Man City HMRC letter adds huge tax risk over 9 seasons
Britain’s Parliament has put a new question to Manchester City: did the club pay the right amount of tax? Dame Meg Hillier, chair of the House of Commons Treasury Committee, wrote Thursday, Oct. 1, to HM Revenue and Customs permanent secretary JP Marks about the Premier League findings against City, Sky Sports reported. The Man City HMRC letter asks whether the club paid the correct tax and national insurance across the nine seasons covered by the case.
What Hillier asked in the Man City HMRC letter
The letter asks whether HMRC has received an unredacted copy of the Premier League investigation report. Hillier also sought “reassurance from HMRC that you are seized of the importance of these issues and the public interest in the case,” according to Sky Sports.
She requested an overview of the department’s current work on football clubs and any common tax issues it has found. HMRC has until Thursday, Oct. 15, to reply.
How the Premier League findings raise Man City HMRC questions
An independent panel found City guilty of almost all of the more than 100 charges against it, The Associated Press reported, and Total Apex Sports has covered the possible sanctions over 114 charges. The case covers 2009-18, when the panel said City used “sham” commercial deals with Abu Dhabi-based sponsors to disguise money from its owner, the Abu Dhabi United Group.
The panel called it a “Disguised Funding Scheme,” the AP reported. Over nine years, it found Abu Dhabi sponsors paid only 119.25 million pounds of the 949.94 million pounds recorded in club accounts, with the owner covering the remaining 830.69 million pounds.
Image rights, Fordham and the Mancini payments
The report also described the Fordham Agreement, a vehicle that bought City players’ image rights at inflated prices and was “in reality little more than a front,” according to the AP. Investigators said it let owner money enter the club “in a manner that concealed their true origin” and be booked as operating income.
Sky Sports also cited the arrangement with former manager Roberto Mancini, who led City from 2009 to 2013. He allegedly received 1.45 million pounds net from the club, while an Italian company was paid 1.75 million pounds a year for four days of annual consultancy work at UAE Pro League club Al Jazira. The AP noted that the report described separate deals in which some salaries were supplemented by the owner and labeled as consultancy agreements, with names redacted. Whether any of this left tax unpaid is the core Man City HMRC question.
The investigation began after hacked internal emails were published by German magazine Der Spiegel in 2018, Sky Sports noted. City denies all wrongdoing.
The appeal clock and the Oct. 15 deadline
City must file its appeal of the verdict by Friday, Oct. 2, according to Sky Sports, and the club has already signaled the grounds it will challenge, as covered in Manchester City’s appeal over material errors. The Man City HMRC letter is separate from that process. HMRC has not said whether it is examining City, and the Oct. 15 reply should show how seriously it treats the request.
For background on the Man City HMRC story, see how Man City was found guilty of most financial rule breaches and the compensation claims City could face.
Reporting from Sky Sports and The Associated Press contributed to this story.