Her Majesty’s Revenue and Customs (HMRC) has had its eye on soccer for the past six years.
The agency is particularly interested in the bonuses and image rights payments that players receive from clubs, as these are usually under-declared.
For example, players who have companies to manage their image are reported at a 19% tax rate. If the player does not have a company and receives the money directly, he must pay a rate of 45%.
Thanks to the investigations that the agency has carried out over the years, it has recovered approximately £464million.
Most of the money recovered comes from settlements reached with clubs, agents, and players for alleged tax evasion. Last year alone, the agency investigated 246 players, and 23 agents are still under investigation.
In the case of clubs, the agency is currently targeting Manchester United and Newcastle.
In fact, the accountants at both clubs are the ones who have disclosed the ongoing investigation.
The Red Devils’ accountants said: “We are currently in active discussions with the UK tax authorities over a number of tax areas in relation to arrangements with players and players’ representatives.
“It is possible in the future, as a result of discussions between the group and UK tax authorities, as well as discussions UK tax authorities are holding with other stakeholders within the football industry, that interpretations of applicable rules are subject to challenge and could result in a liability.”
It is not yet clear whether both clubs have already been sued for tax non-compliance. But if they do, it could represent a hefty fine and a severe blow to the clubs’ finances.