The bill Leeds Metropolitan University has received from HM Revenue and Customs (HMRC) also includes tax that should have been paid on fringe benefits enjoyed by former vice chancellor Simon Lee and his wife Patricia that were paid for on a staff credit card.
Leeds Met has decided to pay the bill for Mr Lee, who received a salary of £300,000, itself, along with paying off the tax due on ‘benefits in kind’ for staff who enjoyed corporate hospitality at Headingley.
The university has declined to comment on why it was paying the bill – in particular Mr Lee. But it is understood that as the vice chancellor’s spending had been largely authorised – or at least went unchallenged at the time – officials believe Leeds Met has a responsibility to pay.
The tax liability stems from a Yorkshire Post investigation into a cavalier spending regime under the leadership of Mr Lee, who stepped down in January 2009 after being confronted with allegations of bullying which he denied.
The investigation covered a raft of questionable expenditure, including millions spent on sponsoring professional rugby and cricket at Headingley and failure to control spending on staff credit cards. It also included revelations surrounding a series of foreign trips made by Mrs Lee, who was not employed by Leeds Met.
The investigation prompted a series of audits carried out by accountancy firm KPMG in 2009, one of which led to Leeds Met acknowledging there was a tax liability for ‘benefits in kind’ enjoyed by staff and family members.
Lengthy negotiations have since taken place with HMRC culminating in a final bill being agreed.
The total includes a liability for £11,193 relating to corporate hospitality enjoyed by staff and relatives at Leeds Rhinos rugby league matches, Leeds Carnegie rugby union matches and cricket matches, including at least one England test match.
Leeds Met placed a high emphasis on developing sporting partnerships, which in 2007 included acquiring a controlling stake in Leeds Carnegie rugby union club. The controversial deal, which ended up costing the university £10m, was one of several focussing on professional sport played at Headingley.
In all, £22m was spent on sponsoring rugby and cricket with hospitality regularly made available for staff and guests, primarily in the Lewis Jones suite for rugby and the Hirst and Rhodes suite for cricket.
The KPMG audit was told it was university policy to reward staff by inviting them to major sporting fixtures. It also found that almost as many staff were enjoying corporate hospitality as external guests from businesses and other public sector organisations Leeds Met was keen to build relationships with.
A further £13,744 is being levied for tax due on benefits for Mr Lee and his wife paid for on the former vice chancellor’s staff credit card.
The bills for both corporate hospitality and Mr Lee include unpaid income tax and national insurance contributions, plus interest.
Mr Lee, who has since set up a consultancy brokering partnerships between the public and private sector, did not respond to a request to comment.
A Leeds Met spokeswoman said: “The HMRC settlement refers to the time period 2004/5 to 2008/2009. Since that time, there have been many positive developments at Leeds Metropolitan University.
“Our Vice Chancellor joined us in January 2010 and we have appointed a new Chair of the Board and three Deputy Vice Chancellors since then. We have made a number of changes to our policies and procedures and we are working towards delivery of our new strategic plan. We have settled the amount owing to HMRC and consider the matter to be closed.”
The university has revised its hospitality policy to place a stronger focus on developing business links rather than entertaining staff.