Clubs face punishments for tax "own goals"

British football clubs have been warned by financial experts that they face severe punishments if taxes are not paid.   The news follows Karren Brady, managing director of Birmingham City, being re-arrested on Wednesday as part of a corruption inquiry into alleged “money laundering,” although the club fervently deny any wrongdoing.   “Football clubs are facing more scrutiny than ever before from tax inspectors,” said Frank Goldberg, senior manager at accountants BDO Stoy Hayward.   “HM Revenue and Customs (HMRC) is increasingly looking into the affairs of clubs and not just those in the Premiership. Failure to submit the required returns and make the correct payments on time is increasingly leading to legal proceedings being brought against the relevant club.”   There is mounting concerns from the authorities and the Football League that a growing number of sides are failing to account for their finances and it appears that plans are now afoot to clamp down on these irregularities.      “In addition to current PAYE, National Insurance contributions and VAT, HMRC pay particular attention to ‘Golden Hellos’, image rights and VAT recovery on agents’ fees.   “Simply ignoring them is an unforced error, akin to scoring an own goal,” added Goldberg, who believes the current economic climate may explain why some clubs consider themselves exempt from paying taxes.   “With the recent financial crisis many clubs may find fans staying away from matches causing a reduction in gate receipts.   “HMRC has never accepted that defaulting on taxes is an appropriate way to manage a club’s cash flow and it takes a dim view of those who do.”