HM Revenue & Customs (HMRC) is conducting an investigation into 33 professional football clubs regarding allegations of exploiting a tax scheme, purportedly wrongfully claiming over £17 million in public funds.

This inquiry was triggered by a Times investigation which revealed that various Premier League clubs, such as Chelsea, Fulham, and Nottingham Forest, have received considerable taxpayer subsidies intended to support scientific and technological advancements for the public good.

According to its financial records, Chelsea received more than £3 million in research and development (R&D) tax relief and payments from HMRC between 2020 and the previous year. Nottingham Forest claimed a tax credit of £607,000 during the 2021-22 financial period, while Fulham reported claiming £758,000 in credits from 2019 to 2024.

HMRC stipulates that companies can only apply for public funding if they are pursuing genuine advancements in science or technology that benefit the broader field, rather than just their own enterprise. When approached for clarification on their qualifications, representatives from Chelsea, Nottingham Forest, and Fulham did not provide any comments.

Following the initial reporting, it was also discovered that Brentford submitted a claim exceeding £3 million. Although the club did not comment directly, it has previously indicated that this claim was predicated on £16 million spent on research and development over the last two years, which includes employing “half a dozen PhD students each year for research” and publishing multiple academic papers.

In response to a Freedom of Information request, HMRC confirmed that multiple significant tax relief claims by professional football clubs are under investigation.

HMRC stated, “As of your request date, there are currently 33 open inquiries into claims for Research & Development (R&D) tax relief made by professional football clubs, with a collective value of £17.4 million.” However, the tax authority did not disclose the names of the 33 clubs involved.

HMRC has faced ongoing criticism regarding its management of the R&D scheme, which has seen costs soar from £1.1 billion in 2010 to £7.5 billion by 2023. Critics argue that the organization has inadequately scrutinized claims, contributing to rampant fraud and errors leading to cumulative losses of £4.1 billion since 2020.

Litigation related to Freedom of Information last year compelled HMRC to disclose its lack of decisive actions to combat abuse of the scheme, despite receiving warnings about widespread fraud as early as 2017.

Concerns have also surfaced regarding tax advisors promoting claims that skirt eligibility boundaries. At least one advisor has been cited for describing the scheme as “free money from HMRC.”

Dundee United, a club in the Scottish Premiership, claimed £1.28 million under the R&D program in the 2021-22 financial year. In their most recent accounts, they mentioned receiving a request from HMRC for repayment related to this claim, and stated that they are appealing the decision. They also mentioned that should a repayment be necessary, their tax advisors would be liable to refund them 20 percent of the amount.

The claim from Dundee United was facilitated by ZLX, a Glasgow-based firm that previously advertised its expertise in navigating R&D tax credits. ZLX had claimed on its website to assist clubs with claims related to research on areas such as “stadium-spectator interaction,” “media and multimedia,” and “Covid compliance measures,” although the page containing this information has since been removed.

In a recent court ruling in Scotland, ZLX faced criticism for attempting to file an R&D claim regarding the installation of a fridge for a fruit and vegetable business. The owner of ZLX, Stephen McCallion, said the court reiterated comments made by the defendants, which had not been taken seriously by his legal team.

He noted that while it is “not impossible for a football club to claim R&D tax credits,” those criticizing the clubs may lack the necessary technical experience and may be using the situation to promote their own agendas.

Rugby clubs in the Premiership such as Harlequins and Northampton Saints have also utilized the scheme, asserting that all of their claims were compliant with existing regulations.

Tax expert Dan Neidle remarked that while it’s feasible for larger clubs to invest significant sums in innovative technologies, it stretches credibility to suggest they are spending millions on such initiatives. He added that HMRC’s inquiry into numerous clubs should act as a significant warning.

An HMRC spokesperson remarked, “Given the notable levels of non-compliance in this area, it is essential we take steps to ensure taxpayers’ money is directed towards legitimate R&D efforts. Our actions range from criminal investigations into dishonest agents to enhancing claimant education regarding their eligibility.”

It is important to note that the football clubs mentioned are not currently under criminal investigation concerning their claims.

Chelsea, Nottingham Forest, Brentford, the Premier League, and the Football Association all opted not to comment, while Fulham and Dundee United did not respond to inquiries.