Nike paid just £1m to the taxman in the past five years on £100m sales of its Manchester United replica kits, The Independent can reveal.

The company funnelled nearly £40m over the period to its Dutch business despite making most of its money on sales to football fans in the UK, according to accounts filed with Companies House.

The legal loophole saw the total tax bill in the UK for Manchester United Merchandising Ltd, which is jointly run by Nike and the football club, reduced to just £255,000 last year after an £8.3m royalty fee was paid to its Dutch subsidiary. Similar payments have been made for at least the past five years.

Download the new Independent Premium app Sharing the full story, not just the headlines

It means the taxman missed out on a potential £9.1m over the period from the England football kit makers and leaves Nike the latest in a line of US companies facing scrutiny for their tax affairs in Europe.

Nike could not be reached for comment yesterday, but has said it abides by all tax law in countries in which it operates.