Redknapp/Milandric tax case

Do any members of this group have observations/comments on the tax evasion cases being prepared by HMRC against former Portsmouth FC manager Harry Redknapp and chairman Milan Milandarich?

Technically, we should not publish any speculation once they are charged, as expected, during the week beginning 11 January. But since both men's lawyers have issued pre-emptive press releases, we are hardly likely to prejudice any subsequent trial any more than they are. Portsmouth CEO Peter Storrie, meanwhile, was charged in November for an unrelated issue relating to unpaid tax on a player's signing on fee.

The Storrie, Redknapp and Mandaric cases will grab big headlines for HMRC, and result from "Operation Apprentice", a multi-year probe by the football and tax authorities into backhanders, false accounting, conspiracy to defraud and money laundering. HMRC's prosecution office has found enough evidence to proceed against the Portsmouth three, but there has been no action from the football on the alleged bungs it looked into.

The Mandaric/Redknapp case appears to stem from tax not paid on a personal payment to Harry Redknapp in 2002 as part of a separate property transaction, according to Mandaric's legal team. "Expert tax advice has confirmed that Mr Mandaric has no tax liability," the advisers claimed.

The men involved are innocent until proved otherwise, but one could argue that Portsmouth's current parlous financial situation goes right back to the November 2008 raids on its management team,. The question also has to be asked whether a chairman under caution for offenses at one club (Portsmouth) was a "fit and proper" person in the eyes of the football authorities to take over as chairman at another (Leicester City FC).

Looking forward to some tax & AML-related football punditry before the affair becomes sub judice.
__________________________
John Stokdyk, Technology editor

 

Comments

perhaps

Anonymous | | Permalink

Perhaps this is a result of a money laundering report, given that the accountants and lawyers have not been arrested as well. Be interesting to see how this pan outs, but I do not have much faith in HMRC or our legal system in getting anything right. We currently live in a country where the guilty (MP's) escape but the innocent (Mr Bowles) are put away. The result will depend on how good the legal teams are and how much money is spent on the players (a bit like football) rather than the facts.

nogammonsinanundoubledgame's picture

Funding the defence

nogammonsinanun... | | Permalink

It is a subject that I freely admit to knowing nothing about, but I was wondering whether, if the prosecuting authorities in this case fail to deprive the defendents of the financial resources to fund a defence outside of legal aid (by way of an order to freeze their assets), then Philip Bowles might have grounds for appeal under article 14 of the Human Rights Act 1998, on the basis that paras 3(b) and 3(c) of Article 6 of that Act are being applied or denied in a discriminatory manner.

With kind regards

Clint Westwood

TrevorJSmith's picture

Fortunes always hiding...

TrevorJSmith | | Permalink

I wonder what "due diligence or risk assessment" tests were carried out by 'Arrys new employer, Spurs, against the background of his "reputation" of being a wheeler dealer and his arrest as Portsmouth manager, when his services were engaged. I am sure some assurances were given through the legal teams in the negotiations.

Under normal circumstances he would be suspended pending the end of the legal case but as Spurs doing so well under his direction , this action has not been taken.

I wonder if its a case of "Fortunes always hiding, HMRC looked everywhere" , still its a game of two halves and personally i'd be sick as a parrot if 'Arry had done a wrong 'un. Y'No.

Dead Parrot

Anonymous | | Permalink

Will the Jury be questioned as to their football team preferences ?

What a Monty Python sketch this would make !

Gooners !!

davidwinch's picture

Jury selection

davidwinch | | Permalink

You may be surprised to learn that potential jury members are not specifically asked anything before being sworn in (or after) however a list of witnesses names (including if appropriate the names of victims - e.g. in a murder trial) and the name of the defendant(s) may be read out to them.  If a potential jury member knows one or more of these he will indicate that and will not be selected for the jury for that trial.

Also the prosecution and defence do not get an opportunity to object to a potential juror whom they do not like the look of.

And jurors are not allowed to discuss the case with the media (or anyone else) - even after the case has concluded.

In all these areas the position in English courts is rather different from that in the US.

If you are interested there is an article at

http://news.bbc.co.uk/1/hi/magazine/7180764.stm

Ironically the accompanying picture shows a judge's gavel and - you've guessed it - they have those in US courts but not in English ones!

David

Celebrity Trials

Anonymous | | Permalink

Could we all claim to know Harry. Is this a problem with celebrity trials ?

Jurors pay

Anonymous | | Permalink

There may be some downward presure on expert witness fees, but the poor old jurors only get some £30 a day which could be a disaster for the self employed especially in the current climate.

I would be in a bad mood to start with ! If a decent rate were paid one might be enthusiastic but being forced to take an oath and serve on a jury while your business implodes is a different matter.

Surely such a low rate of reimbursement is only an opportunity to bribe the jury.

davidwinch's picture

Self-employed & jury service

davidwinch | | Permalink

Typically jurors are asked to serve for two consecutive weeks.  This may involve a juror in being involved in several short trials (some last only a day or two).

However some trials last more than two weeks and, if that is anticipated, jurors are warned of this before being selected.  Obviously some will 'cry off' those cases, leaving a jury based disproportionately towards the non-employed, unemployed or those working for larger employers whose absence can be covered by others.

The self-employed may avoid jury service altogether if their business would suffer seriously from their absence.

David

Thanks David

Anonymous | | Permalink

An interesting one to know, as I do not recall the court guidance note to Jurors mentioning this. One of my clients stands to loose £500 through Jury service which is a substantial amount of money to him.

davidwinch's picture

Official guidance

davidwinch | | Permalink

Official guidance includes:

"I am self employed, do I have to serve as a juror?


Yes. Jury service is a public duty, unless someone is disqualified, has the right to be excused or has a valid reason for discretionary excusal then they must serve.


If you have valid business reasons, then applications of this type can be looked at closely and granted only if there would be unusual hardship. However, a deferral will be offered in the first instance. If you wish to be deferred then you will need to clearly state in full, your reasons why on your reply to the jury summons form. You may also be asked for further supporting evidence."

See

http://www.hmcourts-service.gov.uk/docs/infoabout/juryservice/faq_v2_sep...

David

John Stokdyk's picture

More on Portsmouth FC

John Stokdyk | | Permalink

Thanks to input from previous comments on this thread and the original story, I've looked into the supposed winding-up order that is being brought against the club. Portsmouth deny that such a petition has been formally served and HMRC refuses to discuss individual cases.

The news did leak to the BBC as negotiations continued about outstanding VAT, PAYE and NIC liabilities, so it appears to be a media management/brinkmanship situation as the club faces an ever-growing web of financial demands. With £10m due in from a Sky TV payment on 10 January, one anonymous commenter on the latest story suggested that Portsmouth was holding back December payments to players to push the PAYE liability into the next tax month.

If you were advising the club, what would you be doing at this point?

IP

Anonymous | | Permalink

I would advise discussions with a Business Recovery and Insolvency practitioner

Portsmouth FC

IanRiley | | Permalink

Making sure I was paid in advance.

TrevorJSmith's picture

PAYE & VAT Arrears

TrevorJSmith | | Permalink

How are these football clubs allowed to amass such huge debts to HMRC,  if my clients go into arrears they are soon jumped on, yet we see time after time £1m's being owed to the HMRC by FC's.

Isn't it about time the tax collectors are shown a Red Card over this, maybe a league table of Football Club offenders should be published, a table i'm sure Portmouth FC would be in Champions League position!!

I remember a few years back my local non-league club went into Administration owing about £140k to HMRC.

I'd be interested in hearing how HMRC allow this to happen. Or is Football, our new religion, so sacred here?

Football Clubs

Anonymous | | Permalink

When I was a Collector of Taxes I  called on those unlikely to pay over their PAYE on a regular monthly collection basis.  The Bailiff went with me and they were levied upon if they were unable to pay.  The larger more "famous" employers would be handled by the main District Collector (chief) who had his own cases.  These would not come up on the computer for the rest of us to see.  All a bit too "friendly" I thought at the time.  The Old Boys network perhaps.  He was a nice guy but inherently lazy and did very little actual work.  Things dont change a lot it would appear. I was really hard on the PAYE defaulters, after all, they had taken tax from employees who often earned very little.  The Revenue was often used as a cheap loan provider.  I stood on a few toes with my outspoken and hard attitude at times.  Apparently, according to the powers that be , I was a very good Collector.   If everyone paid their dues we would all be paying less (or the MPs could fiddle more) .  There is such an enormous slush fund in sport - why should the Revenue be part of that?   Tough if it closes clubs, but then it is a tough world.  Doesn't it make you want to weep for all those underpaid professional footballers?

rockallj's picture

Soccer is just a business

rockallj | | Permalink

Soccer is just a business and they should be persued just like any other business.

Our clients have to sweat it when undergoing any enquiry or collection. And we all know what an unpleasant experience that can be whether our clients are innocent or otherwise. 

Why should these clubs get it any easier?

footy clubs and super creditor status

Anonymous | | Permalink

I asked this question about 5 years ago and never got a reply. Why do players get treated as super creditors in a football clubs insolvency?. I can understand them having some kind of termination agreement in their contracts and I can understand the FA being allowed to demote the club/take points etc but I cannot see why if a club goes into receivership/liquidation, a player has any more right to be paid than I would if i was the club's window cleaner? any one understand this unusual " rule"? I agree that they do seem to be able to run up ridiculous PAYE/VAT arrears.

tysonn's picture

Football and money laundering

tysonn | | Permalink

This thread reminded me of this FATF report on the link between football and money laundering

TrevorJSmith's picture

The writing is on the wall

TrevorJSmith | | Permalink

The post from the ex Collector of Taxes, probably confirms my views, that Football is "the special one" perhaps receiving more than favourable treatment from HMRC, until its too late and Administration is threatened. Maybe others could confirm this as fact rather than tabloid hysteria being created.

I am also wondering whether there is a Political motive to make sure Football is given as much help as possible as its our national sport and watched by millions and bringing in valuable VAT from Joe Public, even Jose Player spending his wages in London night clubbing and buying pink Bentley's for his girlfriend. This additional tax revenue may in turn cover the loss of PAYE/VAT revenue on failed or late paying Football Club's, in the bigger picture.

Talking Politics it would seem Gordon Brown is a Raith Rovers fan, although has shown Glagow Rangers and Manchester Utd sympathies recently, whereas David Cameron is aparently an Aston Villa fan (seen one match at Villa Park), but recently talked about wanting Chelsea (the Blues) to win the Champions League....... as for the next Labour leader.....

David Miliband supports Newcastle Utd, just like Mr Blair!! The writing is on the wall?

 

 

 

 

 

Are they being treated differently?

Anonymous | | Permalink

Are football clubs really being treated differently from everyone else? I would have thought that the figures being talked about here are simply one month's PAYE charge given the rate of pay which players at Premiership clubs earn. We surely can't expect HMRC to chase debts for PAYE before it is even due! And if they happen to have sold a player during the month/quarter, the debt (including the VAT) could be even higher, even as it just falls due.

So "....such huge debts...." might just be the normal debt due for the current period.

Materiality

Anonymous | | Permalink

The universal law of materiality is at work here. Small amounts are persued by people who deal with small numbers. Just in the same way I like my bank accounts to balance but an auditor of large amounts will be happy if it is thousands out. HMRC have different teams dealing with higher amounts and deal in thousands rather than tens.

MPs are judged using Thousands where as benefit fraudsters in hundreds. I am sure there are many more examples.

Should the rules be different for the little people NO are they YES, just a fact of life as the little people will always be the little people thats their role in life.

John Stokdyk's picture

Yet more football news - Mandaric charged

John Stokdyk | | Permalink

An anonymous member has just reported reading an article suggesting that Manchester United is being investigated for abuses of players' image right contracts and payments. If United's case fails, the club could lose up to £5.3m, our informant says (someone else has commented to clarify some of the detail of the original report).

In other news, Barnsley FC chairman Patrick Cryne is one of four former iSoft directors charged by the FSA with conspiracy to make misleading statements. The case has been scheduled for Westminster Magistrate's Court on 29 Jan. This is more of a financial reporting issue and nothing to do with wrong-doing at the club, but it's odd how news stories about a subject start to snowball. Since it has been a lively topic here, I thought I would mention it.

UPDATE: Former Portsmouth FC chairman Milan Mandaric has been charged with two counts of cheating the public revenue. Mandaric has publicly voiced his innocence and with a hearing set for Westminster Magistrate's Court on 11 February, please avoid making any further comments on the case here until it has been concluded.

davidwinch's picture

Redknapp charged

davidwinch | | Permalink

It has been reported that Henry (Harry) Redknapp, the former football manager of Portsmouth Football Club, has today been charged with two counts of cheating the public revenue. He will appear at the City of Westminster Magistrates' Court on 11 February.

Ian Burton, Redknapp's solicitor, said: "Harry has co-operated fully with investigators during the course of this inquiry and is confident of a successful outcome to these court proceedings."

The charges concern two payments, totalling US $295,000 (£183,000), from Mandaric to Redknapp via a bank account in Monaco allegedly relating to Redknapp's work, evading the tax and national insurance contributions due between 1 April 2002 and 28 November 2007.

David

Does anyone know

Anonymous | | Permalink

What brought about the prosecution? There would usually be a "Hansard" opening and a financial settlement unless the taxpayer lies to the Revenue.  Maybe the case is to encourage others to get it right

davidwinch's picture

Some (careful) thoughts

davidwinch | | Permalink

Mr Redknapp's home was searched in November 2007.  Obviously he has been in communication (no doubt via his lawyers) with the authorities since that time.  Yet he has only now been charged.

I would also highlight the words "allegedly relating to Redknapp's work".

Put it this way, suppose Mr X pays Mr Y an sum of money.  What are the tax implications?  The answer of course is, "It depends upon what the payment was for".

If Mr Y has, say, sold some land to Mr X, then it might be taxable in relation to a capital gain.  If it is a gift there might be Inheritance Tax implications.  If Mr X is Mr Y's employer and the payment is remuneration for work done then PAYE may be due.

Given that the charges are for "cheat" the prosecution has to show (i) payment was made, (ii) that tax was due in consequence and (iii) that the defendant(s) acted dishonestly so as to evade the tax which was due.

The defendants are confident they will be acquitted; the prosecution would not proceed unless they were confident of securing convictions.  Bring it on!

David

Payment to Jurrors

pauljohnston | | Permalink

Is there a reason that this is so low?  Judges are paid well so are the lawyers but it seems totally wrong that the 12 just men and women are paid such a small sum.  Surely the mimum payment has to be the at the poverty line rate ie £8500 pa pro rata.  Perhaps £500 a day would make less people cry off.

With regard to David's comment re the 2weeks.  From the three friends that I know have been called up most of the time is sitting around and waiting.  I could also mention that the Crown Prosecution Service seems to be very inefficient as each jurror said that often they wondered if the CPS lawyer had managed to look at the papers before entering court, because of the number of glaring errors.

 

RebeccaBenneyworth's picture

I would suggest

RebeccaBenneyworth | | Permalink

that the case meets one of HMRC's published criteria for prosecution. The decision wehether to prosecute is set out in a policy document - the Criminal Investigation Policy (developed in 2005) as :

It is HMRC's policy to deal with fraud by use of the cost effective Civil Investigation of Fraud (CIF) procedures, wherever appropriate. Criminal Investigation will be reserved for cases where HMRC needs to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.

Examples of the kind of circumstances in which HMRC will generally consider commencing a criminal, rather than civil investigations are:

  • In cases of organised criminal gangs attacking the tax system or systematic frauds where losses represents a serious threat to the tax base, including conspiracy;
  • Where an individual holds a position of trust or responsibility;
  • Where materially false statements are made or materially false documents are provided in the course of a civil investigation;
  • Where, pursuing an avoidance scheme, reliance is placed on a false or altered document or such reliance or material facts are misrepresented to enhance the credibility of a scheme;
  • Where deliberate concealment, deception, conspiracy or corruption is suspected;
  • In cases involving the use of false or forged documents;
  • In cases involving importation or exportation breaching prohibitions and restrictions;
  • In cases involving money laundering with particular focus on advisors, accountants, solicitors and others acting in a ‘professional’ capacity who provide the means to put tainted money out of reach of law enforcement;
  • Where the perpetrator has committed previous offences / there is a repeated course of unlawful conduct or previous civil action;
  • In cases involving theft, or the misuse or un lawful destruction of HMRC documents;
  • Where there is evidence of assault on, threats to, or the impersonation of HMRC officials;
  • Where there is a link to suspected wider criminality, whether domestic or international, involving offences not under the administration of HMRC.
davidwinch's picture

Jurors

davidwinch | | Permalink

Payments to jurors and to witnesses (including expert witnesses) are based around the concept of an allowance to compensate for lost income.

As an expert witness, for whom attending courts is a key part of my professional work, it seems rather quaint to me that I am paid an allowance based on my supposed 'loss of income'.  But let that pass.

Attending a court always involves considerable waiting around.  In part this is unavoidable because court hearings cannot be accurately timetabled in advance.  However one does wonder if some genius could arrive at a better system.

I was recently involved in a case at Crown Court.  At a preliminary hearing the judge had decided (sensibly) that the matter would take two days in court.  Also, again sensibly, he needed one day immediately before that to read through the documentary evidence himself before the hearing started.  He did not have 3 clear consecutive days in his diary for 3 months, so the case was scheduled for a date 3 months hence.

Three months later the trial date came around.  When we turned up on the first day (i.e. day 2 of the 3) we learned that the prosecution wished to explore whether areas of difference could be reduced by (in effect) a form of negotiation.  This is not unusual.  The judge adjourned till 2:00 p.m. to allow that.

At 2:00 we recovened to tell the judge that we needed more time.  Adjourned till 4:00 p.m.

At 4:00 we recovened to hear that the police officer wished to take advice / instructions from his superior officer (who was not in court and could not be contacted until next morning).  Adjourned till 10:30 a.m. next day.

In the morning the police officer said he had been advised to 'stick to his guns'.  There would be no offer of an agreement which would be acceptable to the defence.  We would go ahead and argue the points before the judge.

But the judge had been timetabled by court staff to hear some bail applications and guilty pleas in other cases at 10:30.  The judge did not become free of those until 12:30 p.m.  Lunch.

Reconvene at 2:00 to tell the judge no agreement could be reached.  The hearing needs 2 days.  The judge tells us he did not get the 'reading day' which was intended on day 1.

Everyone agrees in the circumstances there is no point starting with only a half-day remaining available.  Defence counsel has a case in another court the following day, so there is no prospect of getting a decent run at the case now.

Conclusion, we need 3 days of the judges time (the first of these to be a reading day).  The judge does not have 3 consecutive clear days in his diary for some time.  Case adjourned for 3 months.

Result - a lot of expensive faffing about and no progress at all.

Hmmm!

David

Wasted costs

JeremyNewman | | Permalink

In those circumstances, surely a wasted costs order against prosecution counsel personally would be appropriate - it might just make them concentrate a bit harder!

davidwinch's picture

Costs

davidwinch | | Permalink

Defendant's costs (including my fees) are being paid by the taxpayer in any event.

Actually none of this was the fault of prosecution counsel.

David

£40K

Anonymous | | Permalink

In the grand scheme of things £40K seems a small amount, and I can think of much larger amounts and higher profile figures that seem to have been dealt with using the civil proceedure with low penalties to boot (MPs husband tax barrister ?).

Are some people just singled out for differring treatment and are Customs required to be fair in this context ?

Clint above mentioned the Human Rights Act ? Could this turn out to be a test case, as the amounts at stake are small one assumes someone wants to make a point.

Much larger amounts are seen at small company level and I wonder whether HMRC would not be better prosecuting a few local businesses as I expect this would create a greater rush for more errant taxpayers to put their house in order.

Costs

JeremyNewman | | Permalink

David

You said: "we learned that the prosecution wished to explore whether areas of difference could be reduced by (in effect) a form of negotiation."

Surely prosecution counsel - or whichever member of the prosecution team decided this was needed - could have liaised with the defence well ahead of the hearing, rather than leaving it until the day of the hearing. If so, a costs order against that muppet personally (if the Court has the capacity to make such) would rather concentrate the mind not to waste so much time of so many people. If the Court doesn't have such a sanction, perhaps it should. 

national minimum wage

Anonymous | | Permalink

The Reimbusement of Jurors would seem to be at below the national minimum wage !

Obviously double standards apply.

Re "Footy clubs and super-creditor status"

Paul Gittins | | Permalink

The FA and the Football League have a rule which requires all debts to "football creditors" (ie clubs, players) to be settled in full in order for a club to retain its membership of the Premiership / Football League.

A couple of years ago HMRC, not unreasonably, started to demand parity with "football creditors" and refused to agree to CVAs where they were being asked to settle for less than 100% of the debt.

This in turn has led to the imposition of 15 point penalties on Leeds, Rotherham and others for "failing to exit administration without a valid CVA in place".

You can't accuse the football world of failing to look after its own .......!

Old Greying Accountant's picture

And now...

Old Greying Acc... | | Permalink

Pompey have failed to overturn the HMRC winding up order, not  a good year so far for them!

Probably been done already, football fans having such ready wit, but couldn't resist anyway:

Pay up Pompey, Pompey pay up!! :)

 

Old Greying Accountant's picture

... and also

Old Greying Acc... | | Permalink

These new in year PAYE penalties will hit some of these football clubs hard!

davidwinch's picture

Crystal Palace in Administration

davidwinch | | Permalink

It has been reported that Crystal Palace have gone into Administration.

David

Old Greying Accountant's picture

Shouldn't that be...

Old Greying Acc... | | Permalink

... The Eagles have (crash) Landed!

RebeccaBenneyworth's picture

What a good point OGA

RebeccaBenneyworth | | Permalink

Of course, I hadn't thought of that! Crikey they are going to be in real trouble now. HMRC has stated that the new penalties will be raised on a "risk assessed" basis as the department does not currently have the IT to make it automatic...meaning that those with a very poor history (gues who in this context) will be first in line.

The penalties are a % of the unpaid tax so this could be substantial - unless of course the clubs continue to stick two fingers up to the taxpayers and let the ordinary working man shoulder yet more burden.

Oh oh rant ahead, I'll shut up.

May you live in interesting times !

Anonymous | | Permalink

How sad we all are !??

can't wait for the next instalment.

carnmores's picture

yes yes yes

carnmores | | Permalink

one can understand that HMRC are pissed off as the FA has also nicked some of the TV money due to Pompey to pay other clubs outstanding transfer fees thereby possibly diluting  HMRC  - the FA should be removed from its cucoon but first they should perhaps have a purge of the FA officials - no maybe about it

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A group for discussing issues relating to suspected money laundering and other crime