Operation Loom - How HMRC could still make tax dispute thorn in Newcastle United side

The tenure of Mike Ashley at Newcastle United may have ended over two years ago but ghosts of the Magpies' past have once again reappeared.

Supporters may remember Operation Loom in 2017 when officers raided club premises to investigate tax dealings at Newcastle United and West Ham. That criminal case has now been dropped, but could still be a thorn in the club's side with a civil bill.

Here's what we know so far.

What Newcastle United and West Ham had to do with Operation Loom

Operation Loom was the name of a criminal investigation launched by HMRC which focused on the dealings of Newcastle United and West Ham. The Operation saw raids on club premises carried out on April 26, 2017, as 180 HMRC officers arrived at the offices of both clubs. Computers, financial records and mobile phones were seized as part of the operation.

Newcastle United Managing Director Lee Charnley was also arrested at the time and spent 10 hours with officers before being released without charge.

In May 2021, HMRC ended the criminal investigation and former Newcastle United owner Mike Ashley said: "Newcastle owner Mike Ashley said earlier: "After four years of the club being subjected to this investigation, I am pleased that the criminal investigation has now been discontinued. It is now time for the dark forces that are preventing this football club from becoming the powerhouse that the fans deserve, to step aside."

What Newcastle United wanted to happen with seized documents

The Daily Mail reports that Newcastle United have been fighting to stop the material seized in that 2017 Operation Loom raid from being used as part of investigations into that alleged multi-million-pound tax scandal. However, the club has this week been told that the files would not be returned.

The club is reported to have been leading a two-and-a-half-year legal battle to have digital copies of the seized documents returned by the HMRC but High Court judges have now ruled that the warrants for the raid had been 'lawfully issued' when the investigation was active.

Newcastle United could face huge civil bill

Although criminal proceedings have been dropped, the HMRC told Leeds Crown Court on Wednesday that they allege Newcastle United of 'secretly' using the tax system to make payments to agents and players, as per the Daily Mail. Newcastle United are adamant there are no reasonable grounds to suggest the club had partaken in tax fraud.

The investigation is now set to form a civil case. In court on Wednesday, it was reported that a note sent to Newcastle United during the criminal proceedings said that 'the matter will now be referred to colleagues elsewhere within the Fraud Investigation Service'. It remains unclear how much HMRC may seek in payment from the Tyneside club.