Now Sports Direct is hit by £605m tax demand

by Matt Oliver and Hannah Uttley SPORTS Direct last night revealed it is facing a demand from Belgian authorities for more than £600million in unpaid taxes.

The firm said the dispute was about how goods it transports across the European Union were taxed.

The total being demanded, about £605million, includes ‘200 per cent penalties and interest,’ it added.

Sports Direct said: ‘The group has been the subject of a tax audit in Belgium and received a payment notice from the Belgian tax authorities in the amount of [£605million] and requesting further information in relation to, amongst other things, the tax treatment of goods being moved intra-group throughout the EU via Belgium.’

The notice did not amount to a full tax assessment and could not be immediately enforced, Sports Direct said. But the company admitted it would now have to respond to further questions from the authorities and provide documents they requested.

It claimed it was ‘less than probable’ that it would end up paying a penalty and that it would be able to ‘address the points raised’.

The company has a major distribution centre in Belgium, part of a European division that accounts for £637million in sales – nearly onefifth of its annual revenues.

The shock tax announcement came after Mike Ashley admitted regret over his £90million purchase of House Of Fraser and declared that the department store was in ‘terminal’ decline.

The billionaire Sports Direct boss, who has pledged to save Britain’s high streets, also warned that further job cuts at the chain were on the way and said he would close unprofitable stores.

So far, five stores have been closed since Sports Direct bought the retailer out of administration last year. There are 54 remaining.