UK Treasury Committee chair asks HMRC to report on Manchester City tax implications

The fallout from the Manchester City case reached the United Kingdom Parliament on Thursday, with the Treasury Committee chair asking Britain’s tax authority to report on measures taken in response to the Premier League’s findings.

The request comes after the Premier League said Manchester City used “sham” commercial contracts as part of schemes to inflate revenue and understate costs by more than £900 million ($1.2bn) over nearly a decade.

Committee chair Meg Hillier said she had written to His Majesty’s Revenue and Customs (HMRC) Permanent Secretary JP Marks after the publication on Tuesday of the independent commission ruling that the club had committed “well over 100 individual breaches of the Premier League Rules across the course of many seasons”.

In her letter, Hillier sought assurances that HMRC was “seized of the importance” of the findings and questioned the tax authority about its response.

She asked whether HMRC was aware of the commission’s findings, whether it had requested or been provided with an unredacted copy of the report and what assessments it had made of any potential tax implications arising from the case.

HMRC can unpick a company’s tax returns and reject contrived transactions that reduce the company’s taxable income. HMRC can also apply financial penalties for underpaid taxes as a result of false statements.

However, City’s actions would have artificially inflated the company’s profitability, which would have increased their taxes.

“I would also welcome an overview of current HMRC work around football clubs,” she concluded. “I would be interested in any common issues around taxation (including the taxation of remuneration) that you have found in their practices, and how HMRC is tackling them.”

Manchester City did not immediately respond to a request for comment.

Hillier’s intervention broadens the fallout from the case, which has already prompted debate over possible sanctions, the appeals process and potential compensation claims by rival clubs and players.

Manchester City have denied wrongdoing and are expected to lodge an appeal against the commission’s findings before Friday’s deadline.