United in image rights tax probe
MANCHESTER United is being investigated by HM Revenue over image rights payments to leading players.
The revelation is one of a number of disclosures made in a 322-page prospectus for investors in the club’s £500m bond issue.
Would be investors – who are currently being wooed by Manchester United officials at a series of roadshows around the world – are told that the Revenue is focusing its probe on payments made from 2005 to 2008, but the time-span period could be extended.
The document says: “HMRC’s position is that payments in relation to image rights may be a form of remuneration and, as such, should be taxed as income.”
The club, which is offering the bond via its subsidiary MU Finance, said the matter could lead to litigation.
“On 18 September 2009, we submitted a letter to HMRC, setting out our view that these payments are not taxable as income . We are currently waiting for a response from HMRC. There is a possibility that this matter may lead to litigation.
“Should HMRC succeed in any such litigation the club may be liable for, amongst
other things, approximately £5.3 million (which relates to employer’s NIC contributions during the period 2000/01-2009/10.
HMRC declined to comment on the investigation. A spokesman said: “Our legal obligation to maintain customer confidentiality means we are unable to offer comment on the affairs of individuals or businesses under any circumstances.”
The prospectus which can be viewed here provides a high level of detail on the club’s finances and commercial arrangements.
It is the most detailed summary of activities since the business was taken private by the US-based Glazer family in a £790m leveraged buyout in 2005.
As well as details on the fees charged by and loans made to members of the Glazer family – which have been seized upon by opponents of the regime – the document reveals:
:: that new shirt sponsor, US financial group AON, is paying £20m a year – and has already paid £35.6m upfront;
:: the recession has dented hospitality incomes, with 16% of corporate packages for the current season remaining unsold. Prices range from £18,600 for a five-person package with no food and drink to £187,250 a year for a 16-seater box with food and drink included for the entire season.
:: last season’s run to the final of the UEFA Champions League – which ended in defeat in Rome – generated €38m.
While underlining Manchester United’s financial might, its commercial and footballing success and global popularity, the prospectus warns investors about various threats to the business, ranging from possible terrorist attack at Old Trafford to new rules on football finance being proposed by European governing body UEFA, and even that football may lose its status as the world’s most popular sport.
