http://www.financialdirector.co.uk/accountancyage/news/2263990/hmrc-lines-football-creditor
Breaking news: HMRC tackles Premier League football creditor rule
Rachael Singh, Accountancy Age, 02 Jun 2010
Taxman issues writ against Premier League, aiming a kick at the
controversial football creditor rule
The taxman is taking the Premier League to court in what is another attack
by HM Revenue & Customs against the controversial football creditors rule.
Accountancy Age has learned that HMRC filed a legal writ against the Premier
League on 18 May.
Currently if a club enters administration they are bound by the football
creditors rule, meaning some creditors such as players and managers will be
paid in full from the administration and the remaining payments divided
between the unsecured creditors including HMRC.
The tax office said that due to the duty of confidentiality it could not
comment on individual cases, but made no secret of its disdain for the
football creditors rule, labeling it "unlawful".
"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."
In the Portsmouth administration the football creditors are expected to
receive their full repayment of £22.4m funded by the Premier League's
deductions in the club's allocated TV revenue. However, unsecured creditors
who are owed an estimated £83m are expected to be repaid around £16.5m over
the lifetime of the CVA - usually five years.
In the CVA proposal document administrators claim that HMRC is taking action
against the unfair advantages by football creditors.
"It is understood that a separate action is being initiated by HMRC against
the football creditors rule, it is therefore not intended that a challenge
to the football creditor rule will be undertaken by the future liquidators
of the original company," it said.
The Premier League declined to comment on the details of the legal case.
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