HMRC issues writ over creditors rule 03/06/2010 |
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Her Majesty’s Revenue & Customs (HMRC) has filed a writ against the Premier League and the Football League in an attempt to overturn the creditors rule.
Under the rule, clubs coming out of administration must first settle football debts in full, while other creditors, such as HMRC, are paid later and often receive only a fraction of the sums they are owed.
HMRC, which The Times reports issued the writ on May 18, has pointed to examples such as Portsmouth, where, after the club went into administration, it may be paid 16 per cent of the £17m it claims to be owed, while debts to other clubs and players of about £23m are paid in full.
The rule was labelled “unlawful” by HMRC, which said: “Non-football creditors are being seriously short-changed and enough is enough.”
Danny Davis, an insolvency expert for Mishcon de Reya, the commercial law company, pointed out that the case could have implications for the transfer system.
“If the Revenue succeeds, a player will have to factor in that he may not be paid in full if the club runs into problems,” Davis added. “He will ask for a higher wage and transfer fees may fall.”
The Premier League has said that it will strongly defend its position.
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