By Jonathan Copping, Sports Lawyer, Bolt Burdon Law Firm, London, United Kingdom
The financial dealings of football clubs have been put back into the spotlight this week following dawn raids by HM Revenue and Customs (HMRC) on both Newcastle United and West Ham United Football Clubs regarding an alleged £5 million tax fraud.
HMRC deployed 180 officers across the UK and France to search premises, including both Football Clubs’ stadiums, St James’ Park and the Olympic Stadium. Other locations searched, included Newcastle’s training ground and the home of Newcastle’s managing director, Lee Charnley, who was also arrested and subsequently released without charge.
It has been reported that HMRC’s officers seized computers, mobile phones, business and financial records.
No specific details have been released regarding the alleged tax fraud and none are expected to be released whilst HMRC undertakes further investigations whilst analysing the information and documentation obtained from Wednesday’s dawn raids.
However, the Parquet National Financier (PNF), the French judicial body authorised to prosecute major financial crimes and is assisting HMRC with the investigations, released a statement confirming that the investigations relate to suspected tax fraud and tax evasion regarding several transfers of footballers from French clubs to English Premier League clubs. It has been reported that HMRC are looking at potential illicit payments to players, agents or third parties, which enabled payments of income tax and national insurance contributions to be avoided.
So far, the only football transfer known to be part of HMRC’s investigations is the transfer of Sylvain Marveaux from Rennes to Newcastle in 2011. Marveaux made only 39 appearances for Newcastle in a 5 year period and now plays for Lorient in France. Marveaux was arrested, but has since been released. According to Marveaux, he knew “few” details about his transfer from Rennes to Newcastle.
It is not known how long HMRC’s investigations will take and whether charges will be brought against the clubs and/or individuals involved.
From a sporting point of view, Newcastle’s recent promotion back to the English Premier League and West Ham’s position in the League will not be under threat. However, should HMRC commence prosecutions and subsequently be successful, the English Football Association (FA) has the power to commence its own disciplinary proceedings against the clubs and/or individuals found guilty, on the basis that they have brought the game into “disrepute” through their conduct.
The FA can rely on the decision of an external court when deciding to charge a party for bringing the game into disrepute. Such a scenario may be a long way away, but it is entirely possible that this week’s raids could lead to sporting sanctions being imposed much further down the line.
Jonathan Copping can be contacted by e-mail at ‘JonathanCopping@boltburdon.co.uk’