Day 2 saw a full day of evidence from the prosecution over primarily the first lodgement into the Monaco Bank Account named “Rosie47”. It also brought the first disparity between the two defendants over the reasons for the transaction.
To recap, The Crown’s case against the Tottenham Hotspur manager is as follows:
During his time as Manager of Portsmouth Football Club between 2002 and 2007 he received two payments from the Chairman of the Club Milan Mandaric totalling $295,000 (approximately £189,000) which was paid into an account in Monaco and upon which he should have paid tax. These were as follows: $ £
First payment (Crouch) 145,000 93,100
Second Payment 150,000 96,300
The first of these payments, $145,000 related to transfer of Peter Crouch to Aston Villa. Portsmouth made a profit on this transfer and as director of football Harry was entitled to 10% of the transfer profit. When he replaced Graham Rix and became manager of the club this entitlement dropped to 5%.
Previously Harry had revealed this in the press and that he had asked for the balance of funds. The BBC have reported that Harry’s share was £115,473 but based upon what Harry suggested that this would have been £150,000.
My thoughts on this are two fold. Firstly, why are we talking in dollars? The transaction was an English one and therefore would be by reference to a contract of employment with Portsmouth Football Club. Dollars only become relevant because Mr Mandaric had the money he used to make these payments offshore.
If one were to reduce a sum of £150,000 for tax and National Insurance you would end up with a minimum net sum of approximately £88,500. Could this mean that Harry felt tax had been paid on the money as he got £93,100? Certainly if he is the tough businessman that the prosecution are portraying him to be he would be expected to know if he had been robbed; after all he had pointed this out to Mr Mandaric in the first place.
Secondly, if the money was the subject of a payment relating to a contract of employment then the sum should have been taxed under PAYE by Portsmouth Football Club. It would not matter how the payment was made, either within or outside of the company, PAYE would still be due.
What would be needed, if the payment was outside of the business, would be for the Company’s accounts department to be advised so that entries could be made in the records to show an increase in Mr Mandaric’s loan account so that the profit and loss be charged with the bonus payment securing tax relief for Portsmouth.
Between the defendants Harry says it is a contractual payment, describing it as a bonus. Mr Mandaric appears to be suggesting that it was an interest free loan or an investment to help a friend out and therefore outside of the tax regime. It would also appear that the prosecution are relying upon transcriptions from the former newspaper The News of the World.
When it comes to the defence of the case it will be interesting to see how both men defend this point as it will be critical for Mr Mandaric’s defence. In this area he, as Chairman and owner of Portsmouth, would appear to have more responsibilities towards the Crown to make sure that things have been done correctly.
We also learned that Harry had suffered a civil investigation from HM Revenue & Customs over a two year period relating to an amount he received over the transfer of Rio Ferdinand. This was described as a “gift” by Harry when completing his forms but appears to have suffered tax after the enquiry.
Gifts are a difficult area and of one receives it by reference to your employment then HM Revenue & Customs would press for tax and National Insurance. It appear that is what happened in this case.
Part of this procedure might have included completing a statement of assets which would include disclosing all of the bank and deposit accounts held at two particular dates. A failure to disclose an account or completing it inappropriately at a later date is looked upon unfavourably by the Crown and will no doubt be referred to often during the trial.
This looks bad on Harry’s record and he will have to give some very strong reasons for the omission when the time comes. This failure to disclose, even if the Rio investigation period was much different, came at a time when an opportunity came to make a clean breast of things. If he thought the funds had been taxed that might be one thing but the interest received?
It seems that Harry had forgotten of the accounts existence. What might Mandy Rice-Davies have to say about that? He should have been prepared by his legal team to have the book thrown at him over this failure. It could prove to be close to a red card issue.
So the day concludes with the prosecution continuing to give evidence.
Elsewhere it has been a disappointing day with a winding up order being made against Portsmouth for failing to pay £1.6m of tax. Clearly this demonstrates that whilst Portsmouth might be underfunded for its current operations by its owners that having football creditors paid in full does and will not work in the future and therefore must be changed.
I cannot say whether any of these football creditors have been paid but from memory one name that was on the list was, yes you’ve guessed it, Peter Crouch. The same man who was let off for an eye gouging offence last weekend. The poor man can’t keep out of the news.