The highly-rated youngster signed for Liverpool in the summer of 2019, but the two clubs could not come to an agreement on a compensation package for Elliot.
Reports claim the defending champions offered £750,000 to secure the services of the youngster, but Fulham wanted a fee of around £8 million for the young winger.
Since no fee could be agreed between the two sides, the transfer had to be referred to a tribunal. The outcome of the tribunal then resulted in Liverpool having to pay Fulham about £4m if certain targets are met.
Liverpool to pay Fulham record transfer fee for Harvey Elliot
Liverpool are to pay an initial fee of £1.5m for the youngster who signed his first professional contract last year when he turned 17. It is reported that another £200,000 is to be paid to Fulham when a second professional contract is signed by the player.
Fulham will still get the total compensation package if certain clauses are met. The clauses include Elliot making 100 appearances for Liverpool and being capped at senior level for the England national team.
In a statement on Twitter, Fulham expressed their satisfaction with the outcome and it is believed that Liverpool also sees the outcome as a fair one.
Elliot holds the record for being the youngest-ever player to feature in a Premier League game. He achieved this after coming on for Fulham against Wolverhampton Wanderers back in May 2019 when he was aged 16 years and 30 days.
The youngster made nine appearances for Liverpool after his move in 2019, including two cameo appearances in their historic title-winning run last season. Elliot is now on loan at Championship side Blackburn Rovers and has been one of the standout players in their quest for promotion.
He has scored four goals and provided eight assists in 22 league games for the Rovers this campaign.