 was put in jeopardy right up to the last minute when HMRC agreed to waive the rules for playing competing. It’s reaching the point where the best in the world in all sports are actively avoiding these shores. And since the chances of us hosting another Olympics for the foreseeable future are close to zero, the number of opportunities for us to see them in action will be tiny and shrinking.
We are helped by the prestige of some of the events in our sporting calendar – Wimbledon, the Open Golf, Lords, Ascot and Wembley are all famous names that scream out to the best. Their attraction for the moment remains strong. But the prospect of the Bolts and the Nadals staying away is already here and that is not going to help “inspire a generation” when the Olympics are but a distant and warm memory.