Around two dozen UK professional football clubs have fallen into arrears over their tax payments.
According to findings by chartered accountants Lubbock Fine, at least 21 professional football clubs in the UK have fallen into arrears to the HM Revenue & Customs (HMRC) over corporation tax or VAT.
The low profitability of many football clubs, especially those in lower leagues, has made many unable to pay their tax bills on time.
Many football clubs are still struggling with substantial debts from the Covid lockdowns, which reduced ticket sales and other match-day revenues. Meanwhile, salary and energy costs have inflated substantially.
According to High Court records, HMRC has issued winding-up petitions – statements of intent to shut down a company due to unpaid debts – to several football clubs.
The clubs include Taunton Town Football Club (active), Chorley Football Club (withdrawn), and Reading Football Club (withdrawn).
Another was Southend United Football Club, but this was later dropped after it paid its £275,000 tax bill.
Graham Caddock, Ddrector at Lubbock Fine explained that “HMRC often feels that it is at the back of the queue for debts”, but added that it “is now taking a much more aggressive approach to collect those overdue liabilities.”
“Many football clubs opt to delay tax payments – or not pay altogether. Clubs may prefer to face a fine from HMRC to upsetting other key stakeholders in the business – like players or suppliers,” he warned.
The report by Lubbock Fine noted HMRC has stepped up its compliance drive as the tax authority grapples with a broader crisis in unpaid debts.
The value of ‘debt available for pursuit’, the amount of tax owed to HMRC in arrears, was estimated at £39bn at the end of the third quarter of 2023.
The firm warned that HMRC’s compliance action is likely to get tougher as it tries to recoup as much unpaid debt as possible.
Actions could include winding up petitions and the appointment of debt collection agencies to pursue debts.
“It is quite common for HMRC to pass the collection of debts to external debt collection agencies. These agencies are not afraid to arrive unannounced at a business premises demanding to be paid,” Caddock added.