HM Revenue and Customs has been asked to examine potential tax implications arising from the Premier League’s case against Manchester City after an independent commission found the club committed extensive breaches of financial regulations.
The Premier League confirmed on 29 September that City had been found guilty of all charges concerning serious financial-rule breaches between the 2009-10 and 2017-18 seasons, as well as most charges linked to failures to cooperate with the league’s investigation. The commission concluded that the club used sham commercial arrangements to inflate revenue and reduce reported costs.
City has maintained that the findings are wrong and has until 2 October to lodge an appeal.
Treasury Committee Raises Tax Questions
Dame Meg Hillier, chair of the House of Commons Treasury Committee, has written to HMRC Permanent Secretary and chief executive John-Paul Marks asking what action the department has taken following publication of the commission’s findings.
The committee wants to know whether HMRC has reviewed the case and whether it has sought access to an unredacted version of the commission’s report. Hillier also requested information about HMRC’s wider work on taxation of remuneration and possible tax avoidance within football clubs.
The intervention follows analysis by Tax Policy Associates concerning payments linked to former City manager Roberto Mancini. The organisation estimates that approximately £12 million in UK income tax and National Insurance may have gone unpaid if the commission’s findings and previously leaked documents accurately reflect the arrangement. It estimates that interest and penalties could potentially increase the total exposure to around £23 million to £24 million. These figures are the organisation’s assessment rather than a determination by HMRC.
Tax Policy Associates said its analysis concerned consultancy payments connected with Al Jazira Sports and Cultural Club which it believes were effectively part of Mancini’s remuneration for his employment at Manchester City. Its report stressed that the assessment remains preliminary because the full commission decision and appendices have not been published.
Commission Finds Disguised Funding Scheme
The Premier League said the commission found that City entered into sham arrangements with commercial partners as part of a funding structure in which sponsors paid only part of the recorded sponsorship fees, with the remaining amounts funded by Abu Dhabi United Group Investment & Development, the company that owned the club.
According to the league, further arrangements were used to reduce reported operating expenses, while another structure involving player image rights was also funded by ADUG. The commission concluded that the combined schemes inflated revenue and reduced costs by more than £900 million during the period under investigation.
Those findings supported the commission’s conclusion that City had materially misstated its finances and appeared to comply with Premier League and UEFA spending limits when, on the commission’s findings, it would otherwise have breached them substantially.
City Expected to Challenge Funding Findings
City is expected to argue on appeal that money supporting key sponsorship agreements originated from the Abu Dhabi government rather than ADUG.
That distinction could be significant because sponsorship by state-owned organisations is permitted under Premier League regulations. City’s position is that Abu Dhabi sponsors were responsible for their contractual sponsorship payments and could seek financial assistance from the Abu Dhabi government without the funding representing payments from the club’s owner.
The commission rejected that account and concluded that the evidence supported the Premier League’s case that ADUG had participated in a disguised funding structure. City has disputed the decision and says the findings contain material errors.
The disagreement is also likely to renew scrutiny of the relationship between City’s ownership and the Abu Dhabi state. Sheikh Mansour bin Zayed Al Nahyan, who controls ADUG, is vice-president and deputy prime minister of the United Arab Emirates and a member of Abu Dhabi’s ruling family. City has consistently maintained that it is privately owned rather than state-owned.
Appeal Process Still Ahead
City chairman Khaldoon Al Mubarak has indicated that the club believes it possesses evidence supporting its defence. The club can challenge the commission’s findings through an independent Premier League appeal board.
The financial case is therefore not yet complete. The Premier League has said sanctions will be considered separately, while any appeal must first address the commission’s findings on City’s financial arrangements and cooperation with the original investigation.
Meanwhile, the Treasury Committee’s intervention places a separate focus on whether any arrangements identified during the football proceedings could have consequences under UK tax law. HMRC has not publicly determined that Manchester City owes the sums estimated by Tax Policy Associates, and the organisation itself acknowledges that it does not know whether the tax authority has previously investigated or resolved the relevant arrangements.