Football clubs under threat from HMRC

Several football clubs, including Premier League Portsmouth began the New Year in a state of financial limbo, with reports circulating that HMRC had issued a batch of winding-up orders against clubs to recover unpaid tax liabilities. Notts County and Cardiff have also been caught in the spotlight.

Portsmouth issued a press statement pointing out that it not been formally served with any petition, adding it was “shocked and surprised this action has been taken in respect of VAT, PAYE and National Insurance Contributions which either have been, or are about to be paid, or are disputed”.

Since Ali Al Faraj bought Portsmouth in October 2009, extreme efforts have been made to agree a repayment schedule for tax liabilities inherited from the previous owner, the club said. A club spokesman said it had to issue the press statement after word was leaked to the BBC of a possible winding-up order.

The new owner has made £9.7m available to HMRC made up of £5.7m in payments £4m in unspecified securities. “It is well known that the business has been in a difficult position following former owners’ decisions and the current owner is committed to resolving this and moving forward,” the statement added. “In such a tough economic environment the club finds it hard to understand this action by HMRC.”

Continued...

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Comments

Players wages

Anonymous | | Permalink

Perhaps the late payment of the players wages has more to it than just insufficient funds - maybe the club is trying to push the PAYE liability into the next tax month to give them breathing space before paying over the PAYE?

John Stokdyk's picture

Update - December wages paid today

John Stokdyk | | Permalink

Talk about fast-moving news... I'd barely finished updating this item when I found out via Twitter that Portsmouth staff received their December wages today, while the players are due to be paid on Tuesday. According to Sky Sports News, the cash reached club employees' bank accounts this morning. "It was due to a file not being loaded with the bank," according to Portsmouth's spokesman (he didn't tell me that bit, but there was a lot to cover).

Very interested in the PAYE-juggling idea suggested above, but wonder if an adviser tangling with HMRC's debt collection squad would really opt for that route. The threat of winding-up over two months' debt seems hastier than usual - perhaps persistent corner-cutting might encourage them to take a harder line.

John Stokdyk's picture

Statement from Notts County FC

John Stokdyk | | Permalink

The following extracts are taken from a statement by Notts County executive chairman Peter Trembling on the club's website:

"While appreciating that news of a petition from HMRC will come as a source of concern to supporters, I can reassure them that we are doing everything possible following the management buy-out of the club to ensure that the club's finances are put on a stable footing.

"Since being made aware of the possibility of the petition, we have kept our management and playing squad fully informed about the situation...

"We have kept all our potential investors fully appraised of the situation regarding HMRC and they are fully relaxed about this.

"I can categorically reassure all supporters that the club intends to meet and settle the requirements of this petition and of our other creditors."

football clubs and PAYE

oldersimon | | Permalink

The truth seems to be that for years football clubs have seen not paying over the PAYE stopped from players' wages as a good wheeze for improving cash flow, and then whinged about HMRC when it has the effrontery to try to collect it. HMRC usually seems to be the largest creditor in most cases when a club goes into administration. This is very close to deliberate evasion - it is not after all the club's money - and I suggest that in fact HMRC should be a lot tougher with them.

John Stokdyk's picture

More background

John Stokdyk | | Permalink

An interesting view, Simon, and one shared by one or two of the members who have been discussing the topic over on our Money Laundering and Crime discussion group.

While researching another topic, I came across an interesting post on the Football Management blog that details a number of previous cases including Rochdale, King's Lynn and Accrington Stanley. From the department's comments to me and the actions of its compliance officials, it's clear that HMRC shares your view of the situation.

RebeccaBenneyworth's picture

Couldn't agree more Simon

RebeccaBenneyworth | | Permalink

I'm so glad that HMRC will have new powers to issue penalties during the tax year for non payment of PAYE next year. It is scandalous that football clubs are paying more than they can afford in "net pay" and then going under leaving HMRC to go whistle. This is probably one of the instances when the loss of Crown preference is a bad idea.

I agree that the Collector (sorry, Debt Management) should get much heavier on businesses which use taxpayer's money (unpaid PAYE) as a source of cheap finance, and this includes the football sector from top to bottom - the non league clubs are no better; I have been reading about one particular lower ranking club on the brink of going under which owes a staggering sum to HMRC - some 10 times the amount owed to any other creditor. Disgraceful that they are in that state, but almost as bad that they have been allwed to get into that state. Although it would present real difficulty for small employers this does militate towards monthly reporting of PAYE and NIC as for the construction sector to give HMRC a better handle on the liabilities before they get out of control. (Oh dear, did I really say that?)

Well said !

Anonymous | | Permalink

Why should the taxpayer fund overpaid footballers ?

monthly PAYE returns ?? Not good for small employers HMRC are unsympathetic to small business and will just fix bayonets and charge.

The construction industry has just gone underground ! I am fed up with having to try and counter pub advisers regarding the need to operate the CIS. The construction industry has worked out it does not need to comply with this one either.

directors

Anonymous | | Permalink

Perhaps all footballers should also be directors ! Paye collection no problem !