A statement issued last night by Redknapp's solicitors BCL Burton Copeland read: "Harry Redknapp is extremely surprised and disappointed to have been informed that HMRC intend to institute proceedings against him in the week commencing 11 January, 2010.
"We believe that the decision to commence proceedings will, in due course, be shown to have been totally misconceived."Redknapp, who has been given the full support of his club, has always denied any wrongdoing following an investigation into his financial affairs, which included his arrest on suspicion of conspiracy to defraud and false accounting in November 2007, when he was the Portsmouth manager.
On November 29th 2007, fraud detectives arrested Redknapp, Peter Storrie (Portsmouth's Chief Executive), Milan Mandaric (the clubs owner), Amdy Faye (player), and his agent Willie MacKay for alleged corruption in football.
The five men were taken into custody after officers had searched eight addresses across the UK. The City of London Police did not rule out further arrests at the time and it is understood that a former Premiership manager was among those coming within the scope of its inquiry.
The CLP investigation by the CLP's Economic Crime Unit is believed to have focused on possible financial malpractice. The CLP have now passed this information on to the Inland Revenue and it is they who have made the latest move.
The CLP's work is separate to the "bungs" inquiry conducted by the former Metropolitan Police commissioner Lord Stevens and his company, Quest.
The Quest inquiry has looked into possible undeclared income and revenue fraud, or in other words, tax evasion. There is a crucial legal difference between this and any probe into "bungs" because of the nature of the inquiry. It is understood that the CLP is not looking specifically at allegations of "bungs" themselves, but rather the whereabouts of certain monies relating to transfers, and whether appropriate tax was paid by all members of the transaction.
It was understood at the time that the CLP were examining the transfer of Faye from Auxerre to Portsmouth in 2003 for £1.5m and a Peter Crouch transfer in 2002.
While MacKay was also being questioned about his connections to other transfers including Pascal Chimbonda's move from Bastia to Wigan. It was a move that angered Wigan who said the Police were "scraping the barrel" with this investigation.
Of the initial Quest inquiry, Lord Stevens found that 17 of the 362 transfers that were investigated did not meet all the requirements put before them. Since that initial investigation by Quest between 2004 and 2008, they have since been employed by FIFA to look into another 15 irregular deals that emanated from the Premier League. This move was done without the FA's or the EPL's permission and has caused a rift between the three governing bodies.
Speaking to BBC Radio 5 Live, Redknapp said: "It's not a major issue. It's something that was done between myself and my ex-chairman [Milan Mandaric], away from football, and it really is ... well, it's unbelievable, I've got to be truthful. I can't comment on it, but it's farcical."
This current order by the Inland Revenue is believed to center around the transfer of Peter Crouch. In 2001 the striker was signed from QPR for £1.25m but was sold on to Aston Villa in 2002 for £5m after a highly successful season with Pompey where he scored 18 goals in 37 games.
Under the terms of his contract at Portsmouth, Redknapp was to get ten percent of the net profit of any player he sold while manager of the club. However, when he changed his contract with the club the terms were changed to five percent.
When Redknapp received his re-numeration for the Crouch transfer he was only given five percent instead of ten. He then confronted Milan Mandaric about the reduction and the Serbian gave him the other five percent through an offshore account in Monaco.
The monies went into Redknapp's HSBC account in Monaco and were then transferred into his HSBC account in Britain. The Spurs manager then claims that it was his accountants who informed the Inland Revenue of the monies.
The story becomes murkier when Mandaric and Storrie's opinion's on the situation are asked for. Peter Storrie initially claimed that the extra 5 percent was a football related bonus with nothing to do with transfers while Mandaric claims that the money was a gift from one friend to another for a job well done.
This difference of story from the three main characters under investigation is one of the reasons that rumour and innuendo has dogged this particular case.
Since moving to Tottenham from Portsmouth the Lilywhites performances have moved to another level. Always favourites to challenge for the Europa League positions (5th to 7th) Spurs are now in the middle of a concerted push for the unknown ground of the Champions League. A far cry from the club being rooted to be bottom of the table when Redknapp took over in October 2008.
Unsurprisingly Spurs are supporting their manager for the time being and have issued a statement backing the 62-year-old. "The club considers this matter to be a private, tax issue which pre-dates Harry's employment with the club and which is not related to football matters," the statement read. "His position remains unaffected and he has the full support of the club."
Daniel Levy, Tottenham's Chairman, will have to monitor this situation delicately. These rumours of tax evasion and strange dealings have dogged Redknapp for the last two years without any concrete evidence to suggest they were fact.
In 2006 BBC's current affairs Panorama programme claimed to have a world exclusive of the bung culture within football and named Redknapp as one of the chief perpetrators. But the findings of the show were very weak and were lauged off by media and football bodies alike. The program alleged that Redknapp had tapped Andy Todd of Bolton up, something the two clubs and player strongly refuted.
"I have no idea what I was doing in the programme," Redknapp told the BBC in 2006. "Anyone who saw the programme knew it was farcical. I've done nothing wrong, not a thing. I now just want to talk about football. I don't think there is anything in it that I need to worry my lawyer about."
The show which was widely panned also made unsubstantiated allegations about Sam Allerdyce, the current Blackburn manager, and has seen it's standing as a current affair programme diminish since then.
There was no evidence of either manager having done any wrong and BBC's reputation took a severe battering after the so-called exclusive.
Redknapp has vehemently maintained his innocence throughout this two year ordeal. Although he has always been regarded as a "wheeler-dealer" in the transfer market, his record is possibly the best in the Premier League, this has often been misconstrued by the media and public alike as they read further into his character.
But one thing is for sure, there is a lot of baggage surrounding Redknapp, and the sooner it is over and done with the better for one of the longest serving managers in English football.