Photo Credit: Jakub Żerdzicki
Two UK divisions of ticket resale platform Viagogo owe nearly $20 million in taxes after the government found they had underpaid.
Two UK-based divisions of ticket resale platform Viagogo have been slapped with a £15 million ($19.7 million) tax bill after the government found they had not paid enough.
Filings for VGL Services and IFOT Services—both part of the U.S.-listed StubHub group that includes Viagogo—indicate that both divisions set aside money to cover costs pertaining to a HMRC (His Majesty’s Revenue & Customs) “transfer pricing inquiry” for 2016 through 2018.
Transfer pricing refers to the way separate entities under a larger corporate group charge each other for services provided to one another. Such transactions should take place at market rates; tax authorities often monitor whether companies are artificially inflating prices to move money in tax-favoring circumstances.
While the corporate filings do not detail HMRC’s findings about Viagogo’s taxes, there is also no indication that the company deliberately tried to dodge taxes. Neither business directly sells tickets, but both supplied group companies during the period in question, including providing technology and customer services.
According to the filings, the businesses said they believe HMRC’s findings resulted in “double taxation,” effectively taxing them twice for the same activity in different jurisdictions. Both firms said they had since changed their transfer pricing policy but are seeking “remediation” under the UK’s tax agreement with other countries.
Earlier this year, the companies paid a combined £5.5 million, but explained in their filings that the “timing of further payments and settlement remains unclear.”
The scrutiny surrounding the ticket reseller comes as the UK government moves toward a review of the secondary ticketing market, which is expected to result in a cap on the price for which tickets can be resold. Policy changes like this could have a marked impact on platforms like Viagogo, whose parent company StubHub’s valuation on the U.S. stock market has dwindled in the past month.
To make matters even more confusing, StubHub Holdings is a separate entity from StubHub International, which includes the UK brand of the same name. The two businesses were forced to split by the UK markets authority to ensure continued market competition following StubHub’s acquisition of Viagogo.
