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Rangers tax strife means clubs face greater scrutiny

TOP football clubs say they are facing greater scrutiny over their financial affairs in the wake of Rangers' much-publicised battles with the taxman.

A survey of clubs in the Scottish Professional Football League found at least a quarter say HMRC is becoming more vigilant and vocal in approaching them regarding their tax affairs, with officials contacting them "more frequently and earlier" than previous years.

Rangers were placed into liquidation in February 2012 after running up tax debts of £15 million, and have faced a lengthy probe over their use of controversial tax-free payments to players, which is currently working its way through the courts.

The annual survey by accountants and business advisers BDO LLP found this may have led to other clubs' affairs coming under the microscope, despite none of them reporting delays in any tax payments.

The survey, which did not reveal individual clubs' responses, also found the wealth gap between Scotland's bigger clubs and those on more restricted finances is growing, with the top teams attracting the lion's share of broadcast revenues, ticket sales and backing from investors.

At the same time one third (33 per cent) of SPFL clubs reported reduced match ticket sales over the last season; 66 per cent reported a fall in match day catering; and 50 per cent a drop in corporate entertaining.

The biggest concern for clubs is falling attendance due to the economic environment followed equally by inflexible players' salaries and the ability to attract sponsorship.

All clubs reported finding suitable sponsors was becoming harder although a third stated revenues were increasing from commercial contracts.

However, the report found more clubs are optimistic about their finances compared to last year, with 83 per cent of SPFL clubs stating their financial position as very healthy or not bad, and 17 per cent stating their finances were in need of attention.

None of the clubs relied on any secondary funding source such as season ticket advances, while 11 said they would spend less than £2.5m on players during the next two seasons.

Transfer budgets will increase at one club and remain the same at the remainder in the coming year. Two-thirds of the clubs stated they have clauses in player contracts which stipulate wages will be cut if the team is relegated. None of the clubs believe there will be a decline in any of the major revenue streams in the coming season.

Charles Barnett, professional sports group partner at BDO, said: "There are clear signs the financial lessons of the last few years have been learned by most of the clubs in the SPFL.

"There is no mortgaging the future through season ticket advances and clubs appear to have made a conscious decision to live within their means.

"The last few years have undoubtedly seen an enormous and unprecedented shake up in the finances of Scottish football.

"It remains to be seen whether this may turn out to be a positive development in financially boosting the lower divisions but for Scottish football it has been a wake-up call that the high spending excesses of previous decades are long gone and that financial reality must rule in future."

A spokeswoman for HMRC said: "The overwhelming majority of football clubs pay the right tax at the right time.

"We recognise the crucial role they play in contributing to the UK's economy which is why we work hard to help them to get their tax right from the outset.

"We provide tailored help for football clubs that want it, while tackling those who attempt to get an unfair business advantage by not keeping to the tax rules."

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