Clubs in trouble

[old man villa fan]

From the Beeb -

Portsmouth could go out of business if they lose their court case against the tax authorities on Thursday, according to the club's lawyer.

Her Majesty's Revenue and Customs says it is owed £13m more than the £24m claimed by Portsmouth's administrators.

Richard Sheldon QC says that if HMRC wins, the club will "not be able to give the Football League the assurances it needs to fulfil its fixtures".

"It will go out of the league. The club will probably be liquidated," he added.

High Court judge Mr Justice Mann, who is overseeing the tax liability case, will hand down his decision between 1500 BST and 1600 BST on Thursday.

Portsmouth's lawyer, Sheldon, added that if the club loses the case then it would prevent former owner Balram Chainrai, who put the club into administration in February, buying it for a second time.

Sheldon added: "If the club is not sold it will clearly be relegated out of the Football League.

"The administrators cannot give the assurances needed that this season's fixtures can be completed.

"It will then go out of the Football League and into some distant league, but the reality is that it will probably go into liquidation because the administrators will not be able to fund the continued business."

Earlier on Wednesday Sheldon claimed that Premier League clubs wanted Portsmouth to go bust last season when the full extent of their financial problems emerged.

Sheldon told the court that it was only the intervention of Premier League chief Richard Scudamore that saved the club.

The other clubs wanted "to boot Pompey out there and then", Sheldon said.

He added: "The clubs wanted Portsmouth to go to the wall and divide all the TV money among themselves."

That prospect was avoided, however, when Scudamore persuaded the clubs to give Pompey an early parachute payment, allowing them to complete the season.

Portsmouth, who remain in administration, were docked nine points for becoming the first Premier League club to go into administration and were duly relegated at the end of the season.

A couple of points from that article stand out -

Firstly, that the current owner wants to buy them back (Something that should never be allowed) and secondly that the other Premier League clubs last season tried to get them kicked out of the league.

I think the QC is trying to win sympathy support.

In my opinion, it seems too easy now for clubs to go into administration and therefore the risks of poor financial administration are reduced.

[Dave Cooper please]

The main point missed out of that article is the reason HMRC have taken them back to court, namely that they "allegedly" tried to defraud the system by not paying their players actual wages, rather they paid then non-taxable Image Rights.

If they did this then frankly they are in deep shit. The Football League are already talking about a fifty point deduction, yep - 50 points! Basically relegating them again, and quite right in my opinion.

As per usual I really do feel for Pompey supporters, it's not their fault, although they weren't complaining too bitterly at Wembley! I suppose it's a shame that the football club and by association, it's supporters, has to take the punishment for shit owners, but I can't see any way round it until the FA gets it's act together to stop shitehawks taking over football clubs.

[UK Redsox]

If the "image rights" fraud is proved then Portsmouth should be relegated.

I suspect that several other clubs will be worried as well. I can't believe that Portsmouth were the only club operating such a system.

As for the second part of the case, I hope that HMRC are able to show that the "football creditors getting paid in full" rule for Admins/CVAs is unfair/invalid/illegal.

I've never understood why football clubs don't have to abide by the normal rules of insolvency.

I have some sympathy for Portsmouth, in that they're being used as the test-case for this. However, its well past due that this "preference" system was challenged

[Concrete John]

In general I'm not in favour of the legal system 'making an example' out of one particular person/case as I feel they should all be judged on their own merits, but that's exactly what I think is going to happen to Pompey!

[Hookeysmith]

I hope we were not one of the teams to say "Fuck em lets split their money"

They should be named and shamed

If that is how the game is going then i have just fallen even deeper out of love with it.

I may be wrong but why does the whole club, its supporters and the economy it provides around match day for local folk have to be punished for some dodgy practicies at board  / accounting level

[Somniloquism]

I hope we were not one of the teams to say "Fuck em lets split their money"

They should be named and shamed

If that is how the game is going then i have just fallen even deeper out of love with it.

I may be wrong but why does the whole club, its supporters and the economy it provides around match day for local folk have to be punished for some dodgy practicies at board  / accounting level

Not sure if we would have been but Liverpool and some other would have as they would have jumped places due to other clubs (including us) having points taken off us.

[Dave Cooper please]

I hope we were not one of the teams to say "Fuck em lets split their money"

They should be named and shamed

If that is how the game is going then i have just fallen even deeper out of love with it.

I thought it was a unanimous decision to chuck them out and it was only Scudamore who intervened?
Does any one know if it was a split vote?

I may be wrong but why does the whole club, its supporters and the economy it provides around match day for local folk have to be punished for some dodgy practicies at board  / accounting level

Same as any business really. If it is proved that the owner / directors / accountants broke the law then separate cases could be bought against them, but the business will still be bankrupt.

Football needs a proper way of vetting potential owners, not the bollocks they have at the moment. "Fit and Proper" my hairy anus in a lot of cases.

[UK Redsox]

http://news.bbc.co.uk/sport1/hi/football/teams/p/portsmouth/8886009.stm

I'm surprised that, having come this far, HMRC aren't appealing.

Da Beeb this morning were saying that HMRC were looking at other ways of challenging the "football creditors" loophole.

That loophole is my main problem with this whole situation. Remember that if HMRC don't get paid, that's less money for the Govt and therefore less money for public services or more tax to be paid by the public.

HMRC need to start insisting that football clubs pay their tax on time and clamp down on those that don't.

[Dave Cooper please]

The football creditors thing does need looking at, it is just wrong that a millionaire footballer will get 100% of any money owed to him while a struggling catering company will e lucky to get 5p in the pound.

But...it was bought in to protect players and clubs much lower down the pyramid. For a non-league club £10,000 owed for a transfer could be enough to put them in debt trouble as well, and lower league footballers don't get paid the daft money Pompey were paying.

[peter w]

I think that the HMRC were going to court more to make a point. They knew they weren't going to get more and the judge did mention that he didn't know what they wanted as they had their money back. Their argument was that football's rules needed to be changed.

It is ludicrous that  a club can over stretch itself, buy success on the back of it, then when the taxman wants what they are owed the club can say that they can't afford it. If you or I were to do that we'd have harsher penalties.

I definitely feel for the fans at Portsmouth but somewhere soon the taxman is going to have to make a stand, be backed up by the courts, that football really needs to get its house in order and stop getting high returns for players and directors whilst everyone else gets screwed.

[fredm]

I heard last night on Five live that HMRC have a Court case starting against the Premier League and Football league in a couple of months(?) regarding the "Football creditors must get 100% rule."

The bloke talking said he believed they had made a mistake going after Pompey as a club as it is a League issue and in the League rules - therefore they should have thrown everything against the Leagues to prove that the rule is wrong.  He said that is why they have not appealed against the Pompey decision so as not to weaken their case any further for the future trial.

Apparently the PL and FL had legal reps there so they can get their case together.

The bloke talking (sorry can't recall who he was) said in his opinion the rule was morally wrong and the others, presenter etc, were all in agreement.

[oldtimernow]

as someone arguing over a move by HMRC to disallow tax relief on pension contributions following the sale of my business of over 30 years i am increasingly pissed off as I see examples of the large companies getting away with the amounts involved.

Talk about one rule for the big boys...in 2007 we paid more tax than Man utd....and we were only a small village chemists.

[lovejoy]

I also think the HMRC are looking at the treatment of image rights as offshore earnings as they argue this is tax avoidance.

[TheSandman]

I also think the HMRC are looking at the treatment of image rights as offshore earnings as they argue this is tax avoidance.

Looking at?

I'm pretty sure they've already brought a case against Rangers for it.

[cdbearsfan]

Not as big as Portsmouth but still, former league side Nelson have ceased to be.