HMRC’s £5m tax probe into football is ‘just the beginning’ warns leading sports lawyer

180 investigators made a series of raids including at West Ham and Newcastle on Wednesday
Jamie McDonald/Getty Images
James Olley27 April 2017

HMRC’s investigation into tax irregularities in football is long overdue and the £5million figure under suspicion is just the beginning, a leading sports lawyer warned.

A total of 180 investigators made a series of raids including at West Ham and Newcastle amid allegations over payments made during the transfer of players between Premier League and French clubs.

HMRC officers also visited Chelsea although the club are not implicated in any wrongdoing, while French prosecutors say 10 searches were carried out in France. Business records, financial records, mobile phones and computers were all seized in coordinated activity.

HMRC has seemingly struggled to bring prosecutions and Kyle Phillips, a solicitor in the sports sector team at top London law firm Howard Kennedy, told Standard Sport: “They have been very lazy in coming to the table with it but that’s not just in football.

“HMRC have been talking over the past 20-30 years about how they will fight tax evasion but just haven’t really done anything about it. The amount of money lost through tax avoidance is colossal – we are talking about hundreds of millions of pounds – and so this is one section that they are beginning to target. It is overdue in all areas but now is better than never.

“They keep on going for further and further powers and they are getting more through the new Criminal Finance Bill but they already have similar powers to the police when it comes to stop and search. They have good powers compared to other regulatory bodies but they have not used them to the full capacity.”

Financial consultants Ernst and Young estimate that the Premier League is responsible for generating £2.4billion in tax and so this latest HMRC investigation centring on the possible avoidance of income tax and national insurance to the tune of £5m is relatively small by comparison.

“£5m is not a large figure for tax avoidance,” added Phillips. “It depends where they have got the information from and I can’t speculate as to why they haven’t gone after the big guns. It is a high-profile case but when it comes to the crunch, the figure itself is not significant compared to other allegations of other people who have supposed been engaged in tax evasion and tax avoidance.

“It will be up to whoever is implicated to explain significant fees going from one account to another.”

HMRC is known to have been conducting wide-ranging investigations into the tax arrangements of football clubs for some time, particularly focusing on the concept of image rights; a player’s salary is taxed at 45 per cent but fees paid to a company set up to manage image rights are taxed at corporation tax rates of 20 per cent.

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