Shrimps have a suspended two-point deduction hanging over their heads

The penalty, suspended until June 30, 2026, relates to the club’s failure to self-report – on five separate occasions – the non-payment of amounts due to HMRC within the required two working days.

Any deduction will be activated should the club fail to notify the league of any future HMRC default prior to that date, as per EFL Regulation 17: HMRC Reporting.

Another failure to report before the final game of this season will see the deduction come into force for the 2024/25 campaign.

A failure after then means the deduction is applied in the 2025/26 season instead.

Morecambe’s situation was outlined in a report by the Club Financial Reporting Unit (CFRU), set up by the EFL to monitor and enforce financial regulations that member clubs must follow.

Their published report shows the first two failures concerned September 2023 and January 2024, both relating to PAYE issues.

The first was when the CFRU became aware on September 27, 2023 that HMRC sought to contact the club regarding a shortfall on PAYE-related payments which should have been made on September 22.

In response, Morecambe said it was unaware of any default as a third party had been engaged to provide payroll services.

Having seen the outstanding amount paid, the CFRU accepted the Shrimps were unaware of the default until they were informed and, therefore, were unaware of the need to self-report.

Breach number two came when the club informed the CFRU on January 26 this year that it was late in paying PAYE due on the 22nd.

Having paid it on the 26th, the Shrimps acknowledged that was four working days after the due date.

Failure number three concerned March of this year, when HMRC told the CFRU that Morecambe had an outstanding VAT bill, of which the club had not informed the CFRU.

A due date for repayment had been February 24 but, with the club unable to pay by the due date or shortly afterwards, a Time To Pay (TTP) Agreement was made.

However, that also meant an embargo was put in place until July – when the TTP Agreement was paid off – as well as a fine being imposed and a three-window transfer fee ban, reduced to one on appeal and suspended for two years.

The next failure covered events of April 29, when the Shrimps confirmed PAYE due to HMRC had not been paid.

The report notes it was due on April 22 but Morecambe’s notification came on the 29th: a five-day working period later.

It added that correspondence with the club at the time said ‘the then CEO noted that the issue around self-reporting had been forgotten in the context of the club attempting to resolve the issues relating to its VAT default.’

Their last breach was over the summer, when the CFRU made contact on July 1 to enquire about reports players would not be paid on time.

Morecambe responded the same day, saying players had been paid but that PAYE due on June 22 wasn’t paid until the 29th.

The period to the date of payment was five working days but the period to the CFRU being notified of a default was six working days.

As part of email correspondence, Morecambe said the club had struggled with the loss of key staff; particularly the chief executive and head of finance.

The report added that ‘has led to the co-chairmen (Rod Taylor and Graham Howse) having to operate within both roles whilst they are finding replacements.’

All the information was considered by the Club Financial Review Panel (CFRP), which acknowledged Morecambe’s swift and full response to information and meeting requests.

It also noted the HMRC VAT assessment, which was understood to have left the club out of pocket to the tune of a redacted sum, as well as the departure of key staff.

The CFRP also considered the ‘repetitious and persistent nature of the failures’, along with the club’s reporting in the second and fourth instances and the other sanctions which had been imposed.

The panel also deemed a financial penalty wasn’t appropriate for two reasons: the club’s ‘significant financial pressures’ and ‘the seriousness of the repeated breaches’.

In response, a Morecambe statement said: “Following the club financial reporting unit’s statement today, the club acknowledges and accepts the ruling regarding breaches between 27th September 2023 and 1st July 2024.

“We also appreciate the club financial reporting unit recognition of our consistent cooperation throughout the enquiry, including our timely responses to information and meeting requests, despite the challenging circumstances faced by the club since July, including the loss of key personnel and ongoing ownership issues.

“We are pleased to report that all key roles vacated during the summer have been filled and the club is up to date with all HMRC liabilities, continuing to settle these obligations on time since July.”