Hearts settles tax liabilities

HEART OF MIDLOTHIAN FC has reached a settlement with HM Revenue & Customs after a dispute over tax and national insurance contributions.

The Scottish FA Cup holders agreed to pay £1.5m over three years, and in a separate deal paid a £450,000 tax bill in two instalments in order to stave off a winding-up order.

The first dispute related to players taken on loan from Lithuanian club FC Kaunas, which is controlled by Hearts owner Vladimir Romanov.

The players from Kaunas had paid tax to the Lithuanian authorities and not to HMRC, despite working in the UK.

The Edinburgh club’s share issue brochure stated HMRC “claimed unpaid tax liabilities of circa £1.75m (excluding interest and penalties) in relation to the arrangements between the company (Hearts) and FC Kaunas in relation to certain players who were loaned to the company by FC Kaunas”.

But it announced on Tuesday that no penalties are payable under its agreement with HMRC and that the tribunal it held last month has now been concluded without any evidence being heard.

Club director Sergejus Fedotovas said: “We are satisfied that this resolution provides the club with an opportunity to now move forward with certainty. We believe that the payment terms agreed with HMRC allow the club to manage repayments in a way that will not be detrimental to longer-term development of the club.”

The final settlement figure is lower than the original amount assessed by HMRC of £1.75m, excluding interest and penalties.

Related reading