12-02-2004, 11:30 PM
Dear Sajjad
I am content with your treatment of £5m transfer fees paid. I have a question which is a slight variation
Suppose Rooney walked in Sir Alex ferguson's office and said, Hey I am a great player. Alex was convinced and he took on Rooney on a weekly wage of say £80,000. Now £80,000 outlay is a charge to P&L, but obviously no transfer is paid and the guy is an asset and could be sold off for £7 million pounds. Is there any way we can recognise this £7 Million pounds potential in the B/s.
I tell you why? I have never audited a football club, but I could see a potential tax planning opportunity. The Decpn. charge is notional and would be replaced by capital allownaces in tax comps. Only way we can claim Capital allowances is to recongise the asset, but under histroic cost convention we cant do that. However, what about the situation if we form a Manchester united TRUST (life tenant Trst). The trust signs wyne at no cost and then sells it off to United club, thereby united paying a £7Million transfer fees to TRUST on which it can claim capi. allowances. and the trust under an agreements lends the money back to united.
I am content with your treatment of £5m transfer fees paid. I have a question which is a slight variation
Suppose Rooney walked in Sir Alex ferguson's office and said, Hey I am a great player. Alex was convinced and he took on Rooney on a weekly wage of say £80,000. Now £80,000 outlay is a charge to P&L, but obviously no transfer is paid and the guy is an asset and could be sold off for £7 million pounds. Is there any way we can recognise this £7 Million pounds potential in the B/s.
I tell you why? I have never audited a football club, but I could see a potential tax planning opportunity. The Decpn. charge is notional and would be replaced by capital allownaces in tax comps. Only way we can claim Capital allowances is to recongise the asset, but under histroic cost convention we cant do that. However, what about the situation if we form a Manchester united TRUST (life tenant Trst). The trust signs wyne at no cost and then sells it off to United club, thereby united paying a £7Million transfer fees to TRUST on which it can claim capi. allowances. and the trust under an agreements lends the money back to united.
