Share Transfers Agreed/Cooling off period

[CropleyWasGod]

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Wonder if Claros earns in Honduras and whether we are applying the correct PAYE method?

Read recently that over 1000 Romanov employees in Latvia(I think) have not been paid since July.

In HMRC's view, he is resident here. Ergo he should be taxed the same as anyone else.

[ancient hibee]

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In HMRC's view, he is resident here. Ergo he should be taxed the same as anyone else.

But to do that the club has to know his remuneration in Honduras along with his rate of income tax there.Also presumably it depends on length of residence in each country.

[Part/Time Supporter]

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Wonder if Claros earns in Honduras and whether we are applying the correct PAYE method?

Read recently that over 1000 Romanov employees in Latvia(I think) have not been paid since July.

That's not relevant. The difference is that Hibs (or Tom Farmer) don't own that team in Honduras.

[ancient hibee]

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That's not relevant. The difference is that Hibs (or Tom Farmer) don't own that team in Honduras.

The fact that Romanov owns Kaunus has nothing to do with this case.

[One Day Soon]

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The fact that Romanov owns Kaunus has nothing to do with this case.

I think it does in the minds of HMRC surely? They will see this as the tax equivalent of a Housing Benefit contrived tenancy.

[Jack Hackett]

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This, 100%

I prefer deid tae dead though

I don't care how anyone spells it, as long as it happens

[Part/Time Supporter]

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The fact that Romanov owns Kaunus has nothing to do with this case.

It has everything to do with the case. The "loan price" between the two clubs was fixed for maximum tax advantage. Normally HMRC wouldn't be able to question a loan price because the two clubs are independent of each other.

The other factor is that some of them weren't loans in the common sense that most football fans (or HMRC) would understand them: a short term arrangement (between independent actors) which may or may not be extended depending on the circumstances. eg Bednar was playing in the Czech Republic, was bought by Kaunas and then immediately "loaned" to Hearts. He may have never even so much as stepped foot in Lithuania, but would have been paying his taxes there.

[CropleyWasGod]

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But to do that the club has to know his remuneration in Honduras along with his rate of income tax there.Also presumably it depends on length of residence in each country.

Slightly backtrack on my earlier view here.....

He's not an employee of Hibs. Therefore his club will invoice us every month for an agreed amount. There will be no PAYE and NI on that payment.

However, Claros is resident here, and therefore due UK tax on his worldwide earnings. HMRC and he will agree on his liability, and Hibs won't be part of it.

While I write this, I am wondering therefore what the difference is between us and the Hearts situation. (edit.... perhaps HMFC undertook to pick up their tax liabilities, which would be remuneration in itself.)

[Kato]

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While I write this, I am wondering therefore what the difference is between us and the Hearts situation. (edit.... perhaps HMFC undertook to pick up their tax liabilities, which would be remuneration in itself.)

The amount of players? The same bloke owning both clubs? Those seemingly outsize "player registration fees" that puzzled in their accounts?

Nothing like Claros' situation - a one off between two distinct entities.

[CropleyWasGod]

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The amount of players? The same bloke owning both clubs? Those seemingly outsize "player registration fees" that puzzled in their accounts?

Nothing like Claros' situation - a one off between two distinct entities.

The first and second shouldn't make a difference. However, the third might..... depending on who the money was paid to. If part of it was to the players, HMRC might have taken the view that those payments represented remuneration.

[Mikey]

In the unlikely event that Hibs have made a mistake with Claros (and it would be a genuine mistake) you can be sure that Hibs and HMRC would sort it out quickly and amicably.

I would be very surprised if there's an issue though.

[NYHibby]

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It has everything to do with the case. The "loan price" between the two clubs was fixed for maximum tax advantage. Normally HMRC wouldn't be able to question a loan price because the two clubs are independent of each other.

Yes, this is true. From the little that I have heard about this situation it sounds like this is a textbook transfer pricing case. Transfer pricing rules would not apply in almost all football loan deals which is why the guy on BBC radio does not know what he is talking about.

[greenginger]

Romanov is noted as ultimate controller of Hearts as well as Kaunus F C so they are connected companies subject to a whole raft of tax laws I don't ever want to be troubled with again.

[bingo70]

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In the unlikely event that Hibs have made a mistake with Claros (and it would be a genuine mistake) you can be sure that Hibs and HMRC would sort it out quickly and amicably.

I would be very surprised if there's an issue though.

I just can't look past the fact that no matter how innocent hearts may look or how safe Robertson thinks they are...If Hearts had been doing nothing wrong then HMRC wouldn't have found evidence and be pursuing them and Hearts wouldn't be scrambling about trying to raise £1.75m.

Whatever it may be that they've done, they've been caught.

[StevieC]

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The first and second shouldn't make a difference. However, the third might..... depending on who the money was paid to. If part of it was to the players, HMRC might have taken the view that those payments represented remuneration.

My guess is that the "registration fees" were used by Kaunus to pay all (or part) of the wages.

For example .. Hearts pay Kaunus a £200k registration fee and then pay £1k a week towards the wages. Kaunus pay the player £5k a week at lower tax level. They then pay UK tax and NI on the £1k.

If the HMRC have reasonable evidence, they could argue that UK tax and NI should be paid on the registration fee (or the full wage).

Just guessing likes.

[StevieC]

I can remember a story ages ago about a Hearts player that applied for a loan/mortgage, or something, and his wage was too low to get it, until he produced documentation of an additional income from Kaunus.

I didn't read too much into at the time, but looks like it could be what the HMRC are chasing up.

[CropleyWasGod]

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I can remember a story ages ago about a Hearts player that applied for a loan/mortgage, or something, and his wage was too low to get it, until he produced documentation of an additional income from Kaunus.

I didn't read too much into at the time, but looks like it could be what the HMRC are chasing up.

I remember that one too, Stevie, and I've always suspected that that was at the root of the HMRC investigation. However, if that is the case, then it's not the loan players that are the issue here. That player was employed by Hearts. As such, he would be subject to tax on his worldwide income.

[NYHibby]

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However, Claros is resident here, and therefore due UK tax on his worldwide earnings. HMRC and he will agree on his liability, and Hibs won't be part of it.

This might just be your loose use of language, but you are wrong on this point. Strictly speaking the UK does not tax "worldwide earnings" like the other countries that do tax worldwide earnings, like the US for example. In my own personal case, I am a US citizen/UK resident with a fairly complicated tax situation. The US taxes me on all my UK income but the UK does not tax me on certain US income.

This whole situation is further complicated by the differences in the various bilateral tax treaties.

[Hibeesforever]

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There could well be a top level tax consultant in there, he looks heavily pregnant to me.

Could even be triplets.

The comedy has started in ernest. Hands off Hearts HMRC !

If the bill is £4million with interest and penalities, can't see any way out for them this time.

A third division re-start will be difficult without a ground!

[hibbybob]

It would be interesting to know how the loan of Craig Thomson to Kaunas was treated.

Would HoMFC be stupid enough to treat the tax situation differently from the players loaned to Hearts from Kaunas? I.E try to dodge tax both ways? If so, could HMRC use this in their case against Hearts?

[Kaiser1962]

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My guess is that the "registration fees" were used by Kaunus to pay all (or part) of the wages.

For example .. Hearts pay Kaunus a £200k registration fee and then pay £1k a week towards the wages. Kaunus pay the player £5k a week at lower tax level. They then pay UK tax and NI on the £1k.

If the HMRC have reasonable evidence, they could argue that UK tax and NI should be paid on the registration fee (or the full wage).

Just guessing likes.

I suspect they may be interested in players like Bednar, Goncalves, Aguiar and Jankauskas who signed for Kausnas yet never kicked a ball for them.

[StevieC]

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Would HoMFC be stupid enough to treat the tax situation differently

I don't think any of this would be down to "stupidity" from Hearts point of view and more likely to be the tax avoiding mindset of their owner. Being self-employed in the UK, I have to declare all my income and pay the appropriate amount of tax and NI accordingly. I get the impression that there is a completely different mindset in Russia (and former Soviet nations) regarding the declaration of income and the payment of tax, and that the authorities are less stringent at chasing up irregularities.

I would suspect that Vlad paid very little (if any) tax on the "player registrations" that were received from Hearts.

[Seveno]

I understand that the Jambos' tax consultant is Corporal Fraser of Dad's Army.













We're dooooooomed !

[StevieC]

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I suspect they may be interested in players like Bednar, Goncalves, Aguiar and Jankauskas who signed for Kausnas yet never kicked a ball for them.

Were some of those players not on a reported £8-£10k a week?
If so, that's an annual wage of close to £500k with a tax liability of 50%, so it wouldn't be long in adding up to the figure the HMRC are chasing.
It's sounding more and more like the HMRC could well have a decent case.

[PatHead]

Sound familiar?

http://www.guardian.co.uk/sport/2012...administration

[StevieC]

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Sound familiar?

http://www.guardian.co.uk/sport/2012...administration

This bit certainly does ..

"They have already thrown themselves on the mercy of their fans once this year, when an appeal from Hood to raise £500,000 to secure their short-term future was successful .. but that money would appear to have been swallowed."

Replace £500,000 with £1.75m.

[Part/Time Supporter]

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Were some of those players not on a reported £8-£10k a week?
If so, that's an annual wage of close to £500k with a tax liability of 50%, so it wouldn't be long in adding up to the figure the HMRC are chasing.
It's sounding more and more like the HMRC could well have a decent case.

It would have been 40% back then but you can see how they could quickly get to the sort of number mentioned.

The other strange thing about those deals (certainly in Bednar's case) was how Kaunas would then "sell" the player to Hearts after a year or two. Almost like they realised there was a tax problem and needed to rectify it.

[Kaiser1962]

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Were some of those players not on a reported £8-£10k a week?
If so, that's an annual wage of close to £500k with a tax liability of 50%, so it wouldn't be long in adding up to the figure the HMRC are chasing.
It's sounding more and more like the HMRC could well have a decent case.

I recollect reports that Goncalves was on considerably more than that. Was it not reported when Zaliaukios was negotiating that he wanted parity with Goncalves?

When was Campbell Ogilvy there? Just out of curiosity.........

Over the road they are all pretty much praying for administration but a few half sensible folk are, rightly, pointing out that this is very unlikely to happen given the structure and set up of the debts. Right now they will be very fortunate to see the end of the year, never mind the end of the season. .

[Mon Dieu4]

they have had a few "stars" that would have been on a fair wedge, Dairylea Kingston, Fyssas, Bednar, Panilla, Skacel, Zaliukas etc

[DaveF]

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I recollect reports that Goncalves was on considerably more than that. Was it not reported when Zaliaukios was negotiating that he wanted parity with Goncalves?

When was Campbell Ogilvy there? Just out of curiosity.........

Over the road they are all pretty much praying for administration but a few half sensible folk are, rightly, pointing out that this is very unlikely to happen given the structure and set up of the debts. Right now they will be very fortunate to see the end of the year, never mind the end of the season. .

As much as I'd like them to sink without trace, I just can't see them shutting up shop. Somehow, they will escape from all this and still be hanging around like a bad smell for years to come.

Feel free to dig up this post and remind of it if \ when the place is demolished though