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Taxman launches legal action against Premier League
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Her Majesty’s Revenue and Customs (HMRC) has issued a writ against England’s Premier League and Football League in a move to invalidate the “Football Creditor rules” which sees failing football clubs pay players, managers and other clubs ahead of other unsecured creditors.
Under Premier League rules, when a club suffers insolvency, the Premier League itself may divert the club’s share of revenues from media rights and sponsorship to football creditors, which includes the clubs, players, management and the Premier League itself. The tax body will most likely have to settle for just 20 per cent of the £17 million it claims to be owed by Portsmouth, which has gone into administration, because other clubs and players will be paid in full. “Non-football creditors are being seriously short-changed and enough is enough,” the Revenue said. It argues there is nothing in insolvency legislation that allows unsecured debts due to football creditors to be honoured to the detriment of other unsecured creditors. There is no date for a court hearing, but HMRC is understood to be willing to push the matter. The Premier League said it intends to “robustly defend” its position. In 2004, the Inland Revenue failed in a legal bid to overturn a voluntary arrangement of Wimbledon Football Club on the grounds it infringed the Insolvency Act as football creditors received payment in full while the Revenue, a preferred creditor, did not. The High Court ruled that the power of the League to secure full payment for the creditors of its choice was legal. |
