Football has been put on notice that customs officers are ready to crack down hard on tax evasion in the sport with dawn raids at two Premier league clubs which have seen four agents and Newcastle United’s managing director arrested.
Weeks after a warning that the image rights regime which helps top-earning players avoid tax is going to come under scrutiny, four agents for Premier League players were arrested, as part of a huge operation involving 18 customs officers which is believed to stem from an investigation into the transfer dealings of French club, Olympique de Marseille.
New legislation is about to make it a criminal offence for companies to prevent the facilitation of tax evasion and many British clubs are now thought to operate a ‘red flag’ system when they believe there is anything suspicious.
Reports in France suggested that it was French officials who arrested the four football agents. Newcastle's 39-year-old managing director Lee Charnley was the only confirmed arrest but he is thought to have been released without charge. Despite the raids at West Ham, it is understood there were no arrests made at the club.
The first raids took place early on Wednesday at Newcastle's St James' Park and training ground and West Ham's London Stadium, with HMRC confirming that its officers, not police, had "arrested several men working within the professional football industry” for a suspected £5million income tax and National Insurance fraud.
Investigators searched premises in the north east and south east of England and seized computers, mobile phones and paperwork. West Ham confirmed in a statement that their offices at the former Olympic stadium had been raided but said the Premier League side was "cooperating fully" with the investigation.
It is thought that other clubs in the UK could be visited as part of the widespread investigation which involves as much as £5m in non-payment of income tax and National Insurance fraud.
HMRC also visited Chelsea’s Stamford Bridge stadium, though in an evidence gathering capacity. No equipment or documentation was taken away from Chelsea and there is no suggestion of any wrong-doing at the club or involving any of its employees. The club said in a statement: “In connection with is wider investigation HMRC has requested certain information which the club will provide.”
Andy Wood, a director at Enterprise Tax Consultants, said HMRC's aggressive tactics reveal just how keen the authorities are to make examples of those suspected of tax evasion.
Mr Wood said: "HMRC is being very bold in describing this as fraud from the outset, as that is a criminal offence and potentially carries severe penalties for individuals whom it can prove have been guilty of such activity.
"However, the Revenue has not been shy of late in making clear its desire to tackle high-profile figures and companies whom it believes are avoiding or evading tax, partly because of the deterrent effect. In football, that has been certainly the case following HMRC's clamping down on the use of employee benefit trusts of the sort which were at the heart of Rangers' liquidation in 2012 and the recent hearing in the Supreme Court.
"As well as HMRC getting tougher with those even suspected of impropriety, the investigation involving Newcastle and West Ham provides yet more evidence of how its international reach in trying to bring tax evaders to book is continually being increased by co-operation with foreign tax authorities."
An HMRC spokesperson said: "The French authorities are assisting the UK investigation, have made arrests and several locations have been searched in France. This criminal investigation sends a clear message that, whoever you are, if you commit tax fraud you can expect to face the consequences."