McIlroy, who was made an MBE after winning his first major in 2011, was the first Sports Personality of the Year winner in almost a decade to miss out on an honour in the same year.
A Whitehall source compared his snub to that of Sir David Beckham, whose knighthood was blocked for years when a “red flag” was placed on his nomination following an investment in what HMRC later deemed to be a tax avoidance scheme. He was finally knighted last year in the King’s Birthday Honours.
The nature of the dispute behind McIlroy’s honours omission is unclear, but earlier in his career, he was among thousands of wealthy individuals who put money into another scheme that ended up being challenged by the tax authorities.
In 2015, HMRC launched an investigation into whether investments made by McIlroy and others had avoided tax by exploiting the Business Premises Renovation Allowance programme, under which investors could claim up to 100 per cent tax relief on expenditure. There was nothing illegal about the schemes, but HMRC warned at the time it had the power to demand payment of any tax it deemed to have been unfairly avoided.
McIlroy was one of 183 people who had invested in a scheme to regenerate parts of Liverpool, Birmingham and Sheffield. The golfer said in 2013 that he was happy with his involvement in a Birmingham “regeneration project”. There is no suggestion he has ever deliberately sought to dodge his tax obligations.
Honours are nominated by members of the public, then scrutinised by committees overseen by the Cabinet Office. The Cabinet Office consults HMRC, which checks whether there are any reasons not to honour an individual and raises “red flags” before any final decision. The final list is then sent to the prime minister for approval before they are formally awarded by the King.
McIlroy was nominated for a knighthood last year by the Northern Ireland Executive in Stormont.
That followed calls for him to be honoured, led by then Ulster Unionist Party leader Mike Nesbitt, who said: “For a country the size of Northern Ireland, it is remarkable how many sportspeople have become icons in their fields. Think George Best, Mike Gibson, and Mary Peters, to name just three.
“Rory McIlroy has just trumped all of them, and with the grand slam monkey off his back, looks set for even more success. This universally popular figure deserves the highest praise the nation can bestow, and a knighthood is just that.”
McIlroy also told Sky Sports in November: “If that were ever to happen it would be an unbelievably massive honour.
“That’s obviously up to people a lot more powerful and important than me.
“But, I mean, if it were to happen one day, it would be a very proud moment in my life.”