HMRC urged to scrutinise tax implications of Man City case

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HMRC urged to scrutinise tax implications of Man City case

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Findings from the Premier League’s case against Manchester City require scrutiny from His Majesty’s Revenue and Customs, the chair of a cross-party group of MPs has told the tax authority.

It was confirmed on Tuesday that an independent commission found City guilty of all charges relating to breaches of the Premier League’s financial regulations between the 2009-10 and 2017-18 seasons.

City have repeatedly denied guilt, and have signalled an intent to lodge an appeal by Friday.

The club were found to have artificially inflated revenue through “sham” sponsorship agreements with the help of their owners.

The independent commission which studied the case found City “utilised devices” to “disguise the true extent of certain club liabilities”.

The Treasury Committee, which is responsible for overseeing policies and administration of HMRC, has therefore asked whether the government department has requested the redacted documents contained within the commission’s report.

Dame Meg Hillier, chair of the Treasury Committee, said she would “welcome reassurance from HMRC that you are seized of the importance of these issues and the public interest in this case”.

The letter follows a report from the Tax Policy Associates, external which claims City failed to pay as much as £12m in unpaid tax because of a “sham” contract with former manager Roberto Mancini.

In addition to unpaid income tax and National Insurance, the report claims City could face a penalty charge that would take their liabilities to £24m.

City to argue sponsorship deals came from Abu Dhabi government

Manchester City will claim as part of their appeal that key sponsorship deals were funded by the Abu Dhabi government, rather than the club’s owners.

Owners Abu Dhabi United Group (ADUG) – a private investment company belonging to United Arab Emirates vice-president and deputy prime minister Sheikh Mansour – are said to have topped up the value of commercial deals as part of a “disguised funding scheme” to the scale of £830.69m.

This, it was argued, enabled the club to appear to comply with Premier League and Uefa financial rules.

However, as first reported by the Daily Mail and Times, sources have told BBC Sport that City are expected to tell an appeal board that they have evidence showing the money directed to sponsors came from the Abu Dhabi government, rather than from ADUG.

Premier League rules allow state-owned bodies to sponsor clubs.

The independent commission detailed how City had “denied there had ever been any disguised funding scheme of the type alleged by the Premier League. Its case was that [it] had misunderstood how Abu Dhabi sponsorship agreements had been funded… The reality was [the club contested] that Abu Dhabi sponsors had always been liable for all recorded sponsorship fees and all had in fact been paid to the club by Abu Dhabi sponsors from their own funds/resources.

“No part of any recorded sponsorship fee had been paid by ADUG or from using ADUG funds. Abu Dhabi sponsors had from time to time applied for financial assistance from the Abu Dhabi government toward their liability to pay the recorded sponsorship fees – such applications had been granted…”

The independent commission rejected this submission as “untrue”, saying: “We concluded that it was an ‘explanation’ that the club had concocted well after the event in an attempt to obscure and conceal the realities of the disguised funding scheme.”

City’s argument is likely to lead to renewed debate over the extent to which City’s ownership is separate from the Abu Dhabi state, and over the ramifications of club ownership with state connections.

Mansour is a member of the ruling family of Abu Dhabi, and the brother of UAE President Sheikh Mohamed bin Zayed Al Nahyan.

Since the takeover in 2008, City have insisted the club is a completely private enterprise, and not state-owned. However, some critics have questioned the distinction, with human rights campaigners claiming the ownership of City has been used to “sportswash” the UAE.

On Saturday, City chairman Khaldoon Al Mubarak referred to “irrefutable evidence” that he claimed supports the club’s claims of innocence. City have claimed the commission’s decision contained “clear material errors, of law, principle and fact, and is unsafe”.

It has emerged that Al Mubarak, who was appointed chairman of City following the takeover in 2008, is named as an Emirati diplomat on the UK government’s current directory of all foreign representatives.

Representatives of foreign states and their diplomatic staff “enjoy privileges and immunities under the Diplomatic Privileges Act (1964)”, giving diplomats immunity from prosecution under criminal, civil and administrative laws.

City’s principal sponsor Etihad Airways has said it is considering legal action against the Premier League, claiming the release of the commission findings had “damaging implications… despite the airline not being named in the redacted published findings”.

The UAE’s state-owned national airline said it “categorically rejects any finding, conclusion or implication that suggests the airline has ever been involved in improper commercial arrangements”.

Etihad is owned by sovereign wealth fund L’Imad which is chaired by the Crown Prince of Abu Dhabi, the son of the UAE president.

The Premier League declined to comment when contacted by BBC Sport.

Additional reporting from James Landale, diplomatic correspondent for BBC News.

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