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Newcastle United lose legal challenge over tax raids Newcastle United 'abused tax system', HMRC alleges
(about 3 hours later)
Newcastle United has lost a High Court challenge over the seizure of documents by tax officials probing the finances of several football clubs. Newcastle United "systematically abused" the tax system to "secretly" make payments to agents and players during transfers, a court has heard.
St James' Park and West Ham's London Stadium were raided in April by HM Revenue and Customs as part of a £5m National Insurance fraud investigation. The allegations emerged after the Tyneside club challenged a raid by HM Revenue and Customs in April.
The club challenged the legality of the search-and-seizure orders, but judges ruled they were "lawfully issued". United argued no reasonable grounds existed for believing it had engaged in tax fraud, but High Court judges ruled the warrants were "lawfully issued".
It said the ruling was "disappointing" and it was considering its options. The club said it was "disappointed" and "considering its options".
Newcastle's managing director Lee Charnley was among several men arrested and later released without charge. St James' Park and West Ham's London Stadium were raided as part of a £5m fraud investigation.
Business and financial records were seized, as well as computers and mobile phones belonging to the club, which recently secured promotion back to the Premier League. Business and financial records were seized, along with computers and mobile phones, and Newcastle's managing director Lee Charnley was among several men arrested and later released without charge.
The HMRC investigation centres on football agents and payments made in transfer dealings between English and French clubs. The club challenged the legality of the search-and-seize orders obtained by HMRC, and a hearing has been held at Leeds Crown Court.
'Considering options' 'Secret' payments
Announcing the decision to dismiss the club's application for judicial review, Lord Justice Beatson said the "warrants were lawfully issued". HMRC argued that reasonable grounds existed for believing Newcastle United was ''knowingly involved'' in a multimillion-pound tax fraud, and the club's application for judicial view was dismissed.
At a hearing in July, the judges heard argument on behalf of the club that no reasonable grounds existed for believing it had engaged in suspected tax fraud. The full judgement has now been published.
But HMRC argued in court that reasonable grounds existed for believing Newcastle United was ''knowingly involved'' in a multimillion-pound tax fraud when club offices were raided. It reveals Operation Loom is looking into whether the club knew payments to agents were being "secretly" funnelled to other unlicensed agents and players themselves in a bid to circumvent income tax and National Insurance.
Court orders have so far prevented HMRC officers from examining the seized material pending the outcome of the legal action. Regarding Demba Ba's transfer to Newcastle from West Ham, HMRC said: "It appears NUFC paid agent's fees for services of £1.9m in full knowledge that the majority would be passed on to other agents... and to a company associated with the player."
There were "further suspicions" arising out of his transfer to Chelsea in January 2013.
HMRC said it believed "NUFC systematically abused the tax system... and all payments to agents made were potentially the subject of criminal proceedings".
A spokesman for HMRC said: "We are very pleased with the court's decision which we are studying in detail. We do not comment on individual cases or ongoing investigations."A spokesman for HMRC said: "We are very pleased with the court's decision which we are studying in detail. We do not comment on individual cases or ongoing investigations."
Newcastle United said in a statement: "We are disappointed with this decision given the court's findings.Newcastle United said in a statement: "We are disappointed with this decision given the court's findings.
"We are considering all of our options with our advisers, including whether to pursue an appeal.""We are considering all of our options with our advisers, including whether to pursue an appeal."