+- +-

+-Newcomers Start Here

+-Harlequins/Rugby Links













+-Articles



Author Topic: Have Saracens broken salary cap rules?  (Read 4567 times)

0 Members and 0 Guests are viewing this topic.

RodneyRegis

  • Baa Baas Captain
  • *****
  • Posts: 754
Re: Have Saracens broken salary cap rules?
« Reply #15 on: Monday 04-Mar-2019, 10:54* »
A pension is a legal way of giving an employee money.

A house is not.

Gone

  • Lions Captain
  • ******
  • Posts: 1707
Re: Have Saracens broken salary cap rules?
« Reply #16 on: Monday 04-Mar-2019, 10:59* »
There's nothing wrong with any of these companies existing.

The question is why they exist and what they're used for.

Owen Farrell is perfectly entitled to have a property empire.

The question is whether any of the company's operations and revenue streams are in lieu of salary payments from Saracens for playing rugby.

exdublinquin

  • Spectator
  • Posts: 1
Re: Have Saracens broken salary cap rules?
« Reply #17 on: Monday 04-Mar-2019, 11:02* »
I agree there is unlikely to have been any breaches of law and one is entitled to go in to business with someone, be they employer or not.
If the individual is your employer or a connected person to your employer (typically a Director or Shareholder), then there CAN be tax issues, but again if these are dealt with correctly, there is unlikely to be a breach of tax law.
However in this case, it is the Premiership rules on determining adherence to the Salary cap that are pertinent.
So although there is no breach of company law or tax law, there may well be a breach of the internal regulations for determining the salary cap.



Quinky

  • Lions Bench
  • *****
  • Posts: 779
Re: Have Saracens broken salary cap rules?
« Reply #18 on: Monday 04-Mar-2019, 12:34* »
A pension is a legal way of giving an employee money.

A house is not.

Not sure where you get the idea that someone has been given a house.

Let me put this is simpler terms:

A company set up to invest in property may require loans and/or mortgages to buy said properties. These are known as "liabilities", whilst the properties themselves are "assets". If the ownership of the company is transferred by way of sale, then usually both assets and liabilities will be transferred with the company. As long as fair value is paid for the company, it's legit. If however fair value isn't paid, or assets are undervalued, then it's not legit.

Regarding loans, if someone has given a loan to the company and/or its directors then there will be terms attached, to govern repayment periods, interest charged etc. It may be that interest is at a rate preferable to market, but this would then be seen as a taxable benefit (if it's done via the employer). What is questionable is if Wray were to fund the loan personally, in which case I suspect this may raise the eyebrows of PRL.

Ultimately, unless loans are given without repayment, then nobody is "giving a house" to anyone else. If you look at the accounts filed by the Vunipola's company, you'll see they have liabilities due after more than 12 months - this is how the bulk mortgage liabilities are shown. Hence, I strongly doubt that anyone was "given a house".

Now, you could look at Land Registry records and see purchase price paid for properties, see who the vendor was, see if the price paid reflected fair market value, see who is guaranteeing the mortgage (usually hinted at by way of charges registered) and then work out of any benefits have been bestowed; but that's a long way from "giving a house" to someone.

thomh

  • Amateur Player
  • *
  • Posts: 14
Re: Have Saracens broken salary cap rules?
« Reply #19 on: Monday 04-Mar-2019, 13:11* »
A pension is a legal way of giving an employee money.

A house is not.

Why not?  So long as the correct amount of tax is paid on the value of the house I see no reason why it couldn't be. 

In any event, what they actually seem to have been given is shares in companies which in turn own properties.  Awarding shares to employees happens all the time, albeit usually it's shares in the company the employee actually works for.

The really strange thing here is why, if this IS part of a salary cap avoidance scheme, has it been done in a way that it so easily ascertainable by anyone who happens to type "Vunipola" into Companies House while procrastinating?  English companies have to declare any persons with significant control, including shareholders over a certain % threshold, so using shares in English companies to circumvent salary cap regulations would be bizarrely transparent.  Here's one of them for example:

https://beta.companieshouse.gov.uk/company/10592745

QuincyJones

  • First Squad
  • ***
  • Posts: 67
Re: Have Saracens broken salary cap rules?
« Reply #20 on: Monday 04-Mar-2019, 13:26* »
How to tell if they've breached the cap? Wait outside their offices and watch for carloads of expensive lawyers arriving... :)

The sticky issue for me is this: why should two individuals not start a business venture together? The fact that one owns the club and the other plays there may look a bit dodgy, but at the same time that shouldn't preclude them from going into business. It may well come down to how profits are shared out, whether funding was put in place by one party and the relevant paperwork legitimises this, whether the correct tax is paid etc.

It doesn't look good. But that doesn't mean it isn't legit. No doubt the club have been very careful in how they present this to the governing body.

There is nothing stopping them from going into business together whatsoever. The point is that any and all additional benefits (even gifts) all have to come under the salary cap. So the real question is whether or not they have declared these business ventures to PRL and included them in expenditure, as they should have.

I'd hazard a guess that they haven't. No doubt that won't stop them from getting away with it.

QuincyJones

  • First Squad
  • ***
  • Posts: 67
Re: Have Saracens broken salary cap rules?
« Reply #21 on: Monday 04-Mar-2019, 13:31* »
why should two individuals not start a business venture together?

Because one is employer and the other employee. It's like saying why should one guy not give another guy a house or car if he wants to? If they are an employee then a benefit is conferred. Similarly, if I invest in a business which is simply a vehicle for transferring funds from me to an employee then I'd better make sure I'm not evading tax...

Yeah exactly - nothing wrong with them doing it, so long as it's all declared and included in their cap payments.

QuincyJones

  • First Squad
  • ***
  • Posts: 67
Re: Have Saracens broken salary cap rules?
« Reply #22 on: Monday 04-Mar-2019, 13:36* »
Not sure where you get the idea that someone has been given a house.

Let me put this is simpler terms:

A company set up to invest in property may require loans and/or mortgages to buy said properties. These are known as "liabilities", whilst the properties themselves are "assets". If the ownership of the company is transferred by way of sale, then usually both assets and liabilities will be transferred with the company. As long as fair value is paid for the company, it's legit. If however fair value isn't paid, or assets are undervalued, then it's not legit.

Regarding loans, if someone has given a loan to the company and/or its directors then there will be terms attached, to govern repayment periods, interest charged etc. It may be that interest is at a rate preferable to market, but this would then be seen as a taxable benefit (if it's done via the employer). What is questionable is if Wray were to fund the loan personally, in which case I suspect this may raise the eyebrows of PRL.

Ultimately, unless loans are given without repayment, then nobody is "giving a house" to anyone else. If you look at the accounts filed by the Vunipola's company, you'll see they have liabilities due after more than 12 months - this is how the bulk mortgage liabilities are shown. Hence, I strongly doubt that anyone was "given a house".

Now, you could look at Land Registry records and see purchase price paid for properties, see who the vendor was, see if the price paid reflected fair market value, see who is guaranteeing the mortgage (usually hinted at by way of charges registered) and then work out of any benefits have been bestowed; but that's a long way from "giving a house" to someone.

The article notes that Wray was the owner of the house in which Schalk Brits lived since 2011 and it is not known whether or not he paid rent. So if he didn't pay rent, or his rent was subsidised, the value of this would have to be declared and included as part of his salary under the cap.

Lots of ways they can manipulate things and it looks on the face of it, like they have.

Gone

  • Lions Captain
  • ******
  • Posts: 1707
Re: Have Saracens broken salary cap rules?
« Reply #23 on: Monday 04-Mar-2019, 13:57* »
It all depends on if PLR knew about the arrangements -- which Saracens says they did.

So let's see.

Fursty

  • Touchline Member
  • **
  • Posts: 170
Re: Have Saracens broken salary cap rules?
« Reply #24 on: Monday 04-Mar-2019, 14:14* »
I think there's a lot of confusion here between generating a tax liability and breaching the salary cap.

It's perfectly possible that shareholding of the companies was transferred to the players at below market value which would generate a tax liability (which would almost certainly be settled lawfully), it would also count as remuneration under the salary cap rules - however there is no reconciliation between amounts declared under the salary cap and individuals tax returns.

However one point I'd make is that assessing fair value can be tricky, particularly if the properties held by this company were bought from another of Mr Wray's companies. Also much more minor but potentially beneficial to the players is that all of the admin, legal, conveyancing and accounting etc might be performed by another group company and re-charged at below market rates.

Gone

  • Lions Captain
  • ******
  • Posts: 1707
Re: Have Saracens broken salary cap rules?
« Reply #25 on: Monday 04-Mar-2019, 14:19* »
I think there's a lot of confusion here between generating a tax liability and breaching the salary cap.

It's perfectly possible that shareholding of the companies was transferred to the players at below market value which would generate a tax liability (which would almost certainly be settled lawfully), it would also count as remuneration under the salary cap rules - however there is no reconciliation between amounts declared under the salary cap and individuals tax returns.

However one point I'd make is that assessing fair value can be tricky, particularly if the properties held by this company were bought from another of Mr Wray's companies. Also much more minor but potentially beneficial to the players is that all of the admin, legal, conveyancing and accounting etc might be performed by another group company and re-charged at below market rates.

Yes quite. This isn't a thing about who owns what or is it dodgy to have a company or have they told HMRC something -- it is ONLY about have Saracens been giving more money to their players than they have been telling the Premiership.

To which the answer may well be no.

Quinky

  • Lions Bench
  • *****
  • Posts: 779
Re: Have Saracens broken salary cap rules?
« Reply #26 on: Monday 04-Mar-2019, 14:59* »
Yes quite. This isn't a thing about who owns what or is it dodgy to have a company or have they told HMRC something -- it is ONLY about have Saracens been giving more money to their players than they have been telling the Premiership.

To which the answer may well be no.

That's the gist of my point. It may look dodgy, but it could be perfectly legal/permissible.


Fearless Fred

  • Lions Captain
  • ******
  • Posts: 1286
Re: Have Saracens broken salary cap rules?
« Reply #28 on: Monday 04-Mar-2019, 16:53* »
Saracens are spending 2m over the salary cap - and it's legal

That article doesn't really address the allegations made in the SportsMail piece, though. Yes, Sarries can go above the 7M headline figure with credits for EQP and two Marquee players. What is a question is the nature of the business links that Wray has with certain players and how/whether they could/should be considered as money being paid to players.

DazzaS

  • Senior Player
  • ****
  • Posts: 78
Re: Have Saracens broken salary cap rules?
« Reply #29 on: Monday 04-Mar-2019, 17:58* »
It does not matter if the club are cheating again. Despite all the promises from our dear leaders that Saracens will be found out and Quins will play their part in ensuring justice is done, the club were complicit in the cover up so no sanctions were brought forward. Same will happen this time

Also last time while some clubs were in the red they had businesses models to gradually get back in the black and continuously each season most clubs including Quins were making progress. Then after the cover up the salary cap jumped and clubs splashed out to retain the players they had and all the business models had to start again and currently no where near recovering. Apart from Exeter.
« Last Edit: Monday 04-Mar-2019, 18:00* by DazzaS »

 

+-User

Welcome, Guest.
Please login or register.
 
 
 
Forgot your password?

+-Site Statistics

Members
Total Members: 693
Latest: Stefan
New This Month: 5
New This Week: 2
New Today: 2
Stats
Total Posts: 28910
Total Topics: 1767
Most Online Today: 33
Most Online Ever: 455
(Saturday 22-Sep-2018, 17:51*)
Users Online
Members: 2
Guests: 7
Total: 9