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THE Treasury are to look again at the tax treatment of benefits for sportsmen, following the intervention of the Minister for Sport, Richard Caborn. In a letter to Dawn Primarolo, the Paymaster General, Caborn had said that the fact that Manchester United winger Ryan Giggs could gain a tax-free benefit when he already earned millions was “an issue of public concern”.

It has also emerged that officials from Caborn’s department held talks with their counterparts in the Treasury last year, before he took office, and some thought was given to revising the law. One of the proposals discussed was setting a threshold on how much of the benefit income could be tax-free. Caborn wants to revive the talks and a Treasury official has confirmed that following the minister’s intervention the Treasury will reconsider the issue.

If the tax rules do change, then the players of Manchester United could be the most affected. There are many home-grown players waiting in the Old Trafford ‘benefit queue’ to follow Giggs. They include Gary and Phil Neville, Paul Scholes, Nicky Butt and David Beckham.

But while Giggs will clear £1 million — Sky Sports paid £200,000 just for the TV rights to the game against Celtic on Wednesday night — few others in the game are in a position to make such sums. Bill Nicholson, a greater name in football than Giggs, whose testimonial sees Tottenham Hotspur play Fiorentina next Wednesday, will be lucky if he gets a fraction of that.

This will be Nicholson’s second benefit, following a tribute organised in 1983, when Irving Scholar was chairman at White Hart Lane. Compared to the meticulous way in which the Giggs testimonial has been set up, with Alex Ferguson son’s son Jason playing a key role, Nicholson’s has been hurriedly put together to honour one of Tottenham’s finest, who is suffering from Parkinson’s disease. It is in the main a gesture by the club’s new owners, ENIC, aimed at supporters who had felt alienated by the the largely unsuccessful Alan Sugar regime.

Any attempt by the Treasury to restrict the tax-free nature of benefits will be fiercely resisted by the players’ union. Gordon Taylor, chief executive of the Professional Footballers’ Association, said: “I find it astonishing that a minister of sport, whose job should be to protect the special position of sportsmen and women, should be advocating they be penalised. If we were in a desperate economic state you could see an attempt to close a tax loophole. But we are not, and you can expect that from the Chancellor of the Exchequer, not the minister of sport.

“In any case, tax is paid in the form of VAT of 17.5 per cent. Also it could impact beyond football into other sports like cricket, where they do not earn as much as in the Premiership. These tax concessions have been hard fought and players in the lower leagues could lose out.”

There is also a problem in the way Caborn has gone about his controversial proposal, basing his argument on high-earning Premiership footballers. The Inland Revenue were forced to give the concession after losing a court case brought on behalf of the Kent cricketer James Seymour in 1927. Since then they have lost other cases, including one against England football legend Bobby Moore — the Revenue wanted to tax £1,000 which the FA had paid him as a gift in 1972 — and another against Alan Mullery, also a former England player.

Under the tax rules a benefit or testimonial is tax-free as long as it is a gift to the player. It cannot be mentioned in the player’s contract. As the Revenue put it, the player must have “no expectation” of receiving a benefit. However, as one senior football told me: “Clubs often use the possibility of a benefit to get the player to sign. This is strictly illegal but I know it happens a lot.”

On top of this, different sports have imposed their own rules governing benefits. In football, a player can only qualify for a benefit after he has completed 10 years’ service, as players on average do not spend more than eight years at one club.

Cricket has a more discretionary approach, though the general qualification is 10 years, and while a player’s benefit committee must be independent of the club, some clubs, such as Middlesex, insist that two members of their cricket committee sit on it.

Any Treasury attempt to change the tax rules would mean changing these ‘local’ rules, and it appears very likely that once the fuss about the Giggs testimonial has died down, the issue, which is more complex than Caborn perhaps realises, will be forgotten.

© Mihir Bose

      

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