The agent’s firm, Sports Invest UK Limited, appealed to the FTT disputing a demand from HMRC for VAT at 20% chargeable on a €4m (£3.5m) payment after the agent, Amil Kohansal, signed a €40m football transfer with Italian football club, Inter Milan in August 2016.

The agent negotiated the transfer of Portuguese football player, Joao Mario, from Sporting in Portugal to Inter Milan.

Under the contract with the player, Sports Invest was entitled to a fee of 10% of the player’s gross salary, image rights payments and other remuneration, which was €30m (£26.5m).

HMRC argued that as a result of the transfer, Sports Invest, which is based in the UK, supplied services to both Inter and the player, and should have paid VAT on the transaction.

According to HMRC, output VAT of £438,954 was due on €3m (£2.6m) of the payment, as this amount was classed as ‘third-party consideration’ paid by Inter for a supply made by Sports Invest to the player, which was made in the UK.

It contended that because Sports Invest was based in the UK, its supply fell within the provisions of schedule 4A to Value Added Tax Act 1994 (VATA).

Section 4A VATA states that a supply of services is to be treated for VAT as ‘made in the country in which the land in connection with which the supply is made is situated’.

If the payment was for a supply of services by the appellant to Inter, then the place of supply would be Italy, the country where Inter is based.

Sports Invest argued that all of the payments it received were related to services supplied to Inter, and consequently the place of supply of the services was Italy. As a result, no VAT was due on the payment.

Judge Nigel Popplewell said: ‘At face value, on the evidence before me, it is clear that the appellant was undertaking activity intended to facilitate a supply of the player’s registration from Sporting to Inter.

‘It undertook negotiations between Sporting, Inter and the player. It needed to ensure that the player’s registration was transferred to Inter, and at the same time, the player entered into an employment contract with Inter. This brings its services within the ambit of paragraph 10.

‘In this appeal, there is a non-taxable transaction. This is because when acting in its capacity as employer, inter does not act as a taxable person since it is not acting independently. Since it is not acting as a taxable person, in those circumstances the entering into the employment contract and supplies made under it outside the scope of VAT.

‘I have therefore concluded that if I had not found for the appellant on its primary case, I would have found that the otherwise taxable services supplied by it to the player fall within paragraph 10 and thus would be deemed to have been supplied in Italy as that is the place where the underlying supply is treated as having taken place.