Sports Direct’s auditor Grant Thornton has told regulators he will resign following concerns over a €674 million (£605 million) tax bill, in a move that would put Mike Ashley’s business under further inspection.
The US firm is due to step down in September after the sports goods retailer’s annual general meeting takes place. Grant Thornton has audited Sports Direct since 2007, when it first floated on the London Stock Exchange. Sports Direct informed Grant Thornton – one of its largest listed audit clients – of the tax liability just hours before it was due to sign off on its annual accounts, according to two sources.
The retailer could now struggle to find an auditor after revealing last week that its annual results had not persuaded rival accounting firms to tender for its audit contract. Sports Direct was forced to delay the posting of its earnings by 10 hours and revealed on Monday that the reason was a €674 million (£605 million) Belgian tax demand. Meanwhile, shares in Ashley’s retail empire dropped by as much as 19 per cent before recovering mid-morning to be down nine per cent, and then recovering again by lunch time to be down by 7.75 per cent. Sports Direct’s finance director Jon Kempster announced he was quitting on Friday when the business announced its results.
The business’ head of retail Karen Byers and company secretary Cameron Olsen also resigned in recent weeks. Chris Wootton, who is due to replace Kempster, said Sports Direct considered the tax demand “without merit”. Moreover, if Sports Direct cannot find an auditor, it would become a problem for Ashley and his team of executives, as the lack of an auditor would mean the Department for Business will have the right to make an appointment, according to UK rules.
