As The Times has reported, there’s evidence that Dundee United claimed R&D tax relief for a quarter of its players’ wages. HMRC – and therefore all of us – may have subsidised the club’s wage bill.
The Times‘ article was based on an R&D tax relief claim document we obtained – we’re publishing it in full below. We’re publishing the document because it’s not just invalid – it is outrageous. R&D tax relief is intended to incentivise innovation. It applies to businesses seeking an “advance in science or technology”. It was never intended to apply to the wages of football players, and in our view it’s clear that it cannot apply in this way.
Dundee United have refused to comment. The firm that drafted the document, ZLX, denied that this document was sent to HMRC, but were unable to explain why it was created, or why it was signed by Dundee United’s finance director and a director of ZLX.
We believe this is part of a wider problem. The Times previously reported that 33 football clubs are being investigated by HMRC. And we have previously reported that the total cost of invalid and fraudulent R&D tax credit claims could be £10bn.
What is R&D tax relief?
The modern small business R&D tax relief was created in 2000, with the laudable aim of incentivising R&D investment. As the name suggests, it’s only available for “research and development”. That term is defined in guidance published by BEIS/DSIT and given statutory force under the Corporation Tax Act 2010. HMRC accurately summarise the rules as follows:
The Dundee United claim
Here’s the document supporting a claim for £1.4m of R&D tax relief. It’s signed by Dundee United’s finance director and a director of ZLX:
Does the Dundee United document describe valid R&D tax relief claims?
It does not. We spoke to three leading R&D tax advisers, and all were amazed that anyone could consider such a claim legitimate.
The document covers three obvious things that any sports team would do – training, diet and analytics. This is all dressed-up in pseudo-technical language such as “position-specific carbohydrate periodisation” (meaning changing players’ diets based on their activity). All the verbiage cannot hide the fundamental problem with the three projects: if something is widely known about by clubs, then a club simply doing the same is not attempting to create an “advance in science/technology”, and no relief is available.1The first clubs to use e.g. player analytics would in principle have had a valid R&D tax relief claim.
The document is therefore invalid on its face, but what’s more troubling is the expenses that the document says are claimed for tax relief:
- 24% of their players’ wages – as if the players were carrying out scientific/technical research. That is a huge amount of money, and in our view is indefensible. Even if the R&D projects were real, and qualified for relief, the players would be the subjects of that research, and their wages would not qualify for relief.
- 80% of their chef’s wages – and whilst he appears to be an excellent chef, it seems most unlikely he spent 80% of his time on an R&D project. Even if he did, supporting activities of a non-technical nature are not eligible for relief.
- 90% of the wages of their “head of tactical performance“. Even if he was a professional engaged in R&D, we are doubtful he spent 90% of his time on this.
- 21% of their heating and lighting costs, implying that 21% of the use of their premises was for R&D projects. This seems implausible.
The document is for a 2022 claim; Dundee United also claimed £1.27m for 2020 and 2021.
Who would make such a claim?
The document was prepared by ZLX – the R&D tax firm notorious for suing a client who wasn’t willing to put in a comical R&D tax claim for installing a fridge. ZLX was an official partner of Dundee United and, as The Times reported, the club made an R&D tax relief claim worth £600k.
ZLX’s owner, Stephen McCallion, told us that it is “not a document that was submitted to HMRC and the contents were not submitted to HMRC”. However he was unable to explain why the document was created and signed, and he did not deny (to us or The Times) that Dundee United’s claimed R&D tax relief for a large percentage of its player’s wages.
We and The Times asked Dundee United for comment; we didn’t hear back.
We previously reported that ZLX appeared to employ nobody with any tax qualifications. In 2024, ZLX had two people in its compliance team – their previous experience was as a bartender and sales assistant. It is therefore to be expected that ZLX would make invalid claims. The question is whether this was merely reckless, or whether it crosses the line into criminality on the part of ZLX’s management.
Mr McCallion objects to our previous reporting – but has not identified any specific errors.
We don’t believe any reasonable adviser would have thought this claim was valid, or that any reasonable business would have submitted it. We expect HMRC will charge Dundee United penalties.
If ZLX/Dundee United did make R&D tax relief claims described on the basis of the document we reviewed (or substantively similar claims) then we believe ZLX should be the subject of a criminal investigation.
Thanks to George Greenwood and The Times.
The document attached is © ZLX Limited, and reproduced here in the public interest.
- 1The first clubs to use e.g. player analytics would in principle have had a valid R&D tax relief claim.
27 responses to “Was R&D tax relief used to subsidise football players’ wages?”
I see my earlier post about Tax Policy Associates’ date breach hasn’t been posted or acted on. Do I need to complain to the data commissioner?
comments have to be manually moderated to prevent spam. There usually often a delay of hours, and sometimes days.
There was no personal information and the matter is therefore not relevant to the Information Commissioner.
Dundee United are not the only football club apparently.
It was reported in the Sun earlier this year that Rangers had banked at least £750K in credits (= a claim of c. £4M).
Hibs & Chelsea are also alleged to have made successful claims of significant sums.
I suspect Rangers won’t get a lot of sympathy from the taxman given their unfortunate history of tax avoidance schemes.
Perhaps the new American owners will be more morally upright and volunteer to pay it back?
Might such an assertion somewhat invalidate the ‘new club’ jibe that some crashing bores like to trot out?
Morality in football can, as I am sure you are aware, cover a broad range of topics.
In the meantime, valid R & D claims being made by companies that are investing substantial amounts in the UK are being rejected. Worst still, they are being rejected without explanation and accompanied by documents that state that there is no right of appeal!
Publishing the company UTR? Why? That is a breach of data security
thanks – it’s now redacted
Did you see the Qi program that explained that in Nigerian slang “Dundee United” means a complete disaster…
https://www.tiktok.com/@nabilabdulrashid/video/7325816291552480545?lang=en
As a Dundee United fan and a tax advisor (in other specialisms so this is not my area of expertise) this pains me but it just stinks of naivety and a lack of what felt like proper governance at the time.
One question though – the DUFC signatory was never an Officer of the Club per companies house – should it have been?
I understood at the time that person was self-employed (has own CA firm) and not actually an employee of the Club.
thanks – he was the finance director, but not a director. That certainly doesn’t invalidate anything, but it’s odd he was misdescribed. I’ll add a note on that!
I do think HMRC bear some responsibility for not challenging these when submitted. I know absolutely nothing about common practice in football clubs or, indeed, about sports at all, and so the “research” elements of this have some superficial plausibility for me. But it immediately occurred to me to question how the figures being submitted were arrived at – e.g. “light and heat” costs sounds a lot like the equivalent of trying to treat your home electricity bill as a trading cost because you work from home a day a week. If even I can notice that when I’ve never looked at an R&D claim in my life before, it does seem that HMRC ought to be capable of picking it up when applying the level of scrutiny appropriate to claimed total costs running to the hundreds of thousands.
Did you know that, in Nigeria, the term “Dundee United” means abject and hopeless?
These companies might be filing these claims but HMRC are still signing them off.
There needs to be criminal charges brought in so many areas of business. Covid claim, fraudulent R&D claims, directors taking dividends, salaries from companies then not filing accounts and winding up the business.
It seems these tax avoidance companie/umbrella companies and off shore loans operated with convictions. The worst that can happen is the money needs paid back.
So much is going on
Dan, I would love to hear your thoughts on R&D claims being made by the F1 teams based in the UK
It’s at least clear that there is genuine R&D being undertaken in F1, which has been repeatedly at the forefront of a number of interesting advancements both in connection with the cars and power units themselves including safety, energy recovery, even vehicle and now wearable driver cooling, also more widely from a data, modelling, even logistics perspective. If anyone were claiming driver salaries though (can’t imagine anyone is) obviously that would be similarly suspect.
that absolutely makes sense.
I imagine that the involvement of Abertay University was required to give it the feel of scientific research. Abertay should have published or produced some kind of report, had a research budget (or grant) for the work etc. I wonder if the university realised it was being used for a tax scheme? Bit of reputational risk there.
Abertay is known as a joke college, a last resort. There isn’t much reputation to damage…
Clearly a false claim but the points you raise as to why 80% of a chefs wages could possibly be R&D at a football club raises the question- why is no one at HMRC paying attention. Seems we are paying HMRC staff who just don’t care. We all hate paying tax but if the HMRC don’t do their job properly we all pay more! Who at HMRC is accountable- why not outsource verification of all HMRC R&D claims prior to approval with 2% of the value charged as fee
in this case HMRC are challenging the claim, so we can be pretty confident they are paying attention!
Irrelevant, I’ve no doubt, but looking at the Client Declaration (7.2 of the document), it’s curious how very similar is the formation of the ‘D’ capital in the signatures of both the applicant and the witness.
I think these are e-signatures…
I have said numerous times that there should be a public enquiry into HMRC and their involvement in these schemes and many others that at their heart work on a ‘pay now, ask question later’ basis. The same with Covid Loans. We are £50BN down largely as a result of this incompetence. Rewarded with Gongs..
This should extend to the involvement in the Government(s) who instructed HMRC to deliver these schemes and who failed to take action.
It’s like opening a shop and leaving the shop and the till empty, for any chancer (and there are a TON) who wishes to get some free money.
The fact that this still goes on suggests that this is more than wilful ignorance and stupidity. if it were a TV drama, this would involve ‘brown envelope scenarios’.
We are ALL suffering as a result of HMRC’s mismanagement of these relief schemes and the tap needs to be turned off and those responsible paying a price.
If it’s poor postmasters getting screwed theres a national outcry (rightly) but when it is all of us, there’s words, but no action.
There is a lot of truth in what you say about HMRC’s failure, particularly as it goes back to 2008 and EBT’S (when I first heard of it from an accountant about another client) who I met on HMRC Compliance visit who asked why are HMRC letting this happen!
I would agree there has been failures by HMRC however at this stage I would say the level of their culpability can’t be established.
I believe governments are equally or more culpable in all this, what I would really like to know is did the government check with HMRC first if what they were doing had sufficient controls in place to stop fraud, and more importantly what was HMRC’S response to this!
Since being in private practice (2019) we have had discussions over this as if we didn’t sanction a claim (and there were a lot we wouldn’t) the client went some where else!
The problem with this is will the government /HMRC ever learn, because I am waiting to see where next this will happen again.
The points you raise can ll be dealt with by a Public enquiry as the Post Office scandal has shown. No hiding place.
I very much suspect the HMRC approach was their response to an order to cut staff. I’d like a Public Enquiry to look at this because I bet Ministers were told there would be more fraud through a pay now, ask later approach.
It can takes years to do all the work to prove some cases, HMRC, has been understaffed and catching up because of Brexit and covid and the impact it had on all departments, but R R has increased the numbers of staff. On the legal team they recruit less than 10 new trainee solicitors a year; as with all such things more funding would help – but it’s also shocking that professionals involved in such practises are happy to try and steal money from the tax payers in this way – these cases should hit the headlines and those prosecuted, their fines and the interest on payments etc, published widely in the hope it puts others off. Sadly I think we all know many people who think a little bit of tax cheating is a given right ! And plenty of others who turn a blind eye. Until the mindset changes this will continue….
Really appreciate your reports, especially those highlighting unscrupulous tax advisors/specialists as HMRC ought to be doing a lot more to shut down and prosecute the people behind these firms as soon as these fraudulent claims are offered to clients.