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Newcastle fail to stop seized documents being used in HMRC tax scandal investigation

A general view during the Premier League match between Newcastle United and Arsenal FC at St James' Park on November 04, 2023 in Newcastle upon Tyne, England
A general view during the Premier League match between Newcastle United and Arsenal FC at St James' Park on November 04, 2023 in Newcastle upon Tyne, England

Newcastle United have failed in a lengthy legal bid to stop HM Revenue & Customs using material seized during a raid of the club as part of an investigation into an alleged multi-million-pound tax scandal.

It emerged on Wednesday that the Premier League side had spent almost two-and-a-half years trying to force HMRC to hand over digital copies of documents originally taken when scores of officers swooped on their offices at St James’ Park on April 26 in 2017.

A raid was also carried out that day on West Ham United’s London Stadium, with HMRC officials taking away computers, financial records and mobile phones as part of Operation Loom.

Lee Charnley, then Newcastle managing director, was arrested but later released without charge.

Newcastle went to court to challenge the legality of the raid but High Court judges ruled warrants had been “lawfully issued”.

HMRC told Leeds Crown Court the club had “systematically abused” the tax system to “secretly” make payments to agents and players during transfers, while Newcastle argued there were no reasonable grounds for believing they had engaged in tax fraud.

HMRC ended its criminal investigation into the two Premier League sides in May 2021 but warned it would be wrong to assume that was the end of the matter and that it had “a raft of civil powers” at its disposal.

It has now been disclosed in a High Court judgment published on Wednesday that HMRC also wrote to Newcastle stating the criminal investigation had indicated “tax non-compliance of a serious nature”, that “the matter will now be referred to colleagues elsewhere within the Fraud Investigation Service” and that the appellant’s related “_…_appeals against the assessments to Income Tax, National Insurance Contributions and VAT [which] are currently stayed by the First Tier Tribunal” would also be “dealt with under the banner of civil investigation”.

Newcastle went to court that same month to force HMRC to hand over copies taken of material seized as part of the criminal investigation, which would have prevented their use in any civil proceedings.

The court rejected the club’s application but they continued to pursue the matter – even after their October 2021 Saudi-led takeover – before ultimately losing an appeal heard at the High Court last month.

The judgment included a timeline of HMRC’s pursuit of Newcastle, which began as long ago as April 2014, when it wrote to the club to advise it was conducting a civil enquiry into agents’ fees.

Following the April 2017 raids, HMRC issued notices to the club in January 2018 relating to alleged unpaid VAT totalling £2,034,802 plus interest between February 2011 and October 2016 and unpaid National Insurance totalling £4,250,714.01 plus interest, a court fee and legal costs.

HMRC declined to comment on the status of its investigation into Newcastle or about the amount of money the club are being pursued over.

Newcastle did not respond to requests for comment.

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