McKay, 62, bought his wife Janis a £9,100 Rolex watch and a £54,000 Jaguar car in December 2014 – months after he had been served with a bankruptcy petition due to unpaid taxes of around £902,000, Leeds Crown Court was told.
He denies two counts of fraudulent disposal of property and is expected to tell the jury he genuinely believed he would be able to pay off his debts before his bankruptcy hearing using commissions that were owed to him.
Opening the case for the prosecution on behalf of the Insolvency Service, Andrew Evans told the jury of eight men and four women that McKay was a self-employed football agent who earned commissions from negotiating contracts with football clubs on behalf of professional players.
In June 2014, HM Revenue and Customs (HMRC) issued him with a statutory demand for tax arrears in the sum of £902,128 and, when he did not make any payment, a bankruptcy petition was personally served on McKay in September the same year, the court heard.
The jury was told that, three months later on December 14, McKay visited a jeweller in Leeds and bought his wife a Rolex Datejust II watch and, in the following days, bought a Jaguar XK5 convertible registered in his wife’s name, which was delivered to their home in Doncaster on Christmas Eve.
Mr Evans said: “You may well think that Mrs McKay did rather well for Christmas presents that year, which is all very nice and interesting, but what on earth has that got to do with the Insolvency Service or the criminal justice system or you, as members of the jury, trying this case?
“Because buying your wife lavish and expensive Christmas presents is not in itself a criminal offence.”
The barrister continued: “What the prosecution say in this case was the reason why he bought those lavish gifts for his wife at a time when he was facing bankruptcy proceedings was because he intended to ensure that the benefit of those monies went to his wife, rather than to the taxman and get swallowed up in his bankruptcy and used to pay his debts.”
He added: “He made those purchases in order to defraud his creditors by placing them beyond their reach in order to defeat their claims on his bankruptcy estate.”
The court heard that McKay had around £47,000 in his bank account – which he had not used to pay off his debts – and he used this money and cash to buy the gifts.
He was made bankrupt on March 30 2015 and later signed a bankruptcy restrictions undertaking that will continue until August 2023, the jury heard.
Mr Evans told the court the defence will say McKay did not intend to defraud his creditors when he bought the gifts.
He said: “He will say, at the time he made those purchases, he genuinely believed that monies were owed to him for commissions relating to the transfer of footballers and those monies would be paid to him before his bankruptcy petition was heard and would be more than enough.”
But the prosecutor said any money paid to the defendant would not have been enough to pay off his debts – which had risen to more than £5 million by January 2017.
He said: “In essence, the prosecution say, in December 2014, when this defendant was insolvent, facing bankruptcy, he spent £63,100 on gifts for his wife.
“He could not, and did not, repay his debts, which were substantial, and at the time he purchased those gifts he could not have had a reasonable expectation that he would be able to.”
The trial continues.