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R (Newcastle United Football Club Limited, Newcastle United Limited and Newcastle United Football Company Limited) v (1) HMRC and (2) Crown Court at Leeds [2017] EWHC 2402 (Admin)

Newcastle United has failed in its attempt to quash HMRC’s search warrant for documents involving suspected major tax fraud.

In the course of a wide-ranging investigation into whether there had been significant tax fraud by Premier League football clubs involving undeclared signing-on fees paid by the clubs via an agent to players’ agents and players’ own companies and which (in NUFC’s case) had been allegedly ‘washed through’ the client account of a major Holborn firm of solicitors (without them appreciating how they were being used to assist the fraud), HMRC was granted  a search warrant  on 19 April 2017 to search for documents held by Newcastle United FC and by its managing director, Lee Charnley at his home.  The documents covered by the warrant included 10 years of past transactions involving a number of high-profile players.

Following a dawn raid by HMRC and the seizure of a large number of files of documents for inspection, NUFC obtained an injunction temporarily preventing HMRC from inspecting the seized documents and an order for expedition of an application for judicial review of the Crown Court judge’s decision to issue the warrant.

On 4 October 2017, the Divisional Court refused the judicial review application. The Club failed on every one of its grounds. The parties are waiting for a decision by the court over the Club’s application for permission to appeal.

Central to the Club’s case was the Judge’s failure to give reasons for his decision, despite  earlier edicts from the Divisional Court that judges ought these days to give reasons. There is a separate line of authority applied, for instance, in Cronin [2002] EWHC 2568 (Admin)[1]  and Glen [2100] EWHC 2998 (Admin] which emphasise that a failure by the issuing judge to give reasons is not fatal, so long as a later Court reviewing the decision can “can discern a sufficient basis for the judge’s decision to issue the warrant”.

The Divisional Court once again reminded judges of their obligation to give reasons and referred back to the Criminal Procedure Rules Committee the need to revise the prescribed form - to give more guidance on what judges are supposed to do. The current form had been issued in April 2016 (with the imprimatur of the Lord Chief Justice) following the Tchenguiz case [2012] EWHC 2254 (Admin), but there still remains a lack of clarity in the ‘judge’s section’ of the form

In addition to considering the obligation to give reasons, the judgment will be of interest to those following recent allegations of tax fraud in relations to high profile football transactions. 

A link to the judgment can be found here

Stephen Nathan QC of Blackstone Chambers represented HMRC.

[1]  This case went to the European Court: Cronin  v  UK (2004) EHRR CD 233 where the Court did not consider  that lack of  reasons by the Justices was a valid ground of complaint.

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