Sam Gallagher (sell on clauses)

[flowchart]

Does anyone know how tax is applied to sell on fees? I'm assuming that, whichever amount is correct, a significant proportion will be claimed by HMRC?

 

[Quintrell Green]

Does anyone know how tax is applied to sell on fees? I'm assuming that, whichever amount is correct, a significant proportion will be claimed by HMRC?

I do not think HMRC treat contracted players as stock in their balance sheets, quite like a shop keeper, but I do not know the detail. .

 

[HC Green]

Does anyone know how tax is applied to sell on fees? I'm assuming that, whichever amount is correct, a significant proportion will be claimed by HMRC?

I do not think HMRC treat contracted players as stock in their balance sheets, quite like a shop keeper, but I do not know the detail. .

VAT @ 20% is applied to the transfer fee as it is regarded as a sale. Obviously clubs can claim it back but I doubt if the amount is part of the quoted fee by the selling Club but it might be by the buying Club.

 

[Brixton 'ill Pilgrim]

I would rather have kept the players, Emu, so that the £m came to us and not another club.

Saying that, we wouldn 't have been able to get those size transfer fees, just Argyle prices.

Mind you had we kept them we might not now be in the bottom tier of the English Football League, eh?

Going to clubs with far better training facilities and and playing against the best young players in the country - rather than school kids from Cheltenham and the like, ultimately destined for pub football - has probably helped them to reach levels they might never have attained at Argyle.

The fact that even a fringe top flight player like Gallagher can net us a few hundred grand via the sell on clause is actually a good argument for touting our best trainees round the big clubs as early as possible, sad though that may seem.

 

[Adam R]

Also aren't sell on clauses typically worked out as a % of profit rather than % of transfer fee?

Yes, in most cases it's a % of profit not the fee. It's likely any add ons will be exempt from the sell on clause too. Add-ons that Southampton negotiate won't be considered 'profit' but will be calculated in the reported fee.

Hence, it's a little too simplistic to think that it's 15% of the £5m.

Fair enough, but I can’t remember anyone quoting a £500,000 fee for him back when (as an example) and it’s more likely he went for £50,000 max so we’d still be talking 15% of all but £5m. Also, aren’t add ons to a third party (us) paid in full before Southampton gets to keep any of the transfer fee?

I'd imagine that add-on clauses are included in the sell on clause, otherwise the selling club (in this instance Southampton) would structure a deal whereby it was 50k now and 4.95m after 6 months/5 games or whatever they put in to negate any monies due to Plymoth. If they put in a sell on fee I believe some of that comes our way too so any share of future profit would trickle its way down to us.
May be wrong but without them being included it would be too easy to manipulate the deal to your advantage.

 

[signalspast]

This came up in 2017 when Gallagher was supposedly on his way to Aston Villa, at the time a Southampton fan, who seemed well informed said we are/were due .....
£75,000 up front
£50,000 on 17th birthday
£15,000 after first game
£50,000 after 10 games
£50,000 after 20 games
£50,000 after 30 games
£50,000 if he appears for England
£25,000 if he appears for Scotland
15% of profit sell on clause.

I'm not sure if that's true but seems plausible.

These are the figures I used when replying earlier. I took the first two figures on the list as I dont think he covered the other amounts.

I think any drip down from future sales is a possibility where we would get 15 per cent of future profit sales

 

[Willis88]

Does anyone know how tax is applied to sell on fees? I'm assuming that, whichever amount is correct, a significant proportion will be claimed by HMRC?

I do not think HMRC treat contracted players as stock in their balance sheets, quite like a shop keeper, but I do not know the detail. .

VAT @ 20% is applied to the transfer fee as it is regarded as a sale. Obviously clubs can claim it back but I doubt if the amount is part of the quoted fee by the selling Club but it might be by the buying Club.

You're forgetting Corporation tax as it'll be treated as revenue and thus probably 100% profit. So, I'm not sure about the VAT treatment but HMRC will easily want 18% of the profit. Unless, of course, the club have sufficient losses to cover it (not too sure whether the buy-out of DA and the other transfers count)

 

[Jimmyd]

Does anyone know how tax is applied to sell on fees? I'm assuming that, whichever amount is correct, a significant proportion will be claimed by HMRC?

I do not think HMRC treat contracted players as stock in their balance sheets, quite like a shop keeper, but I do not know the detail. .

VAT @ 20% is applied to the transfer fee as it is regarded as a sale. Obviously clubs can claim it back but I doubt if the amount is part of the quoted fee by the selling Club but it might be by the buying Club.

You're forgetting Corporation tax as it'll be treated as revenue and thus probably 100% profit. So, I'm not sure about the VAT treatment but HMRC will easily want 18% of the profit. Unless, of course, the club have sufficient losses to cover it (not too sure whether the buy-out of DA and the other transfers count)

Only difference between the sale proceeds and net book value of the player would be taken to the P&L and therefore subject to CT i believe?

 

[German Shepherd]

A Rovers supporting mate of mine at work reckons Argyle are good for at least £500,000. I asked him where they were getting their money from to afford £5m & he just shrugged his shoulders.
The season before last they were paying 120% of income on wages ! It's just so crazy.

 

[gaspargomez]

Blackburn is a medium sized club, not much bigger than Argyle in my opinion. However, the club spends money like it’s water. Since Jack Walker’s millions and the parachute payments dried up it’s hard to see how all their expenses are being covered. I’d say Blackburn is a prime candidate for Administration, so if Argyle are owed money then they should try and get it paid ASAP !

 

[Willis88]

Does anyone know how tax is applied to sell on fees? I'm assuming that, whichever amount is correct, a significant proportion will be claimed by HMRC?

I do not think HMRC treat contracted players as stock in their balance sheets, quite like a shop keeper, but I do not know the detail. .

VAT @ 20% is applied to the transfer fee as it is regarded as a sale. Obviously clubs can claim it back but I doubt if the amount is part of the quoted fee by the selling Club but it might be by the buying Club.

You're forgetting Corporation tax as it'll be treated as revenue and thus probably 100% profit. So, I'm not sure about the VAT treatment but HMRC will easily want 18% of the profit. Unless, of course, the club have sufficient losses to cover it (not too sure whether the buy-out of DA and the other transfers count)

Only difference between the sale proceeds and net book value of the player would be taken to the P&L and therefore subject to CT i believe?

The NBV of the player would be £0 as they've already been sold so no asset held. So 100% profit would be appropriate.

Although I know little about accounting for things like players.

 

[JannerinCardiff]

Have we made any money from sell-on clauses for ex-Argyle players signing for clubs in this transfer window?

I.e
Sam Gallagher
Issac Vassell (long shot)

 

[edengreen]

Blackburn is a medium sized club, not much bigger than Argyle in my opinion. However, the club spends money like it’s water. Since Jack Walker’s millions and the parachute payments dried up it’s hard to see how all their expenses are being covered. I’d say Blackburn is a prime candidate for Administration, so if Argyle are owed money then they should try and get it paid ASAP !

We would be football creditors and therefore guaranteed the money under any administration in full

 

[davie nine]

Have we made any money from sell-on clauses for ex-Argyle players signing for clubs in this transfer window?

I.e
Sam Gallagher
Issac Vassell (long shot)

At the recent Fans’ Forum, it was explained, under EFL rules, clubs are not entitled to divulge details of amounts paid or received in transfer deals.
This will become apparent when the video of the Fans’ Forum is released. It will also show the slides of finance details explained by director, Paul Berne.
Simon Hallett assured us in his recent ‘chat’ that this video will be available soon.