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Newcastle United owners face massive HMRC bill after losing in court – Mike Ashley hangover

3 months ago
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It is now over two years since Newcastle United fans finally saw the back of Mike Ashley.

However, for the Newcastle United owners, his not inconsiderable shadow had remained over St James’ Park.

Indeed, it still does to this day, even though we are now coming up to fully 26 months since Mike Ashley handed over the keys to SJP.

It has now been revealed that the Newcastle United owners have lost their court battle against HMRC, a court case that is directly due to Mike Ashley, when he was in control.

Newcastle United now face having to pay £6.25m to HMRC after losing their High Court appeal over tax owed on agents fees and other payments during the Mike Ashley era.

Martin Ziegler, Chief Sports Reporter at The Times, reporting – 29 November 2023:

Newcastle face having to pay £6.25 million to HM Revenue and Customs after losing a High Court appeal over tax payments that were demanded following a raid on the club and seizure of documents during Mike Ashley’s ownership.

HMRC demanded £4.25 million in national insurance contributions and £2 million in VAT payments in 2018, after the raid the previous year. It follows an HMRC investigation into agents fees,

Newcastle had challenged the claims but HMRC won the case in the High Court’s King’s Bench Division on Wednesday. The club’s most recent accounts state the amount claimed by HMRC has been registered as an “accrual” in Newcastle’s financial statements which “represents a best estimate at this time of the amount that may be payable”.

A civil investigation into agents’ fees and Newcastle had been going on since 2014, but in April 2017, as part of a criminal investigation, officers raided the club and seized documents and computers. Nine months later, the club was hit with the demands for unpaid taxes between 2011 and 2017.

It was announced in 2021 — before the Saudi takeover — that the criminal investigation had been dropped but the HMRC did not drop the tax demands. Newcastle appealed and claimed that all copies of seized material should have been returned to the club and the information contained should not have been used in a civil case.

The two High Court judges ruled against Newcastle however, saying: “We dismiss this appeal and allow HMRC’s cross-appeal.”

In situations like these where there is an ongoing legal case and then a takeover of the business happens before a final outcome is reached, what often happens is that whoever selling the business with ‘indemnify’ the new owners against the cost of that final outcome.

In other words, part of the agreement to sell the club, will include a commitment of the outgoing owner to pay the bill, whenever that legal case is finally settled.

However, I am guessing that in the case of our old mate Mike Ashley, he will almost certainly have told the new / current  Newcastle United owners, if you want the club then you take on this liability as well, no matter how much it might end up costing you.

It will be interesting to see just what the Newcastle United owners will say, now that the High Court has made this ruling.

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