26th April 2017

Football arrests over Income Tax and National Insurance fraud

Her Majesty’s Revenue and Customs (HMRC) today arrested several people as part of a wide-ranging probe into tax fraud within the football industry, involving 180 HMRC officers deployed in the UK and France. HMRC could not confirm BBC reports that Newcastle United, West Ham and Chelsea were amongst the clubs involved.

‘HMRC has arrested several men working within the professional football industry for a suspected £5 million Income Tax and National Insurance fraud’, read an emailed HMRC statement. ‘180 HMRC officers have been deployed across the UK and France today. Investigators have searched a number of premises in the North East and South East of England and arrested the men and also seized business records, financial records, computers and mobile phones.’

‘The French authorities are assisting the UK investigation, have made arrests and several  locations have been searched in France’, continued the statement. ‘This criminal investigation sends a clear message that, whoever you are, if you commit tax fraud you can expect to face the consequences. As this is an ongoing investigation HMRC is unable to provide any further detail at this time.’ However, HMRC did confirm that no police forces were involved.

The 2016 Finance Act gave HMRC additional powers to chase and prosecute those it judges to be using offshore funds to avoid income tax, which is an issue for European clubs competing to offer star players the highest salary. The Panama Papers revealed that Spanish club Real Sociedad set up offshore companies for seven players between 2000 and 2008; that 20 football club owners set up offshore companies through law firm Mossack Fonseca; and almost 20 footballers set up similar companies.

Rangers PLC was in discussion about a Discounted Options Scheme (DOS)  it operated in connection to players for approximately ten years. The DOS created shell companies in connection to Rangers players which were invested in by the offshore-based Rangers Employee Benefits Trust (REBT), which was created in 1999. In return, the REBT would have an option to take control of the shell companies in the future, which would therefore be technically worthless to anyone other that the REBT, since they had invested all the money. The ‘worthless’ shares in the company would then be given to the player and the option to take control of the company allowed to expire, passing control of the company – and the cash invested in it – to the player.

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