Untold Arsenal: Arsenal News. Supporting the Lord Wenger in all he does » Revenue and Customs issues writ against the whole Premier League
By Tony Attwood
Well, there it is. I pop over (or rather under, since I went by train) the English Channel for a few days, practice following the football news in French, watch France and Spain on TV being given the run around in warm ups, muck about a lot a Futuraworld (Poitiers) and then come back to find…
Revenue and Customs (what is commonly know as “the tax man”) is taking the whole Premier League to court over the illegality of its tax regime.
The story turned up in my absence in Accountancy Age, and would you believe it, the Sun, Star and Mirror didn’t actually catch up with it at all.
But they should have done because then would would have had “Sexy Suzie, our page three girl of the day says, ‘I think the tax man has got this one wrong and should dunk his head in a pile of horse droppings so there’,” because this one runs alongside such jolly changes to the world of football as
a) Uefa’s end of Financial Doping (which I was raving about before I was put on the train by worried colleagues)
b) The fact that a whole bunch of clubs are teetering on the brink – and Rhys I noted your comment and will look into the Cardiff situation further, but as far as I can see Revenue and Customs still have a winding up order out for them)
c) Liverpool do not, as I understand Redknapp the Younger is reputed to have said while I was not looking, “have £30m to spend and want to make sure they have the right manager in place to spend it”. Rather they have a club over which the vultures have gathered.
Here’s the run down….
If a club enters administration they are bound by the football creditors rule, which means “football creditors” like other clubs to whom they owe transfer money, along with players and managers, get paid in full first of all. Anything left over is divided between the unsecured creditors including HMRC.
The tax office has long called the rule “unlawful”, saying, “HMRC‘s view is that there is nothing in insolvency legislation that provides for unsecured debts due to “football creditors” to be paid in preference to other unsecured creditors such as HMRC.
“Our view is that the practical application of the so called ‘Football Creditors Rule’ may be unlawful. We have nothing further to add at this stage.”
HMRC have tried this battle in 2004 when they were attacking Wimbledon who paid them 30p in the pound on a £525,000 debt it had run up.
Quite what the point of law is, that went against them last time, but will be for them this time, I don’t know – I am certainly nothing remotely like a tax lawyer, but they’ve clearly got something in mind.
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The EPL argues that they need the rule to stop clubs buying players on the never-never and then going bust. If the Football Creditors Rule was not in place Liverpool could buy 20 players at £200m, then go bust, then only pay 10p in the £1 and so get the players for £20m. But this is a fatuous argument, since clearly the EPL can say, unpaid-for players are returned to their previous clubs, all money paid is forfeit, and the club goes down 3 divisions. That might slow down the financial vandals who run most clubs.
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What the EPL are reported to admit (behind closed doors) is that if the Revenue get their way, then the containment field that the EPL has built around the failing clubs (that is at least 16 of the clubs in the league) will fail, and club after club will go down. The domino effect will come to football.
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The Football League has taken one step to placating the Revenue in that club’s with one month or more tax arrears can’t engage in any transfer deals. The EPL adopts this rule in August.
In the case of Portsmouth FC football creditors are expected to receive a full repayment of £22.4m funded by the EPLs deductions in the club’s allocated TV revenue. Unsecured creditors (ranging from St Johns Ambulance to you and me (if you and me are citizens of the United Kingdom) in the shape of Revenue and Customs (who are owed an estimated £83m) may be £16.5m spread over five years.
Combine the Uefa Financial Doping rules, the “no transfer” rule noted above, the 25 player rule, and the abolition of the football creditor rule, and you have an absolute shift in the financial position of the EPL just at a moment when the majority of clubs are least able to cope.
Funny old game.
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