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Match of the month: Football League v HMRC

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5th Dec 2011
Freelance journalist
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A dispute between the Football League and HMRC over the controversial football-creditors rule began in the high court on Wednesday, the Guardian has reported.

Mr Justice David Richards, who is no relation to his namesake Sir Dave Richards, the chairman of the Premier League, will adjudicate on what is one of the most emotive issues in football. Under the rule, buyers of insolvent clubs in administration must pay in full every penny owed to other clubs and to their own millionaire footballers, while other unsecured local-community creditors receive much-reduced sums, the Guardian said.

Gregory Mitchell QC, for HMRC, was quoted by the Guardian as arguing that the rule represents "the ugly side of the beautiful game."

Mitchell pointed to the 36 Football League insolvencies since 2002 that have led to the tax authorities receiving "a very modest dividend".

"The football creditors' rule has been invented by the Football League and the Premier League. It is not a rule created by parliament," he told the court, according to the Guardian. "As far as we know there is no similar rule operating in any other country or industry.

Mitchell stressed that insolvency is not limited to Football League clubs: Portsmouth had collapsed into insolvency with a nine-figure debt in February last year, when at the time they were a Premier League club, the Guardian said.

The League is vigorously defending the action as being in the best interests of its members and of the sport, according to the Guardian. It will argue that clubs failing to honour their transfer commitments in insolvency jeopardises the integrity of the competition – a club could not be compelled to play matches against a defaulting creditor, potentially wrecking the fixtures list.

The League will further claim the rule is a condition of entry to its competitions and that if it is overturned it could lead to a cascade of club insolvencies across the game.

The case is expected to continue into next week.

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By carnmores
05th Dec 2011 16:43

they think its all over

it better be now!

if it was in the best interests of sport , whatever they be , we wouldnt have the FEU either

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By andrewdiver
06th Dec 2011 09:14

I like football

but I am 100% behind HMRC on this one.  

There is no reason why football creditors should have protected status.   Not only are HMRC being deprived of significant sums in tax, but also all of the smaller (non-football) businesses in the local area who are cut-adrift but this ruling. 

Imagine having the same rules in every industry.  No reason why we shouldn't.   We will make sure we pay all other accountancy firms before HMRC on winding up etc.   the rule is a complete nonsense.  

 

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By dwgw
07th Dec 2011 11:42

Don't go all tabloid on us

Use of the catch-all term "millionaire footballers" makes clear the author's position on this subject.  The majority of the footballers employed by insolvent clubs are far from being millionaires.  I suspect that you wouldn't find many millionaire footballers playing outside the top two leagues - and not every player in those leagues will be a millionaire.

There are reasoned arguments to be made by both sides on this topic and, hopefully, this case will see them aired and a sensible outcome emerge.  The use, in an article purporting to be technical, of disparaging terms better suited to a tabloid paper does nothing to enhance the debate.

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By ringi
07th Dec 2011 11:58

What if it was made a crime for the directors ....

Maybe we need a radical change in the law.

What if it was made a crime (for  the directors etc.) not to pay the PAYE taxes and NI over to HMRC on the same day as an employee is paid?    (This would be easier with on-line payment and PAYE software then in the old days of paper P11ds and cash payments)

VAT is a bit harder to see how to do this…

But I can’t see way the directors of company can’t be personally liable for all PAYE  and VAT depts., as they are just holding the money in trust for the government and it was never the companies money in the first place.    Likewise for cooperation tax on an amount up to the dividends that were paid in the year (advanced cooperation tax had its advantages).

 

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Replying to The Highlander:
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By andrewdiver
08th Dec 2011 17:23

Cooperation tax has just made me smile.  

Although perhaps there should be some bigger cooperation relief for those who pay PAYE/NIC/VAT on time!

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By carnmores
08th Dec 2011 12:25

@ringi

totally unworkable as is the real time sysytem to come - people will simply stop employing people on PAYE

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By carnmores
09th Dec 2011 11:57

yes

and non cooperative !

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