HMRC’s raid on two top football clubs indicates it is stepping up activity ahead of a new criminal offence due to come into force this autumn, tax lawyers say.
Raids took place at Newcastle and West Ham this week as HMRC launched a major investigation into suspected income tax and national insurance fraud connected with transfer deals with a French club. A third club, Chelsea, has now been visited by HMRC officers as part of the same investigation.
However, tax lawyers have warned that all sectors from banking to construction should be on their guard as HMRC increases its investigative activity in time for the introduction of a new criminal offence for corporates who fail to prevent the facilitation of tax evasion. The new offence is contained in the Criminal Finances Bill, expected to gain Royal Assent any day now and to come into force this autumn.
Jason Collins, partner and head of tax at Pinsent Masons, said: “HMRC is stepping hard on the accelerator and all sectors need to prepared.
'The Revenue gains a powerful tool this year—the new offence for the failure to prevent the facilitation of tax evasion—and it is already stepping up activity in preparation. Activity will be ramped up even further once it is actually operational.
'It’s becoming increasingly clear that no sector or industry will escape scrutiny. The scale of these raids is dramatic, even for HMRC. Dawn raids are partly undertaken to send a clear message of deterrence. HMRC wants tax evaders and facilitators to be scared.'
Collins said recent investigations show that international cooperation and coordination is improving. There has also been a 28% increase in the number of HMRC raids, from 593 in 2014/15 to 761 in 2015/16.
Tax barrister Tom Wesel, partner at Milestone International Tax Consultants, said: 'HMRC has recently "discovered" footballers as a soft target.
'Something that has also been recently demonstrated in the Rangers Supreme Court case and the enquiry into footballers’ image rights. These raids could be a scare tactic, forcing the clubs to negotiate over arrangements that were entered into in good faith with professional advice. Or, the clubs may have been daft enough to engage in what was obviously fraud. We don’t know. Nor, perhaps, does HMRC yet.
'Powers to raid and seize documents have been hugely expanded in recent years in very worrying ways—it’s at risk of degenerating into a lawless envy fest.'
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