In a little-noticed move slipped into the Budget details on Tuesday, the Chancellor allowed football clubs to phase in a new accounting standard, saving them millions of pounds in extra tax payments.
The Chancellor and his officials are seen in Whitehall as being football mad. Mr Brown is a keen Raith Rovers supporter, while his adviser Ed Balls is a Norwich City fan. Geoffrey Robinson, Paymaster-General until he stepped down in December, owns Coventry City FC, while Charlie Whelan, the Chancellor's former spin doctor, supports Tottenham Hotspur.
The Budget measure is designed to help football clubs struggling to introduce a new accounting standard called FRS10. The standard requires clubs to recognise players on their balance sheets as an intangible asset, and then amortise the cost of the asset over the length of the player's contract.
Until recently, clubs tended not to recognise players as assets on balance sheets as they can lose their value rapidly as a result of injuries.
The rule means that, rather than writing off the cost of buying a player against the first year's profits, clubs have to spread the cost over the length of the player's contract. This means clubs are more likely to report a profit and therefore pay more tax.
However, the Budget allows clubs to phase in the measure gradually, which means the extra tax burden will not take effect for several years.
According to the Treasury Red Book, the measure will cost the Exchequer pounds 45m in the financial year starting April 2000. In the following year, it will bring an extra pounds 20m into the government's coffers.
The new accounting standard may encourage clubs to develop home-grown talent rather than buy in players on big transfer fees.Reuse content