Written by: Keith Tully
Published: 28th March 2018
David Sullivan, the co-owner of West Ham United, has been adjudged at a tribunal to have used the football club to avoid paying £700,000 in taxes.
The matter relates to a £2 million transfer of funds from Mr Sullivan’s family business to West Ham United in 2010 through a purchase of shares in the holding company that owns the football club.
Mr Sullivan has now been told by a first-tier tax tribunal that he must pay back what sums he is deemed to owe because it is believed that the relevant transaction was motivated in part by a desire to avoid taxation.
Details of the issue being considered by the tribunal were first revealed by the Times, with its reports insisting that the £2 million of shares bought by Mr Sullivan’s company were, on the very same day in 2010, converted into “deferred shares” and deemed effectively worthless.
The allegations being faced by Mr Sullivan are that his company acquired shares in West Ham United’s holding company partly in order to bring about a loss on its balance sheet, which would then result in its tax liabilities being reduced by some £700,000.
Judge Jane Bailey, who heard the case at tribunal, said the overarching reason for the transaction was to provide funds to West Ham United but she also drew a number of other conclusions.
“It is clear from our findings of fact that there was more than one way to provide funding to the football club and that one of the reasons that Mr Sullivan chose to provide funds to the football club in the specific way that transpired was so that the appellant (Sullivan) could claim a capital loss,” she said.
“Therefore we consider securing a tax advantage to have been ‘one of the main purposes’ of the arrangements.”
The director general for customer compliance at HMRC, Penny Ciniewicz, said in a statement that Congate Ltd, Mr Sullivan’s family business, “built tax structures to avoid paying the tax that was rightfully due”.
West Ham United are currently battling against relegation from the Premier League, sitting 17th in the table having lost four of their last five matches under manager David Moyes.