19718

            VAT — input tax — football club — whether tax on players’ agents fees paid by club its input tax, supplies having been made jointly to club and player by agent or whether not so, supplies having been made exclusively to player — finding that in almost every case supplies made solely to player — alternatively, even if supplies not made agent to Club had it nevertheless right to deduct input tax because it received benefit sufficient to bring it within the Redrow principle — appeal substantially dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	NEWCASTLE UNITED PLC	Appellant

	- and -

THE COMMISSIONERS FOR
	HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

				Tribunal:	David Demack (Chairman)
						Peter Whitehead

Sitting in public in Manchester on 17, 18 and 19 May 2006 and 4 and 5 July 2006

Melanie Hall QC instructed by KPMG, chartered accountants, of Newcastle-upon-Tyne for the Appellant 

Ian Hutton of counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents 

	© CROWN COPYRIGHT 2006

DECISION

Introduction
1.	In this appeal by Newcastle United plc (“the Club”), we are required to decide whether certain tax paid by it on players’ agents fees is input tax in its hands, the supplies of what are agreed to be services having been made by them either as agents both for the Club and for individual players or because the tax falls to be recovered under the Redrow principle, as the Club claims, or is not its input tax, payment to the agents having been third-party consideration, as Her Majesty’s Commissioners for Revenue and Customs (“HMRC”) maintain.  (We should explain that the expression “players’ agent” covers both agents who act for players and those who act for football clubs.  We might usefully add that it is an individual who acts as agent and not, where appropriate, the company that employs him.  But despite the individual being the agent and entering into the FIFA standard representation contract (see below) with a player, quite frequently the employing company also contracts with a player).
2.	The appeal itself is against a decision contained in a letter of 26 November 2004 whereby HMRC upheld a series of assessments to VAT in respect of the prescribed accounting periods 04/01 to 01/04 inclusive totalling £547,440.  In the letter, inter alia, HMRC said:
“In our case the Players’ Agents Regulations lay down that the agent can only be representing the player or the club, there is no question of the agent providing services to each with only one of the two bearing consideration.  It therefore follows that there is only a supply to whom the service is being provided irrespective of which of them (player or club) provides the consideration.  Customs’ position is that the supply is to the player”.
3.	In its Notice of Appeal, dated 9 December 2004, the Club gave its reasons for appealing as:
The Appellant engages and pays football agents.  The input tax incurred is recovered by the Appellant on the basis that the agent makes a supply to it which is used for the purposes of its business.
The Commissioners contend the input tax in question is input tax incurred by the players irrespective of the payment by the Appellant.
The Appellant contends that in accordance with the principle set out in the case of Commissioners of Customs and Excise v Redrow Group plc [1999] STC 161 and more recently WHA Ltd and another v Commissioners of Customs and Excise [2004] STC 1081 it engages the agents, it has control over the provision of the agent’s services and it pays for the services.  The benefit derived by the players is irrelevant in determining whether the Appellant is entitled to input tax.”
4.	At the request of the Club, we have agreed to anonymise our decision.  But to assist the parties, we have prepared a private schedule (which is not to be released generally) identifying the players concerned in a number of transactions the subject of input tax claims.  
5.	Since the hearing, HMRC have written to the tribunal accepting that the tax on the following invoices is the Club’s input tax. By consent, we therefore allow the appeal to this extent: 			
Player	Invoice Date	Agent	
Brown	17.04.02	A	
Brown	01.02.03	A	
Apple	01.12.03	A	
Cherry	01.08.02	A	
Cherry	23.07.03	A	
Hazel	18.03.03	L	

6.	The case for the Club was presented by Mrs Melanie Hall QC, and that for HMRC by Dr Ian Hutton.  They produced two bundles of copy documents, and called three witnesses: a solicitor who acts as a players’ agent (hereinafter referred to as X), Mr Russell Cushing, the group chief operating officer and a director of the Club, and Mr Paul Firth, an officer of HMRC.  From that evidence, we find the following facts to have been established.
The Facts
7.	The Club’s business is that of a Premier League association football club.  It has a squad of 32 professional players, 24 of whom play for its first team.  It also has a football academy for its junior players.  The majority of the professional players and some of the junior players deal with the Club through players' agents.
8.	The overall governing body in world football is the Federation Internationale de Football Association (“FIFA”).  Its rules apply to all international football confederations / unions, including the Union of European Football Associations (“UEFA”), the European governing body.  In turn, UEFA is the governing body of the Football Association (“FA”) of which the English Premier League is a member.
9.	The FA licences players' agents and their conduct is regulated by the Players' Agents Regulations of FIFA (“the Regulations”).  The provisions of the English Edition of the Regulations relevant for present purposes are the following:

“Player Agents Regulations (SIC)
To simplify matters, use of the male gender in these regulations applies to both males and females.  The expression “players' agents” also applies to agents who have concluded a representation contract with clubs.
Licensed Players’ Agents Regulations 
At a meeting on 10 December 2000, the FIFA Executive Committee passed the following regulations, in compliance with art.17, par.2 of the Regulations governing the Application of the FIFA Statutes:

Amendments to the FIFA Players’ Agents Regulations

Preamble

1.	These regulations govern the occupation of players' agents who arrange players’ transfers within one national association or from one national association to another.

2.	Each national association is obliged to draw up its own regulations for players' agents based on the following guidelines.  Such regulations must be approved by the FIFA Players’ Status Committee and incorporate the principles mentioned below.  

3.	When drawing up their regulations the national associations shall take the FIFA Statutes and regulations into account as well as their own national legislation and international treaties.

I.	General Rules

Art.1

1.	Players and clubs are permitted to call upon the services of a players' agent during negotiations with other players or clubs provided the players' agent possesses a licence issued to him by the national association concerned in compliance with art.2, par.1 below.

The players' agent is a natural person, who, for a fee, on a regular basis introduces a player to a club with a view to employment or introduces two clubs to one another with a view to concluding a transfer contract, in compliance with the provisions mentioned below.

2.	Players and clubs are forbidden from using the services of a non-licensed players' agent (cf. article.16 and 18).

3.	The ban stipulated in par.2 above does not apply … if the agent acting on behalf of a player or club is legally authorised to practise as a lawyer in compliance with the rules in force in his country of domicile.

II.	Issue of a License

Art.2 

[Players’ agents must be licensed by the national association]
Article. 5

[Players’ agents must sit and pass an examination]

Art. 8

1.	Every candidate who has passed the examination is required to sign a Code of Professional Conduct (cf. Annexe B) in which he pledges, without fail, to abide by the basic principles described therein when acting as a players' agent. 

2.	Players' agents who fail to abide by the Code of Professional Conduct during the course of their work are liable to be sanctioned in accordance with art. 15, par. 2. 

Art. 10
	
[Each national association must draw up a list of all the licensed players’ agents on its territory and provide it to FIFA].

	III. Rights & Obligations of Licensed Player's (sic) Agents 
Art. 11
A licensed players' agent has the right:
a.	to contact every player who is not, or is no longer, under contract with a club (cf. art. 12 and 13 of the FIFA Regulations for the Status and Transfers of Players); 
b.	to represent the interests of any player or club that requests him to negotiate and/or conclude contracts on his/its behalf; 
c.	to take care of the interests of any player who requests him to do so; 
d.	to take care of the interests of any club which requests him to do so. 
Art. 12 
1.	A players' agent may represent or take care of the interests of a player or a club in compliance with art. 11 only if he has concluded a written contract with the player or club. 
2.	Such a contract shall be limited to a period of two years but may be renewed in writing at the express request of both parties. It may not be tacitly prolonged. 
3.	The contract shall explicitly mention who is responsible for paying the players' agent's fee, the type of fee and the prerequisite terms for the payment of the fee. 
4.	Only the client engaging the services of the players' agent, and no other party, may remunerate him. 
5.	The amount of remuneration due to a players' agent who has been engaged to act on a player's behalf is calculated on the basis of the player's annual basic gross income (i.e. excluding other benefits such as a car, a flat, point premiums and/or any kind of bonus or privilege) that the players' agent has negotiated for him in the employment contract. 
6.	The players' agent and the player shall decide in advance whether the player will remunerate the players' agent with a lump sum payment at the start of the employment contract that the players' agent has negotiated for the player or whether he will pay annual instalments at the end of a contractual year. 
7.	If the players' agent and the player do not decide on a lump sum payment and the player's employment contract negotiated by the players' agent on his behalf lasts longer than the representation contract between the players' agent and the player, the players' agent is entitled to annual remuneration even after expiry of the representation contract. This entitlement lasts until the player's employment contract expires or as soon as the player signs a new employment contract without the help of the same players' agent. 
8.	If the players' agent and the player cannot reach agreement on the amount of remuneration to be paid or if the representation contract does not provide for such remuneration, the players' agent is entitled to payment of compensation amounting to 5% of the basic income described in par. 4 above which the player is due to receive from the employment contract negotiated by the players' agent on his behalf. 
9.	A players' agent who has been contracted by a club shall be remunerated for his services by payment of a lump sum that has been agreed upon in advance. 
10.	FIFA will provide its standard representation contract (cf. Annexe C) to the national associations. Every players' agent is required to use this standard contract. The parties to the contract are at liberty to conclude additional agreements and to supplement the standard contract accordingly, providing the relevant public law provisions for arranging employment in the country concerned are observed without fail. 
11.	The representation contract shall be issued in quadruple and duly signed by both parties. The player or the club shall keep the first copy and the players' agent the second. The players' agent shall send the third and fourth copies to his national association, or the national association to which the player or club belongs, for registration within 30 days of their having been signed. The national associations shall keep a register of the contracts being received. Copies of the contracts shall be sent to FIFA upon request. 
Article 13 
… Only the player’s agent himself is entitled to represent and promote the interests of players and/or clubs with other players and/or clubs …

Art. 14
A licensed players' agent is required:
a.	to adhere, without fail, to the statutes and regulations of the national associations, confederations and FIFA; 
b.	to ensure that every transaction concluded as a result of his involvement complies with the provisions of the aforementioned statutes and regulations; 
c.	never to approach a player who is under contract with a club with the aim of persuading him to terminate his contract prematurely or to flout the rights and duties stipulated in the contract; 
d.	to represent only one party when negotiating a transfer; 
e.	to give, at request, the relevant body at each national association and/or FIFA all of the requisite information and to send in the necessary papers; 
f.	to ensure that his name, signature and the name of his client appear in the relevant contracts resulting from every transaction in which he is involved; 
g.	to comply with the relevant public law provisions governing job placement in the country concerned. 
Art. 15
1.	Players' agents who abuse the rights accorded to them or contravene any of the duties stipulated in these regulations are liable to sanctions. 
2.	The following sanctions may be pronounced:
a.	a caution, censure, or warning; 
b.	a fine; 
c.	suspension of the licence; 
d.	withdrawal of the licence. 
The sanctions may be imposed jointly. 
3.	The foregoing sanctions may be pronounced only by the national association that issued the licence to the offending players' agent or by FIFA. The delimitations of responsibility are stipulated in art. 22, par. 1 and 2 below. 
4.	The licence shall be withdrawn if the players' agent fails to fulfil any of the prerequisites for acquiring a licence stipulated under art. 2, 3, 6 and 7 (professional liability insurance or bank guarantee). If this is the case and the omission can be remedied, the appropriate body at the national association shall set him a reasonable deadline in which to reinstate compliance with the rules. 
5.	In addition to the reasons given under par. 4, the licence shall be withdrawn, in particular if the players' agent repeatedly or seriously infringes the statutes and regulations of the national associations, confederations and/or FIFA. 
6.	The licence shall be withdrawn by the national association which issued it. FIFA reserves the right to direct a national association to mandatorily withdraw a licence. 
IV. Player's Duties
Art. 16
1.	Players may only call upon the services of a players' agent who holds a licence issued by a national association in compliance with these regulations, subject to the exceptions mentioned in art. 1, par. 3. 
2.	The player’s agent’s name and signature shall, without fail, appear in the relevant employment contract(s) in every transaction in which a players' agent represents the player’s interests. 
	If a player does not use the services of a players' agent, this fact shall also be explicitly stated in the relevant employment contract.
V. Duties of the Clubs 
Art. 18
1.	Clubs which wish to engage the services of a player may only deal either:
- with the player himself, or
- with a players' agent who holds a licence issued by a national association in compliance with the provisions of these regulations, subject to the exceptions mentioned in art. 1, par. 3.
2.	For every transaction in which a players' agent represents the interests of a club, his name and signature shall, without fail, appear in the relevant transfer and/or employment contract(s). 
If the Club does not use the services of a players' agent, this fact shall also be explicitly mentioned in the relevant transfer and/or employment contract(s).
3.	A club which pays another club compensation shall pay it directly to the beneficiary club. It is strictly forbidden for the Club making the remittance to pay any of the amount, either partially or wholly, to the players' agent, not even as remuneration. 
Art. 19
1.	Any club that infringes any of the bans contained in art. 18 will be liable to the following sanctions: 
a.	a caution, censure or warning; 
b.	suspension of any or all of its board of directors; 
c.	a fine of at least CHF 20,000.--; 
d.	a ban on any national and/or international players' transfers for at least three months; 
e.	a ban on any kind of national and/or international football activity. 
In addition, any transaction which the Club makes in contravention of art. 18 above will be declared null and void.

The sanctions may be imposed jointly.
2.	The sanctions listed above may only be pronounced by the national association to which the Club is affiliated (in the case of a national transfer) and by FIFA (in the case of an international transfer). 
VII. Disputes
Art. 22
1.	In the event of disputes between a players' agent and a player, a club and/or another players' agent, all of whom are registered with the same national association (national disputes), the national association concerned is responsible. It is obliged to deal with the case and pass a decision, for which service it is entitled to charge an appropriate fee. 
2.	Any other complaint not covered by par. 1 shall be submitted to the FIFA Players' Status Committee. 
3.	Complaints about the work of a players' agent shall be directed in writing to the national association concerned or to FIFA within two years of the incident in question and in any case no later than six months after the players' agent concerned has terminated his activities as such. 
IX. Final Provisions 
Art. 27
In the event of any discrepancy in the interpretation of the English, French, Spanish or German text of these regulations, the English text is authoritative.
Art. 28
These regulations were adopted by the FIFA Executive Committee at its meeting in Rome on 10 December 2000 and come into effect on 1 March 2001.”
	
10.	Annexe B to the Regulations contains the ‘Code of Professional Conduct’.  The relevant parts thereof read as follows:

“I.	The players’ agent is required to perform his occupation conscientiously and conduct himself in his profession and other business practices in a manner worthy of respect and befitting his profession.
II.	The players’ agent shall adhere to the truth, clarity and objectivity in his dealings with his client, negotiating partners and other parties.
III.	The players’ agent shall protect the interests of his client in compliance with the law and a sense of fairness, while creating clear legal relations.
IV.	The players’ agent shall, without fail, respect the rights of his negotiating partners and third parties.  In particular, he shall respect the contractual relations of his professional colleagues and shall refrain from any action that could entice clients away from other parties.”

11.	FIFA’s standard representation contract, for which Art.12.10 of the Regulations provides, and which is to be found at Annexe C thereof, takes the following form:

“The Parties
 ________________________	(hereinafter: the players' agent) 
and
________________________	(hereinafter: the client)
have agreed to conclude a representation contract as follows:
1)	Duration
This contract will be valid for  ________________________.  It will take effect on  ________________________ and terminate on  _______________________.
2)	Remuneration
Only the client may remunerate the players' agent for the work he has accomplished exclusively for the player.
3) a.	Player as client 
The players' agent shall receive commission amounting to  ________________+ VAT of the gross value of the contract, comprising annual salary, signing on fee and negotiated bonuses due to the player as a result of the employment contract negotiated by the players' agent. 
3) b.	Club as client
The players' agent shall receive commission in one lump sum amounting to £…
4)	Exclusivity
The parties agree that the placement rights be transferred exclusively /
not exclusively  ________________________ to the players' agent.
5)	Other agreements
Any other special arrangements that comply with the principles contained in the Players’ Agents Regulations shall be enclosed with this contract and deposited with the relevant national association.
6)	Mandatory Legislation
The parties agree to adhere to the public law provisions governing job placement and other mandatory national legal provisions in force in the country concerned as well as in international law and applicable treaties.
7)	Final notes 
This contract has been signed in fourfold and the copies have been distributed as follows:
I.	National association with which the players' agent is registered – The Football Association
II.	National association with which the client is registered – The Football Association 
III.	Players' agent
IV.	Client
Place and date  ________________________”
[Signed by Player’s agent, Client, the players' agent’s national association, the client’s national association].
12.	That contract contains no indication whatsoever of the services to be provided by the agent to the client, so that taken in isolation it may be void for uncertainty.  However, when viewed with the “other agreements” for which paragraph 5 provides it may be valid, and we proceed on the basis that it is so validated.  No evidence was adduced of the Club ever having entered into FIFA’s standard representation contract with a players’ agent and, in its absence, we find that the Club has never done so.
13.	Although paragraph 2 of the Preamble to the Regulations requires each national association to “draw up its own regulations” based on the Regulations, we were informed, and accept, that throughout the assessment period the FA merely adopted the Regulations and did not draw up regulations of its own. (We understand that as from 1 January 2006 the FA has drawn up and adopted its own regulations. To what extent, if at all, those regulations have changed the practices hereinafter described, we are unable to say). 
14.	It is common ground that all the players' agents with whose activities the appeal is concerned are either licensed by the FA or are lawyers authorised to practice in England and Wales.
15.	In evidence, X said, “Whilst the Club, players and licensed [players’] agents are obliged to follow the FIFA rules and guidance, it is generally acknowledged that the rules do not always reflect industry practice”.  And Mr Cushing added, “It is generally acknowledged throughout the industry that the rules cannot accurately reflect the global business we are now operating in”.  Further, at the annual general meeting of the Premier League for 2006, Mr Richard Scudamore, its chief executive, explained: 
“When a club is buying a player, supporters find it hard to understand why the Club sometimes pays the players' agent.  
This has been accepted practice in the industry and deemed to be in accordance with existing regulations.  However, in the interests of transparency and accountability, we are asking the FA to amend their rules to prohibit this.”
16.	We remind ourselves that paragraph 1 of the Preamble states that the Regulations “govern the occupation of players' agents” (emphasis added); they are not discretionary.   Consequently, we reject the evidence of the Club’s witnesses as representing how they are to be applied not only by the agents themselves, but also by clubs and players. Industry practice cannot prevail over the Regulations: if practice differs from them, it contravenes them.  We particularly reject Mr Cushing’s claim that the Regulations “cannot accurately reflect the global business we are now operating in”: we are unable to find any reason why the Regulations cannot do so.    
17.	There are a number of FA forms to which we shall need to refer, and we may usefully include them at this point.  They are to be lodged with the FA on completion of transactions involving players. The forms are the following:
(a)	Transfer / Registration of a Player under written contract (“the Transfer Form”)
“Addendum to contract referring to Players’ Agents
Name of Club:			
Name of Player:			
Date on which the transfer / Registration Form Signed: 	
	
Did the Club use the Services of a Player’s Agent?:	
YES/NO	
If yes, name of Agent:		
Signature of Agent: 	[and date]	
Did the Player use the services of a Players’ Agent?:  	
YES/NO	
If yes, name of Agent:		
	Date:		
Signature of Agent: 		
	Date:		
Signature of Player: 		
	Date:		
Club Signatory: 		
	Date:		
Signature of Witness: 		
	Date:”		

(b)	Form G(2) – Registration of a Player under Written Contract (“Form G2”)
“Players’ Surname		Forename(s)		
Present Postal Address		
Place of Birth*		Date of Birth		Nationality		
National Insurance Number		
Club for which Player last played or registered		
	
(A Clearance is required if the Player last played or registered for a Club affiliated to another National Association).
I hereby desire to be registered as Player under written contract by the 
	Football Club	
from		to		and I undertake	
to observe the Rules of The Football Association, and the Rules of the F.A. Premier League or the Regulations of The Football League dependent on the League in which the Club is in membership, a copy of which has been handed to me.
Signed by the said Player in the presence of:-
Signature of Witness		Signature of Player		
Address of Witness				
		Date		

On behalf of the		Football Club	
I request you to register		as a Player under written contract	
Date		Club Signatory		
Address		
Was an Agent(s) involved in the Registration / Transfer?   Yes / No (delete as applicable)	
If yes, name of Agent(s) involved		
If yes, name of party for whom Agent(s) acted		

*For the purpose of The Football League and F.A. Premier League Benefit Scheme and the Player’s Birth Certificate must be forwarded to the appropriate League in the case of his first registration

£1.00 is charged for this form.  It must be accompanied by a copy of the agreement entered into by the Club and the Player and Transfer Form (if applicable)”

(c)	Declaration of Payment to a Licensed Agent (“the Declaration”)
“(Please complete Sections 1 and 3 for all transfers / contract negotiations regardless of whether or not an Agent was involved)
1.	(Club) … has employed / not employed the services of a Licensed Players’ Agent in the transfer / contract negotiations involving (Player) … 
2.	The fee agreed by the Club is … and is to be paid in accordance with the written agreement between the Club and …. (Agent)
The schedule of payment agreed is:
Date:	…	Amount 	…
Date	…	Amount 	…
The fee due to the Agent is to be sent to the Football Association for onward transmission to the Agent.  Please provide bank details for the Agent and ensure all fees are forwarded in the appropriate currency.  Please contact the Football Association’s Finance Department if assistance is required.
[Bank details]
THE UNDERSIGNED CONFIRM THAT NO PAYMENT OTHER THAN THAT SPECIFIED BELOW WILL BE MADE IN RESPECT OF THIS AGREEMENT AND THE AGENT CONFIRMS THAT NO PAYMENT SHALL BE SOUGHT OR ACCEPTED FROM ANY OTHER PARTY TO THIS TRANSACTION.
		Signed …	(Agent)	Date …
	[3.]	(Club) ………. will pay £…..……. to ……….. (Licensed Agent / Solicitor)
	3. (sic) 	Signed …	Position  ...  	Date …”
(d)	Form H1 – transfer of a registration of a player under a written contract (“Form H1”)
“I am at present a Player under Written Contract with		
and desire the Transfer of my Registration to		FC	
Signature of Player		
Address		
Date		20				

I desire the Transfer of the Registration of		
from		FC to		FC	
Club Signatory		
Address		
Date		20				

I assent to the Transfer of the Registration of		
from		FC to		FC	
Club Signatory		
Address		
Date		20				

Did the Player use the services of a Players’ Agent:             	
YES/NO	Did the Club use the services of a Players’ Agent:             	
YES/NO	
If yes, name of Agent		If yes, name of Agent		
Signature of Agent		Signature of Agent		

£1 is charged for this form.  Registration Form G.1. or G.2. and a copy of the Players’ Agreement must accompany this form”
18.	X explained in evidence, and we accept, that the FA require the Transfer Form or Form G2 to be completed whenever a player signs a new contract.  The forms are not confined to reporting transfers of players, but extend to the registration of new contracts of employment and changes in existing terms.  No alteration to either form is permitted by the FA.  If a form is altered or completed incorrectly on its face, the FA will reject it: the player will not be registered and will not be allowed to play for the club concerned.  
19.	We should also include the FA Premier League and Football League [players’] Contract (2/C/31), the relevant parts whereof read as follows:
“AN AGREEMENT  made the		day of		(year)		
between (name)		
of (address)		
		
acting pursuant to Resolution and Authority for and on behalf of 		
	Football Club (hereinafter referred to as “the Club) of the one part and 	
(name)		
of (address)		
Football Player (hereinafter referred to as “the Player) of the other part.	

WHEREBY it is agreed as follows:-

1.	This Agreement shall remain in force until the 30th day of June ……….. unless it shall have previously been terminated by substitution of a revised agreement or as hereinafter provided

2.	The Player agrees to play to the best of his ability in all football matches in which he is selected to play for the Club and to attend any reasonable place for the purpose of training in accordance with instructions given by any duly authorised official of the Club.

3.	The Player agrees to attend all matches in which the Club is engaged when directed by any duly authorised official of the Club.

4.	The Player shall play football solely for the club or as authorised by the Club or as required under the Rules of the Football Association and the Rules of The F.A. Premier League or the Regulations of The Football League* dependent on the League in which the Club is in membership.  The Player undertakes to adhere to the Laws of the Game of Association Football in all matches in which he participates.

5.	The Player agrees to observe the Rules of the Club at all times.  The Club and the Player shall observe and be subject to the Rules of The Football Association and either the Rules of The F.A. Premier League or the Regulations of the Football League* as appropriate.  In the case of conflict such Rules and Regulations shall take precedence over this Agreement and over the Rules of the Club.

6.	The Club undertakes to provide the Player at the earliest opportunity with copies of all relevant Football Association Rules and F.A. Premier League Rules or Football League* Regulations as appropriate, the Club Rules for players and any relevant insurance policy applicable to the Player and to provide him with any subsequent amendments to the above.

SCHEDULE

	(a)	The Player’s employment with the Club began on the ……. (Year) …..
(b)	No employment with a previous employer shall count as part of the Player’s continuous period of employment hereunder.
(c)	The Player shall become or continue to be and during the continuance of his employment hereunder shall remain a member of the Football League Players’ Benefit Scheme (and a member of the ……………………… Pension Scheme) and as such (in the latter case shall be liable to make such contribution and in each case) shall be entitled to such benefits and subject to such conditions as are set out in the definitive Trust Deed or Rules of the Scheme.
(d)	A contracting out certificate is not in force in respect of the Player’s employment under this Agreement.
(e)	Basic Wage.
£ …………………  per week from ……………….. to ………………..
(f)	Any other provisions [e.g. bonuses, additional payments, etc.].

Signed by the said				
			(Player)	
and				
			(Club Signatory)	
in the presence of				
(Signature)			(Position)	
(Address)				
	
Did the Player use the services of a Player’s Agent:                                              YES / NO	

	If yes, name of Agent		
		Signature of Agent”		

21.	Also amongst the documents before us are four forms of contract used by players’ agents in their dealings with players.  Two of the four agents concerned are ‘A’ and ‘B’.  The relevant parts of their contracts take the following form: 
(a) 	A’s Representation agreement (1/5/85):

“Dated:	

Between:

i)	…					- The Client
ii)	A   					– The Company

ROLE

This agreement is formed between the Company and the aforementioned Client, a professional footballer.  The Company will represent the aforementioned Client in all areas of personality management including, transfer negotiations, contract negotiations, media negotiations; including TV, radio and press.  Commercial representation for the purpose of endorsement agreements including boots, apparel, luggage and all other product areas.  Furthermore, to include personal appearance bookings.

DISCRETION

At the discretion of the Client, the Company will also act on the Client’s behalf in all chosen business areas, personal management such as fan club, tax, mortgage, pension and investments.

FEES

The Company will charge [  ]% commission for any negotiated gross signing on fee during the term of the contract.  Furthermore, the Company will charge [  ]% commission for any income procured outside of the player’s contracted club income.

TERM

This agreement will last for a period of … years from … to …

TERMINATION

Either party may terminate this agreement with written notice, provided 30 days in advance, before such action to be taken, any grievances must be discussed and reported in a formal meeting.  However, should termination occur, then the Client will be responsible for the payment of all out of pocket expenses incurred by the Company in the course of its duties to the Client.

SIGNATURES

(b)	B’s Client Representation Agreement (1/5/66)

“Agreement Date:
BETWEEN

B whose registered office is … (“B”) 
and [client’s name] (“the Client”)

•	B will represent the Client worldwide with immediate effect as exclusive agents for all commercial matters relating to endorsement, advertising, sponsorship, personal appearances, media (including television broadcast, digital transmission and internet), contract negotiation and PR until such time as either party gives at least (1) month’s notice to the other to terminate this agreement with immediate effect.

•	The Client will refer all commercial enquiries to B and B will collect all revenue arising from exploitation of the Client’s services and rights under this agreement.

•	B has a number of fully licensed and bonded FIFA football agents.  The Client will be represented on an exclusive basis by one of them for football playing contract negotiation or re-negotiation.  The Client warrants that he or she has no current agreement with any other agent for such purposes.  B’s licensed agents agree to abide by FIFA regulations in all such dealings.  B’s remuneration for the negotiation or re-negotiation of a football playing contract comprising annual salary, signing on fee and negotiated bonuses (not squad bonuses) – as detailed in the standard FIFA Representation Contract.

•	In consideration for its services B will charge a commission on all commercial contracts negotiated on behalf of the Client and will be entitled to commission on a continuing basis despite the termination of this Agreement.  In accordance with established procedure, B will invoice the payer on an agency basis and the Client will invoice B at the appropriate rate.  The standard commercial rate for such transaction shall be not less than [ ]% PAYABLE TO THE CLIENT, exclusive of VAT.  Other rates or fees, notably for contract negotiations and long-term media contracts or where the Client receives goods in kind for his or her services, may be at a different rate agreed in advance between B and the Client.  If the Client wishes B to carry out personal invoicing, book-keeping or VAT return functions for the client, this shall be on the basis of a separate annual fee agreed between the parties in advance.  If the Client is or becomes VAT registered, B should be advised of this registration number immediately.

•	B will give a full and prompt account to the Client for all monies received which are subject to commission under this Agreement.  The Client authorises B to raise invoices and issue receipts for all commercial transactions, which B has negotiated.  B will keep the Client fully appraised of the terms of any contract under negotiation, unless the Client does not wish to receive such information.  Where the contract terms permit, B will sign contracts for and on behalf of the Client unless the Client prefers to personally sign all such contracts.

•	This agreement does not constitute a partnership, joint venture, or employer-employee relationship.

[Signed by B and the Client]”.

22.	   The other two contracts are in the form of letters.  In the one (1/6/3), on 8 March 2001 player Yellow appointed C1 of C “as his exclusive agent and representative throughout the world for a term of two years” inter alia “to negotiate, renegotiate, conclude and execute on the player’s behalf in all spheres of the Football Industry, including contracts of employment with a FIFA registered club “. And in the other (1/6/33), dated 7 January 2004 player White appointed G1 of G his “sole and exclusive representative with … authority to manage your professional and commercial interests as a football player or otherwise in the United Kingdom and throughout the world”. G1’s duties, as set out at paragraph 3.1 of the letter (1/6/35), “include but are not limited to … (a) represent your interests in relation to any contract of employment with your present football club and the renegotiation of the terms of such a contract; (b) on your express instructions, to actively seek to procure for you a contract with another professional football club within the United Kingdom or elsewhere in the world (in so far as the FIFA Regulations enable me so to do) and to represent you in any relevant contract negotiations”.
23.	Players’ agents are concerned in three different types of transactions when dealing with football clubs, namely: 
(a)	transfers (including those by way of loan) of players from one club to another;
(b)	the negotiation and renegotiation of the terms of players’ contracts of employment; and
(c)	the negotiation of terms on which players contract with clubs are to be                             terminated
24.	Each year a number of players’ contracts expire, others require renegotiation for various reasons, and players move from one club to another.  Under Section M of the Rules of the Football Association Premier League, there are two transfer windows every year when a football club may change its squad of players: one during the summer period between football seasons and the other in January.  We accept a claim by Mr Cushing that football clubs consider their requirements for players both prior to those periods and during them, but that fewer “deals” take place during the January window than over the summer period.
25.	A club to whom a player is under a contract of employment may charge a fee for his transfer to another club during his contract period.  But once his contract has expired, the player may enter into a new contract of employment with any club, and his former club is not entitled to charge a fee to that other club.  Consequently, if the Club wishes to retain the services of a member of its squad of players, it will usually offer him a new contract of employment no later than the penultimate year of his existing contract. The negotiations leading to and events concerned in such an offer, as described by Mr Cushing, typically take the following form. And, with the exception of those transactions relating to contracts of employment to which the invoices listed in paragraph 134 of in our decision refer, we find that   all did take that form.  Notwithstanding that a number of agents may claim to represent a particular player, the Club identifies the one agent by whom he is truly represented, i.e. the one it knows to have entered into FIFA’s standard representation contract with him.  (In evidence, Mr Cushing claimed that in a number of instances the Club instructed the players’ agent and it was only later that the player concerned entered into a contract with the agent.  Having considered his evidence in conjunction with all the documents before us, we are unable to accept it).  In most, if not all, cases, the player and agent will have entered into two written contracts, FIFA’s standard representation contract and another agreement for which clause 5 of the standard representation contract provides. (It may be that that other agreement is made between the company by which the agent is employed and the player.  Where that is so, we consider that nothing turns on it). The player’s standard representation contract will have been registered with the FA. Depending upon which agent is involved, the supplemental agreement provides for the agent and / or the company employing him to represent the player in, inter alia, negotiations relating to contracts of employment and transfers.  Notwithstanding the existence of the representation contracts, the Club, orally by a representative, approaches the agent without reference to the player and claims to invite him to act jointly for it and the player in negotiating the terms of the player’s new contract.  Assuming the agent accepts the invitation, he does not terminate his contract with the player or otherwise suspend it, nor, further assuming he has no written contract with the Club to act for it, does he enter into such a contract. The agent agrees with the Club the terms of his alleged appointment including the fee he is to receive from it if the player signs a new contract, but neither the Club nor the agent informs the player of those terms, including how much the agent is to be paid. The agent’s fee, which may be payable by instalments, is, according to Mr Cushing, generally based on how successful an agent is in “getting to where the Club wants to be”.  The agent is considered to continue to act for the player in all matters other than the negotiation of the terms of his new contract of employment, but in relation to that contract, notwithstanding the alleged joint instructions, the agent and the Club act as if he were instructed solely by the Club.  To quote Mr Cushing, “The Club wants to be in control of the agent”.  The Club then indicates to the players’ agent that it is prepared to increase the player’s basic weekly wage from, say, £700, to, say, £1,200, but instructs the agent initially to offer him, say, £900. Following negotiations, said by the Club to be between the agent acting for it on the one hand and the player on the other, the player agrees to accept, say, £1,000. Next, the Club prepares the player’s new contract of employment, and he signs it.  After he has done so, the Club completes the Transfer Form or Form H1 (the two forms appear to be used interchangeably) and Form G2.  The former states that the Club used the services of a players’ agent, but that the player did not; and by way of confirmation of those statements, the form is signed on behalf of the Club and by the agent.  The latter states that the agent was involved in the registration and acted for the Club.  The Declaration contains details of the fee to be paid to the agent and a declaration by the Club that the agent acted for it and his fee is to be paid in accordance with a written agreement between the Club and the agent.  The Club lodges the various documents with the FA together with the player’s new contract. The Declaration is accompanied by the payment due to the agent (which has to be paid via the FA).  The agent is then said to resume his former role as agent for the player in all matters. 
26.	In our judgment, in those circumstances, the players' agent has not acted for the Club either jointly with the player or alone. He has not supplied services to the Club. We so conclude for the following reasons. For one thing, he has no written contract with the Club – see the requirement of article 12.1 of the Regulations; and, for another, the player alone has the power to give binding instructions to the agent. He also, alone, authorises each and every activity undertaken by the agent as the result of those instructions. The player determines which agent is to take part in negotiations. (By way of confirmation of that fact, we observe that were the player to change agents mid-transaction, the Club would not continue to deal with the old agent, but would approach the new agent and offer to instruct him). The agent continues to act for the player, who is liable to pay his fees: “only the client engaging the services of the players' agent, and no other party, may remunerate him”, article 12.4 of the Regulations. (In the absence of that article, we accept that the Club could enter into an agreement to make a third-party payment to the agent). The Club is in breach of clause 5 of its contract with the player having failed to observe the rules of the FA as represented by the Regulations.  If the agent did act both for the player and the Club, he would be in breach of his contract to act for the player, in inter alia, contract negotiations. 
27.	 Further, we might usefully add for completeness, the agent would be in breach of his fiduciary duty to the player in not securing a contract on the best possible terms, i.e. one providing for a basic salary of £1,200 per week.  Mr Cushing claimed that since only some players obtain the maximum salary the Club is prepared to pay that positively indicates that the agent acts for the Club.  We do not agree. It emerged from Mr Cushing’s evidence that the Club does not “instruct” all players' agents representing players to negotiate on its behalf, but only those it knows will “act in its best interests”.  (If an agent for a player is unacceptable to the Club it appoints a second agent to act exclusively for it.  That, in itself, indicates to us in the clearest possible way that the first agent is not acting for the Club.  No transaction involving a second agent appointed in such circumstances arose in the instant case). And were an agent to ensure that every player under contract to him obtained the maximum wage the Club was prepared to offer, it is most unlikely that the Club would consider him to be acting in those interests.  He would probably not be “instructed” to act for it again.  An agent, undoubtedly aware of that situation and mindful of that probability, would be careful to avoid antagonising the Club and jeopardising his prospects of earning further fees from it.
28.	Continuing from the penultimate paragraph, the Club has falsely declared in the Declaration that it has a written contract with the players' agent and that he has acted exclusively for it in the transaction.  The agent and the Club have falsely stated in the Transfer Form or Form H1 that the player did not use the services of a player’s agent, but the Club did. (And the agent is in breach of article 14.a of the Regulations having failed to adhere to Code of Professional Conduct in Annexe B to the Regulations, by behaving untruthfully). Finally, if the agent’s fee is to be paid by instalments, the Club is also in breach of article 12.9 of the Regulations. We consider that none of the documents generated by the Club can be relied upon as being true and correct.
29.	In other words, on the Club registering a player’s new contract of employment with the FA, all the registration forms it completes indicate that the agent involved acted exclusively for it, and that the player was not represented in the transaction.  By his signature on the forms other than the Declaration, the agent concurs with the Club’s presentation of the transaction to the FA.  That would appear to be at odds with the Club’s claim that an agent acts jointly for the Club and the player. However, it makes no difference to our conclusion. We repeat, the agent does not act for the Club, either alone or jointly with the player: the agent does not supply services to the Club
30.	Mr Cushing also dealt in evidence with the way in which the Club goes about the acquisition of the services of a player under contract to another football club. We accept his evidence as fact.  Again, with the exception of the transfers to the Club of the players Orange and Chestnut, we find the transactions to take a single form. Having ascertained from that other club that an approach may be made to the player, initially the Club approaches the players' agent it either knows beforehand or as a result of enquiries truly to act for the player in question. The Club knows, or chooses to ignore, that the player is under written contract to the agent.  As with the negotiation of terms of a new contract of employment, the Club, again without reference to the player, claims orally to invite the agent to act jointly for it and the player in negotiating terms on which the player’s existing club would agree to his transfer and on which the player would be prepared to join the Club.  Assuming the agent accepts the invitation, he does not terminate or suspend his contract with the player, nor does he have or enter into a written contract with the Club.  The agent agrees with the Club the terms on which he is said to have been appointed including the fee he is to receive if the player is transferred to it, which fee may be payable by instalments.  Neither the Club nor the agent tells the player the contract terms, including how much the agent is to be paid.  The agent is considered to continue to act for the player in all matters other than his proposed transfer to the Club, but in relation to that matter, notwithstanding the alleged joint instructions, the agent and the Club act as if he were instructed solely by the Club.  If terms are agreed and the transfer is completed, the Club prepares the Form G2, the Form H1 and the Declaration.  In the Form G2, the Club states that the agent was involved in the transfer, and acted for the Club in the transaction. In the Form H1 the Club states that the player did not use the services of a players' agent, but the Club did, and the agent signs the form to confirm that he acted for the Club.  That part of the Form G2 which the agent would have been required to sign had he admitted acting for the player is left blank and unsigned.  In the Declaration, the Club confirms that the fee due to the agent is to be paid “in accordance with the written agreement between the Club and [the agent]”.  The Declaration may state that the agent’s fee is to be paid by instalments.  The various forms, together with the player’s new contract of employment, are then sent by the Club to the FA, and the transfer is registered.  The Club pays the agent via the FA and the agent is considered to resume his position under his contract with the player 
31.	Again, the documents and behaviour of the Club and the agent present a very misleading picture. Once more, in our judgment, the players' agent has not acted for the Club, either jointly with the player or alone. He has not supplied his services to the Club.  The agent has no written contract with the Club (as required by Article 12.1 of the Regulations), and is throughout engaged by the player.  Under the contract, the agent is legally obliged to act in accordance with the instructions of the player, but is not so obliged to act for the Club. The agent continues to act solely for the player, who is liable to pay his fees. As in the case of contracts of employment, the player determines which agent takes part in negotiations. He alone has the power to give binding instructions to the agent, and authorise every activity undertaken by the agent as the result of those instructions. If the agent did act for the Club and the player, he would be in breach of his contract with for the player. (The agent may well be, and probably is, also in breach of his fiduciary duty to the player to obtain for him the best possible contract terms in the form of signing-on fees and remuneration).  Further, and in our judgment fatally from the Club’s point of view, if the agent does represent the Club and the player, he is in breach of Article 14.d of the Regulations in representing more than one party in the transfer negotiations. (In so finding, we reject a submission by Mrs Hall that article 14 of the Regulations does not govern the conduct of the Club, its duties being restricted to those in articles 18 and 19. Whilst article 14 may not directly govern the conduct of the Club, it cannot plead ignorance of its contents in dealings with players’ agents so that, in our judgment, it cannot rely on oral contracts entered into with agents (themselves prevented by article 12.1) and said to instruct them jointly to act for the Club and individual players in relation to transfers.  Were the Club to be allowed so to rely, it would effectively confine the effect of article 14 unilaterally to agents - an effect we consider the courts most unlikely to endorse in any proceedings before them. Mrs Hall also observed that a player as an employee, and thus not registered for VAT, would be unable to recover the tax on the agent’s fees, so that she submitted that we should not lean in favour of the dichotomous position that would arise if HMRC were right and the VAT paid on agents’ fees was irrecoverable despite the business context in which it was incurred. We see no reason why the VAT on agents’ fees incurred by football players in contract negotiations and transfers should be treated any differently from that incurred by any other employee). The Club is in breach of clause 5 of its contract of employment with the player having failed to observe the rules of the FA as represented by the Regulations.  The Club has wrongly informed the FA in Forms G2 and H1 that the players' agent acted for it, and in the latter form that the player did not use the services of an agent.  (In evidence, Mr Cushing admitted that the Forms G2 completed by the Club before us were “technically incorrect” in stating that the player did not use an agent on his transfer. He added that the Club acted on industry practice in instructing the agent with whom the player had a pre-existing relationship and completed Form G2 as indicating that the agent had acted only for the Club “to avoid fouling the rule that an agent can only act for one party on a transfer”; the Forms G2 were completed by the Club in that manner to ensure their acceptance by the FA).  We find that all the Forms G2 before us relating to transfers were completed incorrectly, and that in every transfer with which we are concerned the agent named as acting for the Club in Form G2 acted solely for the player involved.  In the Form H1 the agent has in one part incorrectly confirmed by his signature that he acted for the Club and, by the omission of his signature in another part, indicated that he did not act for the player.  And in the Declaration, the Club has falsely declared that it has employed the services of a players' agent, and that the agent’s fee agreed between it and the agent was to be paid in accordance with a written agreement between them.  Finally, if the agent is to be paid by instalments, the Club is in breach of article 12.9 of the Regulations. Again, none of the documents generated by the Club can be relied upon as being true and correct.
32.	On 1 January 2004, the Club entered into an agreement with K, whereby K agreed to provide independent advisory and consultancy services on a non-exclusive basis.  No other such agreements were in place during the assessment period.
33.	Having dealt with the transactions at issue in the appeal in general terms, we find it helpful to look at a number of individual transactions, the documents relating to which, in our judgment, viewed collectively clearly confirm the findings of fact we earlier made, deal with other points we consider it necessary to make, or indicate that an agent acted for the Club.  Included in them are some of the transactions and invoices referred to in paragraph 5 of our decision. We prefer to rely on the documentary evidence, which clearly reveals the relationships between agents and players, rather than the oral evidence of Mr Cushing and X, which sought to ignore the documentary evidence almost in its entirety and concentrate on what was described as “industry practice”.
34.	In the interests of brevity, we propose to indicate the pseudonym of each player in the private schedule followed by an outline of the relevant transaction(s), the details of the contents of the invoice(s) supporting the input tax claim, and its (their) narrative content.  We shall then make such observations and findings as we consider necessary.

35.	Chestnut
Transaction: 
(1)	Transfer of Chestnut to the Club from another Football League Club
(2)	Negotiation of the new terms of Chestnut’s contract of employment with the Club

Basis of claim for input tax credit:   
(1)	Invoice dated 22 March 2001 raised by D – “agreed agency fee for transfer negotiations” (1/2/69)
(2)	Invoice dated 24 September 2002 raised by D – “[Chestnut] - agreed fee for contract negotiation” (1/2/57)
(3)	Invoice dated 19 April 2001 raised by N– “consultancy fee with regard to the transfer of [Chestnut]”. (2/C/228)
36.	The most comprehensive set of documents before us is that relating to Chestnut.  As it illustrates what happens in the typical transfer of a player, and in the negotiation or renegotiation of a player’s contract terms, we list all the documents, and summarise their contents.  
37.	In evidence Mr Cushing claimed, and we accept, that the Club’s attention was drawn to Chestnut by a players' agent called N, and that company was subsequently paid [ ] for its services in connection with Chestnut’s transfer to the Club.  A copy of its invoice was sent to the FA Premier League on 22 June 2001 by Mr Cushing with the following letter:
“I attach hereto a copy of the invoice received from N who acted on behalf of the Club in the transfer of negotiation of the above player for your records.”
We accept that N acted for the Club in that transaction so that the tax on its invoice is input tax recoverable by the Club.
38.	The other documents produced to us relating to Chestnut’s transfer in March / April 2001 and subsequent contract negotiations (2/C/227-241) were as follows:
(a)	The invoice of 22 March 2001 from D 
(b)	An unsigned copy letter from Mr Cushing to D of 16 April 2002 which reads:
“I write to confirm that in acting for and on behalf of Newcastle Football Company Limited in the contract negotiations involving the Player [Chestnut] you will receive a fee of £[ ] payable via the Football Association on or before 30th April 2002.”
(c)	The Form G2 signed on behalf of the Club on 18 March 2001 (2/C/230) was completed as follows:
	“Was an agent(s) involved in the Registration / Transfer? Yes
If yes, name of Agent(s) involved D1 (D)
If yes, name of party for whom Agent(s) acted NEWCASTLE UNITED FOOTBALL CLUB.”
(d)	A Declaration of 18 March 2001 in which D was identified as agent of the Club, and in which the Club stated that payment of its fees was made under a written agreement, which we find to be non-existent.
(e)	The second invoice from D of 24 September 2002 
(f)	A further Form G2 dated 28 March 2002 (2/C/237), again signed on behalf of the Club, was completed thus:
“Was an agent(s) involved in the Registration / Transfer? Yes
If yes, name of Agent(s) involved D2 (D)
If yes, name of party for whom Agent(s) acted NEWCASTLE UNITED FOOTBALL CLUB.”
(g)	A Declaration of 28 March 2002, again identifying D as agent of the Club and stating that payment of its fees was made under what we find to be a non-existent written agreement.
(h)	A Transfer Form of 28 March 2002 identifying D2 of D as agent of the Club. 
39.	Following HMRC’s investigation of the Club’s affairs which led to its being assessed to the VAT under appeal, HMRC wrote to D asking about its involvement in Chestnut’s dealings with the Club. On 18 April 2006, D replied (1/5/107):
“Dear Mr Stephenson
re: VAT No. … [Chestnut]
Please note D were acting on behalf of the above player for all football contracts incurred with Newcastle United Football Club plc.
Yours sincerely”
40.	In evidence, Mr Cushing maintained that that letter had been written by “a mere clerk” within D, and should be ignored as being incorrect.  As we believe it to be correct, we decline to act as Mr Cushing suggested.
41.	In Chestnut’s case, in our judgment that evidence confirms that D1 and/or D2 of D acted only for Chestnut; that neither acted as agent for the Club; that the VAT on D’s invoices was not input tax in the hands of the Club; and that the Club is therefore not entitled to recover the VAT as input tax.
42.	Purple
Transaction: Negotiation of terms of new contract of employment
Basis of claim for input tax credit:  Invoice dated 12 June 2003 raised by E– “professional services in respect of [Purple]” (1/2/67)
43.	Amongst the documents before us, admittedly relating to matters outside the assessment period, but in our judgment confirming the situation within it, is a letter dated 14 June 2004 (2/C/119) from E1 of E to Mr Cushing in which he said:
“I refer to our recent telephone conversation.  
I enclose herewith a letter from [Purple] confirming his acceptance of the contract terms that you have proposed and look forward to receiving the contract in due course.
The letter from Purple, undated (2/C/112), is in these terms:
“Dear Russell
I am writing to accept the contract terms that have been offered to me.  I will leave trust in you and my agent E1 to arrange a date in which the contract can be signed.
Yours faithfully”

44.	Those letters encapsulate the true situation which exists when an agent acting for and having a written contract with a player negotiates the terms of his new contract of employment.  We find that E1 acted only for Purple.  We also find that he did not act as agent for the Club; that the VAT on E’s invoices was not input tax in the hands of the Club; and that the Club is therefore not entitled to recover the VAT as input tax.
45.	Black
Transaction: Transfer of Black to the Club from a Football League Club
Basis of claim for input tax credit: Invoice dated 1 April 2003 raised by F– “to agents fee payable re [Black]” (2/C/24)
46.	On the basis of an admission by Mr Cushing that he and the Club knew that Black was contracted to F1 of F, we infer, and thus find, that F1, was engaged to represent the player in negotiations with the Club.  We so infer because any player entering into a representation contract with an agent would expect to receive the services of the agent concerned to act only for him in any negotiations relevant to his transfer or contract of employment.  
47.	Further, F’s fee was payable by two equal instalments of [ ]: one on 1 April 2003 and the other on 1 August 2003.  And since only a player is allowed to pay an agent’s fee by instalments (see article 12.6 of the Regulations), in our judgment that is further evidence of the agent acting only for the player.
48.	For those reasons, and because by article 14.d of the Regulations an agent can represent only one party when negotiating a transfer, we find that F1 acted for Black in his transfer to the Club, and that the VAT paid by the Club was not its input tax.  It is not entitled to credit for it.  
49.	We might add that the narrative on F’s invoice does not constitute “a description sufficient to identify the services supplied”, as required by regulation 14(1)(g) of the Value Added Tax Regulations 1995.  Consequently, we also find that the Club does not hold satisfactory documentary evidence of entitlement to input tax credit. (This finding applies to others of the invoices before us, but we do not propose to repeat it as it makes no difference to our conclusion).
50.	White
Transaction: Negotiation of terms of White’s new contract of employment
Basis of claim for input tax credit: 
(1) 	Invoice dated 7 January 2002 raised by G  – “agency fee: contract negotiations for [White]” (1/2/61)
(2)	Invoice dated 6 December 2002 raised by G – “agency fee: contract negotiations for [White]” (2/C/35)
(3)	Invoice dated 5 December 2003 raised by G – “Third instalment of agency fee for negotiating and securing the contract of  [White] for Newcastle United” (2/C/36)
51.	On 21 December 2001, Mr Cushing wrote to G1 of G in connection with negotiations for White’s new contract (1/2/50) saying:
“Dear G1 
[White]
I acknowledge receipt of your fax of yesterday’s date containing your proposals for [White’s] new contract.
We are prepared to increase the appearance money in clause 5) subsection b) from £1500 to £2000 and subsection c) from £2000 to £2500.  
We are also prepared to agree to review his basic salary after the completion of 30 appearances from the date of the new agreement and not after 60 appearances as originally stipulated.
As discussed we also agree to make a payment to G payable on January 2002, December 2002, December 2003 and December 2004, for acting on behalf of Newcastle United Football Co Ltd in the contract negotiations.  As I am sure you are aware these payments now have to be made via The Football Association under signed agreement.
Please note that this is the maximum offer that we are prepared to make and will not enter into further negotiations on this matter.
I therefore look forward to receiving your acceptance as soon as possible so that arrangements can be made for the player to sign his contract.”
52. 	Apart from the fourth paragraph of that letter (which we consider incorrectly to indicate the position), we are unable to interpret the letter otherwise than as indicating in the plainest possible terms that G1 was White’s agent and acted for him exclusively in negotiating the terms of his new contract of employment: it is certainly not a letter to an agent for the Club. (Amongst the other documents before us is a Management Agreement of 7 January 2004 (1/6/33) made between White and G1 which opens as follows:  “This letter constitutes my appointment to be your sole and exclusive representative with your authority to manage your professional and commercial interests as a football player …”.  Although that agreement relates to a period later than that with which we are concerned, we assume it to contain the same or very similar provisions to those in place at the relevant time).  
53.	As G1 acted exclusively for White, and not for the Club, we find that the VAT on G’s invoice was not the Club’s input tax, and it is therefore not entitled to recover it.
54.	Although both invoices at (2) and (3) above are before us, the tax on only one of them appears to have been included in the assessments under appeal.  If the tax on the other has been omitted by mistake and HMRC are in time to assess it, we should say that we find it not to be the Club’s input tax.
55.	Yellow
Transaction: 
(a)	Transfer of Yellow to the Club by another Premier League Club 
(b)	Termination of Yellow’s contract of employment

Basis of claim for input tax credit:
(a)(1)	Invoice dated 4 July 2001 raised by C – “agent fee regarding [Yellow’s] transfer from [club X] to Newcastle United” (2/C/50)
(a) (2)	Invoice dated 5 July 2002 raised by C– “agent fee regarding [Yellow’s] transfer from [club X] to Newcastle United” (2/C/51)
b)	Invoice dated 31 January 2003 raised by A (On a date not disclosed A took over C). (2/C/57)
56.	On 8 March 2001, Yellow entered into a contract with C1 of C (1/6/3) whereby he appointed C1 his “exclusive agent and representative” to “negotiate, renegotiate, conclude and execute on the player’s behalf agreements in all spheres of the Football Industry, including contracts of employment with a FIFA recognised club”.  No evidence was adduced of the termination or suspension of C’s contract. As that contract continued throughout the period covered by events with which we are concerned, and because an agent cannot represent more than one party on a transfer, we find that C did not act for the Club on his transfer to it; that C1 acted for Yellow ; that the VAT on invoices (a) (1) and (2) was not the Club’s input tax; and that it cannot recover the VAT theron. 
57.	On 31 July 2002 Mr Cushing wrote to C2 of C (1/6/2) in the following terms: 
‘’ Dear C2 
 [Yellow]
Following a meeting of our Board of Directors yesterday I have pleasure in enclosing our contract offer for [Yellow] which guarantees him [£N million]. This contract is approximately double the value of the one that he signed when he joined us from [Club x] just over 12 months ago.
Whilst recognising [Yellow’s] contribution to the team last season, we are unable to consider a new contract based on the parameters put forward by you at our recent meeting. We feel that by offering this new and significantly improved contract to [Yellow] we have kept the promise made to you and him when he signed for us.
Kind regards
Yours sincerely ‘’
58.	In our judgment that was a letter from the Club to the players’ agent who continued to act for the player as agent on the player subsequently being transferred by the Club to another club having rejected the terms on offer.  The tax on the invoice at (b) above was thus not the Club’s input tax and it may not recover it.  

59.	Orange
Transaction: Transfer of Orange from a French football club to the Club.
Basis of claim for input tax credit: invoice dated 26 February 2002 raised by O.
60.	On the basis of the evidence of X, we find that Orange was represented in his transfer to the Club by a French agent Y.  As X was a fluent French speaker he was instructed to act for the Club in negotiations with Y.  In those circumstances we accept that X acted as agent for the Club, and the player was represented by Y; that the VAT on O’s invoice was the Club’s input tax; and that the Club is entitled to recover it.
61.	Red
Transaction: Transfer of Red to the Club from another club.
Basis of claim for input tax credit: Invoice dated 4 July 2003 raised by F– “to agents fee payable in respect of [Red] re transfer / negotiations as agreed 19 May 2003” (1/2/65)
62.	On Red being transferred to the Club, it wrote to F1, of F, who Mr Cushing admitted in evidence was known to the Club as his agent, confirming that:
“in acting for and on behalf of Newcastle United Football Club Ltd in the transfer / contract negotiations involving [Red] you will receive a fee of £[ ] payable as follows:

£[ ] payable on 1st July 2003
£[ ] payable on 1st January 2004”

63. 	The payments were expressed to be subject to Red entering into a contract with the Club “in accordance with the agreement dated 19 May 2003”.  No evidence was adduced of the existence of any agreement, other than that for payment of F1’s fees and, in its absence, we find that none was made
64.	On the basis of the limited evidence before us and because an agent can act only for one party on a transfer, we infer, and again find, that F1 did not act for the Club: he acted only for Red.  Consequently, we find that the VAT on F’s invoice was not the input tax of the Club, so that it may not recover it.
65.	We observe that the second instalment of F’s fees was payable on 1 January 2004, i.e. within the assessment period.  We should therefore have expected the tax on the invoice for that instalment to have been included in the assessments under appeal.  It was not.  In the event that it has been omitted by mistake and HMRC are in time to assess it, we should say that we find it not to be the Club’s input tax.
66.	Green
Transaction: Transfer of Green to the Club from a Football League club.
Basis of claim for input tax credit: 
(1)	Invoice dated 1 November 2002 raised by K  – “consultancy” (2/C/99)
(2)	Invoice dated 1 November 2003 raised by K– “consultancy” (2/C/100)
67.	On Green being transferred to the Club, his agent, K1 of K, negotiated payment by the Club of his fees of £[ ] plus VAT in three instalments: one of £[ ](plus tax) on 1 November 2002, and two of £[ ] (plus tax) each on 1 November 2003 and on or before 1 July 2004.  Mr Cushing admitted in evidence that he knew Green to be a client of K, so that we infer that Green had entered into a written contract with K that appointed K1 his exclusive agent. (We so infer notwithstanding a claim by Mr Cushing in evidence that K does not enter into written agreements with players and that, where it is instructed to act for the Club, it informs the player that its contract with him is temporarily suspended.  Apart from the fact that a players’ agent is required to enter into FIFA’s standard representation contract with a player which must be registered with the FA, no evidence whatsoever was adduced to support that claim and, in its absence, we are unwilling to accept it.  Were it to be the case that K does not enter into written contracts, it would put it at a severe disadvantage to its competitors, which they would certainly exploit.  We doubt that K would risk losing a client by failing to enter into a written contract with him). Further, on its website, K explains:
“K is a European Sports Management consultancy which provides sports men and women with a full range of services to ensure that their interests are wholeheartedly and efficiently represented … The players welfare is the most important factor to consider, and K’s only concern lies with the interests of the player and his future”.
68.	In evidence, Mr Cushing admitted that the Form G2 relating to Green (2/C/102) which he, Mr Cushing, signed was “technically incorrect” in stating that the player did not use an agent in his transfer.  Against a background of that admission, the above findings of fact and, once again, because an agent can act only for one party on a transfer, we further find that K1 did not act for the Club in the transfer of Green to it: he acted exclusively for Green.  We also find that the VAT on the invoices was not the input tax of the Club, so that it is not entitled to recover it.
69.	Turquoise
Transaction: Renegotiation of terms of contract of employment
Basis of claim for input tax credit:  Invoice dated 24 June 2002 raised by B  – “acting on behalf of Newcastle United regarding [Turquoise]” (1/5/65)
70.	Amongst the documents before us is an agreement dated 17 June 2000 (1/5/88) whereby B agreed to represent Turquoise by one of its licensed players' agents in all matters including contract negotiations “until such time as either party gives at least one month’s notice to the other to terminate this agreement with immediate effect” (see the standard form of B’s representation agreement at paragraph 21 above).  (We observe that by article 12.2 of the Regulations “such a contract shall be limited to a period of two years .. and may not be tacitly prolonged”, so that the June 2000 contract may have been invalid.  But as we are not here to determine the validity or otherwise of the contract, we proceed on the basis that it was valid for a period of two years from 17 June 2000).
71.	As Turquoise appointed X as his exclusive agent and no evidence was adduced of the contract having been terminated or suspended, we find that it did not act for the Club.  The VAT on B’s invoice was not its input tax; and it is not entitled to recover it.
72.	Pink
Transaction: Negotiation of terms of contract of employment
Basis of claim for input tax credit:  Invoice dated 13 November 2002 raised by B – “[Pink] Agents fee” (1/2/40)
73.	Again, we have before us a contract between the player and B (1/5/92). It is dated 25 June 2001.  Under it Pink appointed B his exclusive agent for all commercial matters, including contract negotiations, until either party terminated the contract on at least one month’s notice.  That the Club knew of the existence of that contract is, in our judgment, confirmed by a letter to B1 of B from Mr Cushing dated 8 May 2002 (1/6/5) in which he said:
“I understand from Paul Martin that you deal with [Pink’s] contract.  I am therefore writing to you to give you notice that we wish to offer the player a new contract, and would hope that we can enter discussions with you as soon as possible”.  
Had the Club been intending to appoint B1 as its agent we should have expected the words “enter discussions with you” in the final sentence of that letter to have been replaced by “instruct you”
(As in the case of Turquoise, and for the reasons we gave in paragraph 68 above, the contract may have been invalid). 
74.	We also have the player’s FIFA Standard Representation Form of 28 June 2001 (1/5/94) whereby B2 of B was appointed Pink’s agent for two years commencing on 28 June 2001. There being no evidence that either agreement was terminated or suspended temporarily, we find that B2 was Pink’s agent, and did not act for the Club; he acted exclusively for Pink.  Consequently, the Club is not entitled to recover the VAT on the above invoice; it was not its input tax.
75.	Copper
Transaction: Transfer of Copper to the Club by another football club 
Basis of claim for input tax credit:  
(1)	Invoice dated 25 September 2001 raised by A  – “as per Agreement.  Professional agency fees re [Copper]” (2/C/160)
(2)	Invoice dated 15 August 2002 raised by A – “2nd instalment of 2 in relation to [Copper].  This instalment due on 15 August 2002 in accordance with the Agreement dated 10 August 2001” (2/C/161)
76.	Copper joined the Club on transfer from another Premier League club.  Mr Cushing said that whilst he did not know that A1 of A was Copper’s agent, “it was likely that he was”.  We are in no doubt that he was for in the documents before us is a contract dated 1 July 2000 (1/5/109) whereby Copper agreed that A would represent him in, inter alia, transfer negotiations in the two year period commencing on 1 July 2000.  In our judgment, it is implicit in that agreement that A would act only for Copper in negotiations with the Club.  (No evidence was adduced to indicate that A terminated or suspended the agreement).  
77.	Yet again we find that the services provided by A were supplied only to Copper under his contract with that company.  As the services were not supplied to the Club, either jointly with the player or alone, the tax on the invoices was not the Club’s input tax and the Club is not entitled to recover it.
78.	Ash
Transaction: 
(1)	Transfer of Ash to the Club from a Football League club
(2)	Renegotiation of terms of Ash’s contract of employment with the Club
Basis of claim for input tax credit:  
(A)	(1)	Invoice dated 4 April 2002 raised by A – “Fees in connection with the transfer of [Ash] from [club A]” (2/C/193)
(2)	Invoice dated 14 January 2003 raised by A– “Fees in connection with the transfer of [Ash] from [club A]” (2/C/202)
(B)	Invoice dated 27 November 2003 raised by H– “Agency services in respect of [Ash]” (1/2/68)
79.	One of the contracts included in the documents before us (1/5/110), although undated, provides for A to represent Ash “in all areas of personality management including transfer negotiations, contract negotiations …” for a period of two years from 27 February 2002.  In our judgment, that contract implicitly requires A to act only for Ash in negotiations with the Club.  No evidence was adduced to indicate that the contract was terminated or suspended and, in its absence, we infer that it was not.
80.	All the above invoices were raised in the two year period for which that contract provides and, in our judgment, A did not act as the Club’s agent alone or jointly with the player.  It follows that we find that A acted only for Ash; the VAT on the A invoice was not the Club’s input tax; and it is not entitled to recover the tax.
81.	Elm
Transaction: Negotiation of terms of Elm’s new contract with the Club 
Basis of claim for input tax credit:  Invoice dated 28 June 2002 raised by I – “Work done on behalf of Newcastle United in the negotiation of a three year contract for [Elm]” (2/C/216)
82.	In evidence, Mr Cushing admitted that “the agent involved was the players' agent”.  (The agent concerned was I1 of I).  That merely confirmed what Elm himself said in the following letter to Mr Cushing of 16 May 2002 (2/C/215):
“I am writing this letter to inform you that I am no longer represented by G1.  I am now represented by I1 of I.  Please will you direct all negotiations regarding my future at Newcastle United to I1.”
83.	Against that background, once more by inference, we find that Elm had a written contract with I1 would act only for him in negotiations with the Club..  We also find that I1 did not act for the Club alone or jointly with the player: he acted only for Elm.  As the supplies of I1’s services were not made to the Club, it is unable to recover the input tax it claimed on his invoice.
84.	Beech
Transaction: Negotiation of the new terms of new contract for the loan of Beech by the Club to Club B
Basis of claim for input tax credit:   
(1)	Invoice dated 16 August 2002 raised by A for  – “as agreed , the fee for the extension of the [Beech] contract at [club B]” (2/C/206)
(2)	Invoice dated 13 March 2003 raised by A– “as agreed , the fee for the extension of the [Beech] contract at [club B] for one year” (2/C/205)
85.	The first of the above invoices has been cancelled, and the Club has withdrawn its input tax claim in relation thereto.  We may therefore ignore it.  
86.	In evidence, Mr Cushing claimed, and we find, that A was not Beech’s agent: it was instructed by the Club to act exclusively on its behalf in agreeing the terms of the loan of Beech to Club B. Against that factual background, we hold that the Club is entitled to recover the tax on the second invoice as the VAT thereon was its input tax.
87.	Apple
Transaction:  
(1)	Transfer of Apple to the Club by a Football League Club
(2)	Renegotiation of the terms of Apple’s contract of employment with the Club 

Basis of claim for input tax credit:   
(1)	(a)	Invoice dated 1 March 2001 raised by J– “Professional services as agreed re: [Apple]” (2/C/244)
	(b)	Invoice dated 10 January 2002 raised by J  – “Professional services as agreed re: [Apple]” (2/C/245)
(2)	Invoice dated 1 December 2003 raised by K  – “Consultancy” (2/C/251)
88.	K’s invoice is one of those the subject of the letter referred to in paragraph 5 of our decision. Had HMRC not accepted that Apple was exclusively contracted to J we should have found that to be the case. It follows that K was not his agent, but acted for the Club.  We therefore accept that the tax on K’s invoice was the Club’s input tax, which it may recover.  The tax on the two invoices raised by J was not the Club’s input tax, and it may not recover it.
89.	Pear
Transaction:  Extension of Pear’s contract of employment with the Club
Basis of claim for input tax credit:  Invoice dated 14 August 2001 raised by L – “Assisting with and agreeing extended contract for [Pear]” (2/C/253)

90.	In evidence, Mr Cushing accepted that Pear was a client of L, but nonetheless maintained that that firm acted jointly for the Club and the player in negotiations leading to Pear’s contract of employment being extended.  Once more, we infer and find that L acted exclusively for Pear. We do so in part based on the following fax from L1 of L to Mr Freddy Shepherd, the chairman of the Club of 1 May 2001 (1/5/50): 

‘’Dear Freddy
[Pear]
Further to our previous conversation, I would confirm that, at the moment, the offer tabled by yourselves is not sufficient.
Although, as I am sure you are aware [Pear] would like to renew his contract with Newcastle United, we have had several meetings at which there has been an insistence from the Player that his remuneration level is set at £[ ] per week (package).
Given the current market, and indeed increased terms, I do not think this is an unreasonable request, I fully understand your own sentiments and your desire to retain [Pear’s] services at Newcastle United and I can assure you that I do not intend to do anything other than convey your opinions and messages to the Player before taking any further decisions (again between you and I as to whether or not a deal can be reached, or whether we should work together to place the Player elsewhere).
Once you have had your meeting with Bobby [Robson, the Club’s manager], please let me know your initial responses and then we can arrange a further meeting.
Kind regards
Yours sincerely’’
91.	The reference to “the offer tabled by yourselves” in our judgment clearly indicates that L1 was acting for the player and not for the Club, as does the remainder of the fax.
92.	For the reasons we have given so many times now, since the negotiations were in the standard form, with all that entailed in terms of input tax recovery, we find that L did not act for the Club; the VAT on its invoice was not the Club’s input tax; and it is not entitled to recover it.
93.	Hazel
Transaction:  Transfer of Hazel to the Club 
Basis of claim for input tax credit:   
(1)	Invoice dated 1 July 2003 raised by B – “[Hazel] – Agents fee” (1/5/74)
(2)	Invoice dated 18 March 2003 raised by L for– “To professional advice rendered in connection with the transfer of [Hazel]” (1/2/59)
94. 	In the case of Hazel, the documentary evidence before us as to who acted as agent and for whom is, to say the least, confusing.  Uniquely, we have before us an agreement in B standard form between B and Hazel, and a FIFA representation contract made between B1 of B and Hazel, both dated 6 February 2002.  The latter stated it would be valid for two years, terminating on 6 February 2004, whereas the former provided for an indefinite term to be determined by one month’s notice to be given by either party.  In each case, the player appointed the agent his exclusive agent.
95.	We then have a number of forms completed by the Club.  A Transfer Form dated 20 January 2003 shows B2 of B as agent for the Club, and B1 as agent for Hazel.  A Form H1 of the same date contains the same information. But a Form G2 (2/6/283) shows both B2 and B1 as acting for both the Club and the player.  Then a Declaration, dated 31 January 2003 (2/C/285), shows L1 of L as having acted for the Club in the transfer of Hazel.  By fax of 28 March 2003 Lee Charnley, the Club’s assistant secretary, informed the Finance Department of the FA that £[ ] had been transferred to its bank account for payment to L1 of L and said “This payment is in accordance with the written agreement between the Club and L1, of L.  A copy of which is attached for your information”.  Although no such written agreement is with the documents before us
96.	It appears from a Declaration of 30 January 2003 (2/C/279) that the Club agreed to pay B2 “in accordance with the written agreement” between them £[ ]; £[ ]on 1 August 2003 and £[ ] on 31 December 2004.  For the reasons we gave in the last preceding paragraph, we find that there was no written agreement between B2 and the Club. Nevertheless, HMRC accepted that L1 acted for the Club, and that the VAT on L’s invoice was the Club’s input tax, so that by consent we agree that it is recoverable.
97.	The agreement of 6 February 2002 between B and Hazel (1/5/98) states that:
“It is agreed that: (1) B will represent the client [Hazel] worldwide with immediate effect as exclusive agents for all worldwide commercial matters including, but not limited to, those relating to … contract negotiation …”.
(As mentioned earlier, that agreement was separate from the contract of the same date between B1 and Hazel (1/5/103)).  
98.	Consequently, we find that B did not act for the Club in the transfer to it of Hazel; that B1 acted only for Hazel; that the VAT on B’s invoice of 1 July 2003 was not the Club’s input tax; and that the Club is not entitled to recover the VAT as input tax.
Other Players
99.	For completeness, we list the invoices relating to the remainder of the Club’s input tax claims listed under the pseudonyms of the players concerned, which claims we reject as falling within the general findings of fact we made in paragraphs 26 to 32 of our decision.  They are:
100.	Blue
Transaction: Negotiation of terms of contract of employment
Basis of claim for input tax credit:  Invoice dated 9 April 2003 raised by J – “professional services regarding the contract negotiations of [Blue]” (1/2/66)
101.	Gold
Transaction: Transfer of Gold to the Club from another football club 
Basis of claim for input tax credit:  Invoice dated 12 December 2001 raised by K – “acting on behalf of Newcastle United FC in the transfer of [Gold]” (1/2/41)
102.	Silver
Transaction: Renegotiation of Silver’s terms of employment  
Basis of claim for input tax credit:  
(1)	Invoice dated 17 May 2002 raised by K– “consultancy” (2/C/149)
(2)	Invoice dated 1 November 2002 raised by K– “consultancy” (2/C/147)
(3)	Invoice dated 1 May 2003 raised by K– “consultancy” (2/C/148)
(4)	Invoice dated 1 November 2003 raised by K– “consultancy” (2/C/150)
103.	Lead
Transaction: Renegotiation of terms of Lead’s contract of employment  
Basis of claim for input tax credit:  Invoice dated 4 July 2001 raised by K relating to both Lead and Steel – “consultancy – as agreed”) (2/C/169).
104.	Steel
Transaction: Renegotiation of terms of Steel’s contract of employment with the Club
Basis of claim for input tax credit:  
(1)	Part Invoice dated 4 July 2001 raised by K– “consultancy” (2/C/169)
(2)	Part Invoice dated 23 December 2002 raised by K– “consultancy” (2/C/180) 

105.	Wood
Transaction: Renegotiation of terms of Wood’s contract of employment with the Club
Basis of claim for input tax credit:  Invoice dated 18 March 2002 raised by J– “Professional services as agreed” (2/C/186)

106.	Oak
Transaction:  Renegotiation of Oak’s terms of employment with the Club 
Basis of claim for input tax credit:   
(1)	Invoice dated 2 September 2002 raised by M– “To professional services in connection with assisting the club in negotiating terms with [Oak], fee payable in accordance with agreed schedule” (2/C/208)
(2)	Invoice dated 24 February 2003 raised by M– “To professional services in connection with assisting the club in negotiating terms with [Oak]” (2/C/209)
(3)	Invoice dated 1 September 2003 raised by M– “To professional services in connection with assisting the club in negotiating terms with [Oak]” (2/C/207)
The Relevant Legislation
107.	In reaching our conclusions on the facts, we have taken account of the following legislation:
(a)	Article 2 of the EC Sixth Directive (77/388/EC) which states:
	“The following shall be subject to value added tax
	1.	The supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such.”
(b)	Section 5(2) of the Value Added Tax Act 1994 (“VATA 1994”) which states that:
“(2)	Subject to any provision made by that Schedule and to Treasury orders under subsections (3) to (6) below—
(a)	‘supply’ in this Act includes all forms of supply, but not anything done otherwise than for a consideration;
(b)	anything which is not a supply of goods but is done for a consideration (including, if so done, the granting, assignment or surrender of any right) is a supply of services.”
(c)	Article 11(A)(1)(a) of the Sixth Directive provides:
	“The taxable amount shall be:
	(a)	in respect of supplies of goods and services … everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies …”
(d)	Section 24(1) of VATA 1994 provides:
“Subject to the following provisions of this section, “input tax”, in relation to a taxable person means the following tax, that is to say—
(a)	VAT on the supply to him of any goods or services;
(b)	…
(c)	…
being (in each case) goods or services used or to be used for the purpose of any business carried on or to be carried on by him.”

The community concept of supply

108.	We have also borne in mind that the concept of supply in the Sixth Directive is an autonomous one of Community law that cannot be determined by how the transaction is classified under national law, see e.g. Case C-320/88 Shipping and Forwarding Enterprise Safe BV v Staatsecrataris van Financien [1991] STC 627.  That ensures uniformity and neutrality in the application of VAT.  Thus we have considered the essential features of the transaction “irrespective of the way in which it might be artificially presented”.  Case C-315/00 Maierhofer v Finanzamt Augsburg-Land [2003] STC 564 at paragraph 39
The Club’s alternative case
109.	In dealing with the alternative case presented for the Club, we may ignore those transactions in which it is agreed or we have found that a players’ agent did act for the Club, so that this section of our decision deals only with the remaining transactions.
110.	Notwithstanding that even if there were no supply made by the players’ agent to the Club, Mrs Hall submitted that it nevertheless gained the right to deduct input tax because it received a benefit sufficient to bring it within the principles laid down by the House of Lords in Commissioners of Customs and Excise v Redrow Group plc [1999] STC 161, as later applied by the Court of Appeal in WHA Limited and another v Commissioners of Customs and Excise [2004] STC 1081.  Dr Hutton contended in response that the submission was incorrect: if it were correct in the circumstances of the case, third-party consideration would become largely, if not entirely, otiose, and the concept of ‘adventitious’ benefit would become meaningless.
111.	In the Redrow case, the facts were that Redrow, a builder, established a scheme to assist prospective purchasers of its new houses to sell their own houses under which it agreed to pay the estate agents’ fees on the purchasers’ sales.  Redrow instructed the estate agents and paid their fees, but only if the purchaser’s house was sold and he went on to purchase a Redrow house.  If the purchaser’s house was not sold or he failed to purchase a Redrow house, the purchaser himself was responsible for payment of the estate agents’ fees, and the agents were advised by Redrow to enter into a fall-back agreement with the purchaser to deal with that situation.  The House of Lords unanimously determined that the VAT on the estate agents’ fees Redrow paid was its input tax and thus deductible in calculating its tax liability.  
112.	Lord Hope of Craighead, delivering one of two reasoned speeches in Redrow observed, at page 165, that “the only question to be addressed is whether the supplies on which it [Redrow] seeks to deduct input tax have been used or are to be used for the purposes of the business.  The relevant test is that laid down in Belgium v Ghent Coal Terminal NV (Case C – 37/95) [1998] STC 260.  Was the supply received in connection with the business activities of the taxable person, for the purpose of being incorporated within its economic activities?”
113.	Lord Hope continued at page 165:
“The tribunal held ([1995] V&DR 115) that the services which were supplied by the estate agents were supplied both to Redrow and to the prospective purchasers. Potts J ([1996] STC 365 at 371) said that this was a decision which the tribunal were entitled to reach.  The approach which the tribunal took was to ask itself whether and to what extent Redrow received the services supplied by the estate agents.  The primary facts seem to me to support the conclusion which it reached on this issue.  Clearly the estate agents were supplying services to the prospective purchasers, as they were engaged in the marketing and sale of the existing homes which belonged to the prospective purchasers and not to Redrow.  But Redrow was prepared to undertake to pay for these services in order to facilitate the sale of its homes to the prospective purchasers.  The estate agents received their instructions from Redrow and, so long as the prospective purchasers completed with Redrow, it was Redrow who paid for the services which were supplied.  I do not see how the transactions between Redrow and the estate agents can be described other than as the supply of services for a consideration to Redrow.  The agents were doing what Redrow instructed them to do, for which they charged a fee which was paid by Redrow’’.
114.	Lord Hope went on to make the following general observations, at page 166:
‘The word “services” is given such a wide meaning for the purposes of VAT that it is capable of embracing everything which a taxable person does in the course of furtherance of a business carried on by him which is done for a consideration.  The name or description which one might apply to the service is immaterial, because the concept does not call for that kind of analysis.  The service is that which is done in return for the consideration … Questions such as who benefits from the service or who is the consumer of it are not helpful.  The answers are likely to differ according to the interest which various people may have in the transaction.  The matter has to be looked at from the standpoint of the person who is claiming the deduction by way of input tax.  Was something being done for him which, in the course or furtherance of a business carried on by him, he has had to pay a consideration which has attracted VAT?  The fact that someone else, in this case the prospective purchaser, also received a service as part of the same transaction does not deprive the person who instructed the service and who has had to pay for it of the benefit of the deduction.’
115.	Dealing with the identification of the recipient of services in the second reasoned speech in Redrow, Lord Millett posed the question to be answered as: “to whom did the agent supply his services, not who derived a benefit from them?”  The answer to that question he found to lie in two features of VAT: (1) anything done for consideration which is not a supply of goods is a supply of services; and (2) unless the services are supplied for a consideration they cannot constitute the subject matter of a supply.
116.	Lord Millett, taking essentially the same view as Lord Hope, continued saying (again at page 171):
‘… one should start with the taxpayer’s claim to deduct tax.  He must identify the payment of which the tax to be deducted formed part; if the goods or services are to be paid for by someone else he has no claim to deduction.  Once the taxpayer has identified the payment the question to be asked is: did he obtain anything – anything at all – used or to be used for the purposes of his business in return for that payment?  This will normally consist of the supply of goods or services to the taxpayer.  But it may equally well consist of the right to have goods delivered or services rendered to a third party.  The grant of such a right is itself a supply of services. In the present case, Redrow did not merely derive a benefit from the services which the agents supplied to the householders and for which it paid.  It chose the agents and instructed them.  In return for the payment of their fees, it obtained a contractual right to have the householders’ homes valued and marketed, to monitor the agents’ performance … and to override any alteration in the agents’ instructions which the householders might be minded to give.  Everything which the agents did was done at Redrow’s request and in the events which happened, at its expense.  The doing of those acts constituted a supply of services to Redrow.”
117.	Lord Millett went on to observe that the services rendered to the prospective purchaser were the ordinary services of an estate agent, whereas those supplied to Redrow were the right to have the house valued and marketed in accordance with its instructions.
118.	The facts in WHA were that a group of companies instituted a scheme intended to alter the recovery of input tax charged on repair services made under insurance policies relating to vehicle breakdowns.  The scheme involved the use of two Gibraltar insurance companies, one of which, Viscount, appointed WHA, a UK company, to handle claims and pay the repair bills.  HMRC rejected repayment claims made by WHA on the basis that the repair services by garages were supplied to insured customers, rather than to WHA.  Viscount and WHA appealed contending that the garages were supplying their services to WHA, which in turn was making onward supplies to Viscount.  The Court of Appeal held that there was a supply of services by the garages to WHA, and that the input tax on the garages’ bills was in principle recoverable by it.  
119.	Neuberger LJ, who delivered the leading judgment in WHA, relied on the passages cited above from the speeches in Redrow, other than that cited at paragraph 114  to conclude at pages 1092 and 1093:
“[46]	To use Lord Hope’s words, it is enough for WHA’s case … that ‘something’ namely the repair work, was ‘done for’ WHA, in the sense that it was authorised and paid for by WHA and WHA benefited from the work.  Lord Millett’s approach may be said to be slightly different although I believe that the difference is one of language or emphasis, rather than of concept or principle.  His approach would appear to involve, in the present case, asking oneself who paid for the works, on the basis that any person who did not pay for the works, such as the insured, ‘has no claim to deduction’.  Once one identifies the payer, namely WHA, one simply asks whether he received ‘anything at all’ for the carrying out of the work by the garage.  Given that it satisfied WHA’s obligation to Viscount, and it enabled WHA to earn its £17.60, the answer to that question must, to my mind, be in the affirmative.
[47]	The respondents’ case on the first issue receives further support, in my view, from the decision and reasoning of the House of Lords in the later case of Customs and Excise Comrs v Plantiflor Ltd [2002] UKHL 33, [2002] STC 1132, 2002 1 WLR 2287,   In that case, the taxpayer supplied horticultural goods by mail order, and its charges included a sum in respect of postage.  The taxpayer stated to customers that it would advance the postal charge to Parcelforce on behalf of the customer.  The House of Lords held that, on analysis, there were three supplies, namely: (i) ‘the supply of Parcelforce to Plantiflor of the service of delivering its customer’s goods’ which, but for the fact that Parcelforce’s services were exempt, would be a ‘taxable supply’; (ii) ‘[t]he supply by the customer incurring no liability to Parcelforce to the customer of the service of delivering his goods to him’, which because it involved the customer incurring no liability to Parcelforce, was not a taxable supply; and (iii) ‘[t]he supply by Plantiflor to the customer of an arrangement service for which Plantiflor charged £1.63 per parcel’: see [2002] STC 1132 at [67], [2002] 1 WLR 2287, per Lord Millett.
 [48]	Earlier, consistently with what Lord Hope had observed in Redrow, Lord Millett said ([2002] STC 1132 at [50], [2002] 1 WLR 2287): ‘a single course of conduct by one party may constitute two or more supplies to different persons’ and that (at [51]: ‘[t]he question is whether that was a taxable supply, and this depends on whether it was made for a consideration.’”
120.	A little later in his judgment, at page 1094, Neuberger LJ added:
“[52]	It is true that, in the final paragraph I have quoted from the speech of Lord Millett, he referred to the degree of control over the agents enjoyed by Redrow, and that it can be contrasted with the relative lack of control over the garage by WHA.  However, the extent to which Redrow had a right to select the agents and control their activities does not seem to me to have been a factor which played much, if any, part in the reasoning of Lord Hope.  So far as Lord Millett’s speech is concerned, I consider that the final paragraph quoted at [44], above was included merely to emphasise the extent to which it could not be said that Redrow was receiving a merely adventitious benefit from the agents’ activities. Quite apart from this, it is clear that WHA has a degree of involvement, and indeed a real degree of control, over the activities of the garage.  WHA authorises the work and is liable for its cost, save to the extent that the policy dictates; further, the garage is obliged to comply with WHA’s requirements in the leaflet, at least if it was a garage selected by WHA, as presumably is the position in the great majority of cases.
[53]	Standing back, it appears to me unlikely in the extreme that the entitlement of a person in the position of Redrow or WHA to claim input tax could depend upon the precise degree of control which it exercises over the person who renders the invoice.  Although it is plainly dangerous to generalise, it seems to me that to justify a claim for input tax in principle, it would normally be sufficient for the person presented with the relevant invoice to establish that he had authorised and paid for the work the subject of the invoice, and that he received a genuine benefit in the course of his business from the carrying out of the work.”
121.	Not surprisingly, Mrs Hall focused her submissions on Lord Millett’s observation on page 171 of Redrow, that
 “Once the taxpayer has identified the payment the question to be asked is: did he obtain anything -  anything at all – used or to be used for the purposes of his business in return for that payment? This will normally consist of the supply of goods or services to the taxpayer. But it may equally well consist of the right to have goods or services rendered to a third party.”
and on Neuberger LJ’s apparent development of Lord Millett’s approach, at paragraph 46 of his judgment in WHA, when he said:

“[Lord Millett’s] approach would appear to involve, in the present case, asking oneself who paid for the works, on the basis that any person who did not pay for the works, such as the insured, ‘has no claim for deduction’. Once one identifies the payer, …, one simply asks whether he received ‘anything at all’ for the carrying out of the work by the garage.”
123.    The approach so identified ignores Lord Hope’s confirmation of the tribunal’s finding, at page 165 of his speech in Redrow, that the estate agents supplied services to Redrow for a consideration. In the instant case, we have found that the players’ agents do not supply services to the Club for a consideration.

124.     Although control of the sales process may have been a factor that played little or no part in the reasoning of Lord Hope (see paragraph 52 of the judgment of Neuberger LJ in WHA), nevertheless it was important that the estate agents had real obligations to Redrow. In the instant case, the players’ agents have no such obligations; as we have found, they are exclusively contracted to individual players, and are legally bound to act on the players’ instructions.  We reject a submission by Mrs Hall that the existence of a contract between an agent and a player is “irrelevant” in a VAT context.

125.      But we consider the far most telling point against the Club to arise from a comparison of the scheme involved in the Redrow case with another frequently employed house-builder’s sales incentive scheme.  That other scheme provides for payment of the solicitor’s fees of a purchaser – an arrangement which cannot be structured to enable the house-builder to claim that the supply of legal services is other than to the purchaser, given the duty of the solicitor to act for his client.

126.   In the instant case, that comparison requires consideration of a claim made in evidence by Mr Cushing and the law relating to conflicts of interest.  Mr Cushing explained in great detail that the Club instructs an agent known to act for a player for three reasons:
(a)	the agent facilitates the transaction;
(b)	he acts as a conduit – a channel of communication between the player and the Club; and
(c)	he also acts as a buffer between the player and the Club, preventing unnecessary misunderstandings and disagreements.
121.	127.     And in what Mrs Hall submitted was a key part of the Club’s case, for those reasons Mr Cushing claimed that in transfer and contract negotiation/renegotiation transactions the agent acts in both the interests of the Club and the player.  As their interests are not mutually exclusive, there is mutuality of interests in using the agent’s services, and he supplies his services to both the Club and the player.  
122.	128.      It is a general principle of the law of agency that an agent may not put his duty in conflict with his interest (see Halsbury’s Laws of England Volume 1 (2) 4th Edition para 103 at page 73). The principle was stated in the following way by Lord Hanworth MR in Fullwood v Hurley [1928] 1 KB 498 at page 502:

“ … if and so long as the agent is the agent of one party, he cannot engage to become the agent of another principal without the leave of the first principal with whom he has originally established his agency”

and by Scrutton LJ, also at page 502, as:

“No agent who has accepted an employment from one principal can in law accept an engagement inconsistent with his duty to the first principal, from a second principal, unless he makes the fullest disclosure to each principal of his interest, and obtains the consent of each principal to the double employment.”

129.    We earlier found that the agent (and for that matter the Club) does not inform a player of the terms on which he is said to be appointed the Club’s agent (see paragraphs 26 and 31 above).  Thus the agent fails to make full disclosure to his first principal of his interest, and does not obtain his consent to the double employment.  We might add that we consider it may be wholly incompatible with the duty of a players’ agent exclusively contracted to a player to obtain the player’s consent to double employment.  

130.	For completeness and lest the Club should claim that football industry usage permits it to act as it does notwithstanding the restrictions on joint agency laid down by Lord Hanworth and Scrutton LJ, we propose to deal next with the question of joint usage of agents.   In North & South Trust Co v Berkeley [1971] 1 All ER 980, Donaldson J (as he then was) dealt with a practice of joint usage of agents by Lloyds in the insurance industry, at page 990, saying:

“If a usage is to have effect in law, it must at least be notorious, certain and reasonable.”

131.	On the evidence before us, we entertain doubts as to whether the practice of a players’ agent being instructed to act jointly for a football club and a player is notorious. Football players, characterised in large part as naïve in matters of business by Mr Cushing, are unlikely to be aware of the practice since it has no practical effect on them.  That the usage applies throughout the football industry, as claimed by X and Mr Cushing, may be sufficiently widespread as to be certain. That leaves the question of reasonableness. If the Club requires the services of a players’ agent it may appoint any agent to act on its behalf other than the particular agent of the player concerned. There is no evidence of a second agent being unable to carry out all the instructions of the Club, to facilitate its requirements.  An agent for the player acts as conduit between the Club and his player principal: there is no need for a second conduit. As we understood Mr Cushing’s evidence, if there are misunderstandings and disagreements between the player and the Club, they are almost inevitably those of or caused by the player, so that it is for the agent, on behalf of the player, to ensure that they are resolved with the Club. Since there is no reason known to us why the Club should not appoint a second players’ agent to act exclusively for it, and the Club fails to act on the restrictions laid down for the use of joint agents laid down by Lord Hanworth and Scrutton LJ, we consider its usage of the player’s own agent wholly unreasonable and, therefore, incapable of being a legal usage.

132.	In our judgment, the services of the players’ agents in the instant case are analogous to the services of the solicitor in the sales incentive scheme involving payment of his fees. Given the players’ agent’s duty to act exclusively for his client, the player, the agent cannot engage to become the agent of the Club. He cannot supply his services to the Club for a consideration; and the VAT on his services cannot be the Club’s input tax. We consider that to be so notwithstanding that the Club obtains a benefit from the players’ agent’s services.

133.	We accept that there may be cases where third party payment results in the payer receiving a supply of services so that the tax on those services becomes his input tax.  But, in our judgment, this is not one of those cases. 

Conclusion
134.	  Having rejected both the Club’s main and alternative arguments, we dismiss the appeal, except in relation to the amounts included in the invoices listed at paragraph 5, and in relation to the tax on the following invoices;
Player	Invoice Date	Agent	
Chestnut	19.04.01	N	
Orange	26.02.02	O	
Beech	13.03.03	A	
135.   We reduce the tax assessed by the amount of these invoices, and to that extent allow the appeal.  But despite our having done so since the assessments were all made by HMRC in the absence of evidence to support the Club’s input tax claims, we are not prepared to allow the Club any of its costs.  
136.    In the event of the appeal being dismissed, wholly or substantially, Dr Hutton made application for HMRC’s costs. We accede to his application, and direct the Club to pay HMRC’s costs of and incidental to and consequent upon the appeal, such costs to be calculated on the standard basis, and to be determined by a Costs Judge in the event of their not being agreed.

DAVID DEMACK
CHAIRMAN
Release Date: 21 August 2006
MAN/04/0780