Two UK divisions of the ticket resale website Viagogo have been hit with a £15m tax bill after HMRC found they had not paid enough duty.
Corporate filings for VGL Services and IFOT Services, both part of the US-listed StubHub group that includes Viagogo, reveal that both firms set aside money to cover costs arising from a “transfer pricing inquiry with HMRC” relating to the period between 2016 and 2018.
Transfer pricing refers to the way in which separate entities within a larger corporate group charge each other for services or goods they provide to one another.
Any such transactions should take place at market rates. Tax authorities are known to monitor whether companies are inflating prices artificially in order to move money from a division in a high-tax jurisdiction to one based in a low-tax area.
The accounts did not go into detail about HMRC’s findings about Viagogo’s tax affairs and there is no suggestion the company deliberately sought to avoid or evade tax.
The UK businesses do not directly sell tickets but both supplied group companies during the period in question, according to the accounts, including providing technology and customer services.
The £15m combined sum set aside by the two companies, both of which are registered to an address on London’s Cannon Street, includes interest that HMRC would have earned on the tax receipts, had they been paid, as well as charges for late payment.
In their filings, the businesses said they believe HMRC’s findings have resulted in “double taxation”, which is when a business is taxed on the same activity in two different jurisdictions.
The firms said they had now changed their transfer pricing policy but would also seek “remediation” under the UK’s tax agreement with other countries, which could result in a future financial benefit.
The companies already paid a combined £5.5m earlier this year, but said the “timing of further payments and settlement remains unclear”.
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Viagogo is under intense scrutiny as the government moves towards a review of “secondary ticketing”, which is expected to result in a cap on the resell price of tickets, amid an outcry over touts using such platforms to exploit fans.
Any such policy in one of its most important markets could deal a blow to Viagogo, whose parent company StubHub Holdings floated on the US Nasdaq index in September with a valuation of $8.6bn (£6.5bn), which has since dwindled to $6.6bn.
StubHub Holdings is separate to StubHub International, which includes the UK brand of the same name. The Competition and Markets Authority forced the two businesses to split to ensure continued competition in the UK, after Viagogo and StubHub agreed a merger.
Viagogo did not return a request for comment.