HMRC makes arrests after carrying out raids on football clubs in investigating alleged tax fraud

Out-Law News | 27 Apr 2017 | 9:42 am | 2 min. read

HM Revenue & Customs (HMRC) arrested "several men" involved in professional football during raids carried out on Wednesday morning as part of an investigation into alleged tax fraud.

Premises operated by Newcastle United and West Ham United were searched as part of the raids, according to several media reports.

In a statement, HMRC confirmed that 180 of its officers were involved in operations across both the UK and France, and said French authorities assisting it had "made arrests" and searched "several locations" in the country. HMRC said the arrests concern "a suspected £5 million income tax and National Insurance fraud".

Tax expert Jason Collins of Pinsent Masons, the law firm behind Out-Law.com, said HMRC's raids show that businesses across all sectors need to be prepared for scrutiny of their tax affairs.

"HMRC gains a powerful tool this year – the new offence for the failure to prevent the facilitation of tax evasion – and it is already stepping up activity in preparation," Collins said. "Activity will be ramped up even further once it is actually operational. It is becoming increasingly clear that no sector or industry will escape scrutiny."

The Criminal Finances Bill, which is expected to get royal assent this week, will create two new offences which will effectively make a business vicariously liable for the criminal acts of its employees and other persons 'associated' with it leading to the facilitation of tax evasion, even if the senior management of the business was not involved or aware of what was going on. The first offence will apply to all businesses, wherever located, in respect of the facilitation of UK tax evasion. The second offence will apply to businesses with a UK connection in respect of the facilitation of non-UK tax evasion.

"The scale of these raids is dramatic, even for HMRC. Dawn raids are partly undertaken to send a clear message of deterrence. HMRC wants tax evaders and facilitators to be scared. Recent investigations also quite clearly demonstrate that international cooperation and coordination is improving all the time," Jason Collins said.

"Corporates need to be aware of the new powers HMRC will have at its disposal this year, and take steps to ensure their affairs are in order," he said.

According to Pinsent Masons, figures show that HMRC carried out 28% more raids in 2015/16 than it did the previous year. In 2015/16 it carried out 761 raids compared to 593 in 2014/15, it said.

A spokesperson for HMRC said: "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."

The government recently revealed that technical experts from HMRC would visit all English Premier League, Championship and Scottish Premiership clubs over a three year period and review all compliance risks including payments to players.

Last month legal arguments were heard by the Supreme Court in a case concerning whether payments made by Rangers Football Club plc (RFC 2012) to players and executives at the club were subject to income tax deduction. The case concerns payments made by RFC 2012 into employee benefit trusts.