British football clubs have been warned by financial
experts that they face severe punishments if taxes are not
paid.
The news follows Karren Brady, managing director of Birmingham
City, being re-arrested on Wednesday as part of a corruption
inquiry into alleged “money laundering,” although the club
fervently deny any wrongdoing.
“Football clubs are facing more scrutiny than ever before from tax
inspectors,” said Frank Goldberg, senior manager at accountants BDO
Stoy Hayward.
“HM Revenue and Customs (HMRC) is increasingly looking into the
affairs of clubs and not just those in the Premiership. Failure to
submit the required returns and make the correct payments on time
is increasingly leading to legal proceedings being brought against
the relevant club.”
There is mounting concerns from the authorities and the Football
League that a growing number of sides are failing to account for
their finances and it appears that plans are now afoot to clamp
down on these irregularities.
“In addition to current PAYE, National Insurance contributions and
VAT, HMRC pay particular attention to ‘Golden Hellos’, image rights
and VAT recovery on agents’ fees.
“Simply ignoring them is an unforced error, akin to scoring an own
goal,” added Goldberg, who believes the current economic climate
may explain why some clubs consider themselves exempt from paying
taxes.
“With the recent financial crisis many clubs may find fans staying
away from matches causing a reduction in gate receipts.
“HMRC has never accepted that defaulting on taxes is an appropriate
way to manage a club’s cash flow and it takes a dim view of those
who do.”