Credit where it’s due, it’s been a great effort by HMFC fans to get so much money in to their club. One thing that’s been bugging me though, how can they have transferred this direct to their club and not have any tax consequences?
First point is they transferred £5m from FoH now to be used for purposes other than it was originally intended (originally to be used for purchase of the club). If this was money that was pledged to the club directly from the start on a monthly basis, would HMFC not have to account for VAT on this £5m? Are they due VAT of £833k (£5m/1.2)?
I presume, through FoH, the original intention was to use the cash for buying out Anne Budge’s ownership, so the whole transaction would have been accounted for outwith HMFC and FoH could claim a VAT exemption. It’s not really income in FoH but arguably all capital transactions. Now that the income falls inside the club and is to be used for operating purposes, surely this should be a vat-able transaction for all the monthly contributions?
Another point, where they keep talking about the direct contribution from the fans to the stadium building costs, I can’t see how this can be accounted for as non-taxable income for Corporation tax purposes, to be used directly for payment of the stand construction. If it was a direct Share Capital contribution I can understand how this would work, but seeing as AB is reluctant to hand over a single share to the fans for their £8m (FoH £5m + £3m anonymous) contributions so far, how are they getting this into the club as income? Is this some new secret tax law they’ve invented for gift income?
If the £8m was to be accounted for as Income rather than Share Capital, then surely the Corporation tax due on this is 20% of £8m = £1.6m? Or if the fans monthly contributions are vat-able then the Corporation tax due should be (£4.167m + £3m) x 20% = £1.43m
Do HMFC have a total tax bill due to HMRC of £2.233m I wonder? (£0.833m + $1.4m)
If all the above is actually legal, I wonder if there are any ways we as HFC supporters can contribute tax free income to our own club in order to take advantage of the same process?
Is this all legal or are Hearts at it again?
(Apologies for all the questions and an accounting knowledge from Miss Leithead, Portobello High, Higher Accounting, 1985)
Results 1 to 17 of 17
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27-02-2017 05:30 AM #1
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How did HMFC get £8m tax free in to their club? And is it legal?
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27-02-2017 05:33 AM #2This quote is hidden because you are ignoring this member. Show Quote
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27-02-2017 05:54 AM #3
This a thread for CropleyWasGod and the other financial bods. They will take a look at the figures with a high powered microscope for you.
HIBERNIAN FC - ON THE RIGHT SIDE OF HISTORY SINCE 1875
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27-02-2017 06:33 AM #4
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Without being a financial Guru there is not a hope in hell there is anything illegal about this, Budge is far from stupid. There is nearly always a way around the 'system' with creative accountancy. I'm pretty sure we will be doing it in some shape or form to evade some tax.
"You opened the box....and your soul belongs to me...."
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27-02-2017 06:42 AM #5This quote is hidden because you are ignoring this member. Show Quote
All the money is in effect to buy the club. They have a legally binding contract that the shares will be transferred when a set amount is paid in. All that has changed is the price they pay. They are just shareholders providing working capital. It's all perfectly legal.
FoH have done a great job for them and they are getting a new stand without having to borrow very heavily. Once it's all paid for, the Yams are going to have a significant financial advantage over us and Aberdeen if they keep up the current level direct debits and they have done so far. It's £1.5m a year of free money and it buys a lot of player at SPFL level.
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27-02-2017 06:57 AM #6This quote is hidden because you are ignoring this member. Show Quote
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27-02-2017 09:35 AM #7This quote is hidden because you are ignoring this member. Show Quote
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27-02-2017 09:50 AM #8This quote is hidden because you are ignoring this member. Show Quote
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27-02-2017 09:54 AM #9
Here it is. Looks like they get 20% later this year.
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27-02-2017 10:08 AM #10This quote is hidden because you are ignoring this member. Show Quote
So how come they are getting a shareholding without AB getting paid?
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27-02-2017 10:11 AM #11This quote is hidden because you are ignoring this member. Show Quote
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27-02-2017 10:18 AM #12This quote is hidden because you are ignoring this member. Show Quote
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27-02-2017 10:24 AM #13This quote is hidden because you are ignoring this member. Show Quote
I don't see why AB would make a similar gift when the plan was always for her to be paid back.
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27-02-2017 10:25 AM #14
It will all become so confusing that eventually someone else will be left to pay the bill. It's the yam way.
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27-02-2017 10:25 AM #15This quote is hidden because you are ignoring this member. Show Quote
As I said before, I wonder why they decided to make the senior tax partner at Price Waterhouse the new chairman of F.o H. and director of HOMFC.
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27-02-2017 10:45 AM #16This quote is hidden because you are ignoring this member. Show Quote
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27-02-2017 04:38 PM #17
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Isn't there a notion that if they were getting a benefit for their direct debit payments, they would have to pay VAT? Hard to say if having a big girder qualifies as a benefit but you'd have to say that there's no noticeable gain on the playing field experience.
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