Next Game: Pre-Season Friendly - Melksham Town Away on Saturday 7th July

Tuesday, November 29, 2011

HMRC Challenges The Football Creditors Rule

The taxman is taking to the High Court this week in a bid to overturn the Football Creditors rule that sees footballing debts paid in full when a club goes bust.

HMRC have been chasing the rule ever since they lost their own preferred creditor status in 2003, leaving only football debts to be paid in full. They now want that rule deemed illegal so that they can recover more funds when clubs go bust. Both the Premier League and Football League are to defend themselves this week. Removal of the rule would eradicate protection for both other clubs and the players - and other staff - when a side goes bust.

In the case of Plymouth, office staff who worked for nine months without pay will now receive their full back wages over a period of time. Without the rule, they would have been left with a tiny percentage of their due wages. Unsecured creditors received just 0.77p of every pound they were owed. With the guarantee that they would have been paid - eventually - the staff remained and the club survived. Without the guarantee, and the prospect of working essentially for free for several months, most would have likely walked out.

The Football League claim the rule protects the integrity of the competition, preventing clubs from shedding debts and gaining an unfair advantage. It also suggests that lower league sides would have no guarantees that they would be paid when they sold a player, meaning that lower value cash upfront deals would be taken over higher value staged deals.

A judgement on the case is expected before the end of the week.