Taxpayer appears to fund footballers' salaries for ‘R&D'

Times

27-07-2025

Taxpayers appear to have funded player salaries at a top-flight football club on the grounds they were working on cutting-edge research.
HM Revenue and Customs (HMRC) demanded repayment from the Scottish Premier League team Dundee United last year after it claimed £1.27 million under the research and development tax credit scheme.
The scheme, which is meant to support innovations for the public good in science and technology, has been subject to a high degree of fraud and error thanks to lax checks by the tax authority.
Under HMRC's rules a company can apply for the public money only if it has attempted a genuine advance in science or technology to benefit the overall field, not just its own business.
A report was prepared by Dundee United's tax consultant ZLX before the club's claim, which stated that its players spent 24 per cent of their time directly conducting research and development activities, across nutrition and data collection projects.
This meant, the report claimed, this portion of their salaries could be partially recouped from the taxpayer as a research and development (R&D) tax credit under the scheme.
The report also stated that 80 per cent of the club chef's time was spent on nutrition science research, which could also be used to make a tax credit claim.
Eligible research under the scheme must deal with an issue of genuine scientific uncertainty, which an expert in the field would not easily be able to resolve.
• HMRC overhaul: £8bn tax credit scheme faces reform
For one of Dundee's projects, the document claimed that the eligible uncertainty was that 'league involvement, challenge in European competition, playing style and management are all likely to change'.
Simon Brundish, a conditioning coach at Strength:Lab who has worked with Premier League football clubs as well as with the English and Belgian national teams, reviewed the details of the research projects set out in the document.
'There is nothing groundbreaking going on here,' he said. 'A radar profile for each player and each position using arbitrary thresholds created by coaches' 'expertise' is simply standard practice in professional team sport.'
He said that if the club had been paying an external consultant large sums for these kinds of services on the grounds that it was revolutionary research, it was effectively 'buying snake oil'.
The tax expert Dan Neidle said: 'Football players are not scientific researchers.' He added that if Dundee United had claimed a quarter of the players' salaries as R&D expenditure, it was a 'scandal'.
'It is no surprise HMRC are investigating,' he said.
Stephen McCallion, the owner of ZLX, based in Glasgow, said that the claim briefing had not been submitted to HMRC and that ZLX had never been interviewed by HMRC in relation to the Dundee claim.
When asked if he disputed that the Dundee claim included a claim for player salaries, he declined to comment, citing client confidentiality.
• Specialist agents under scrutiny in crackdown on tax credit fraud
There has been controversy around whether it is within the spirit of the scheme for football clubs to make large claims.
In February The Times revealed that Premiership teams including Chelsea, Fulham and Nottingham Forest had made claims.
After the story, disclosures under freedom of information by HMRC revealed that at least 33 professional football clubs were under investigation into whether £17 million had been wrongly claimed.
Chelsea was paid more than £3 million in R&D tax relief and payments by HMRC between 2020 and last year, according to its accounts.
Nottingham Forest claimed a tax credit of £607,000 in the 2021-22 financial year, while Fulham claimed £758,000 in credits between 2019 and 2024. After the reporting, it emerged that Brentford had also made a claim, worth more than £3 million.
Chelsea, Nottingham Forest, Fulham and Brentford were asked if player salaries had been included in any way in their claims under the scheme. Brentford declined to comment. The other clubs were approached for comment.
HMRC has not disclosed the identity of which 33 clubs were under investigation. Dundee separately declared HMRC's repayment demand in its most recent accounts.
Concerns have also been raised about the role of tax advisers encouraging companies to make claims that skirt the border of eligibility, with at least one adviser promoting the scheme as 'free money from HMRC'.
ZLX described itself on its website as having the 'know-how' to navigate R&D tax credits. It previously stated on its website that it could assist clubs in making claims under the scheme for research into 'stadiums-spectator interaction', 'media and multimedia' and 'Covid compliance measures'. The page including this information has been taken down from its website.
The company was criticised in a recent Scottish court case for what the sheriff found was a proposal to make an R&D claim on behalf of a fruit and vegetable company for installing a fridge.
HMRC has faced repeated criticisms for its handling of the R&D scheme as its cost ballooned from £1.1 billion in 2010 to £7.5 billion in 2023.
Officials have been accused of failing properly to check claims being made, leading to a high rate of fraud and error, with resulting losses totalling £4.1 billion since 2020.
Freedom of information litigation last year forced HMRC to reveal it had failed to take sustained action to crack down on misuse of the scheme for five years, despite being warned by officials as early as 2017 that the scheme was being extensively defrauded.
McCallion has previously said that the sheriff repeated comments made by the defendant — which had not been taken seriously by the ZLX legal team — that it was 'not impossible for a football club to claim R&D tax credits'.
He also said that 'those who have started this witch hunt on football clubs have little or no technical experience but instead are using this platform to further their own endeavours'.
Dundee United was approached for comment. The club's accounts state that it is appealing against HMRC's repayment demand.