Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of Scoop.it! Football Finance

HMRC in court today

Posted by John Beech on September 8, 2010

The battle continues, with two clubs due to face winding-up petitions:

  • Ilkeston Town
    Ilkeston Town have been wound-up (1) over a tax debt of £50,000.  The club had argued that it could make a payment of £20,000 shortly as the result of the sale of a player and offered to clear the outstanding debt at £1,000 per month.  The hearing lasted all of two minutes, and Registrar Derrett concluded that “the company is plainly insolvent and I therefore make the final compulsory order“.
    Chairman Gary Hodder had been talking to two prospective buyers (2), so all may not be lost.
    The club has struggled since the withdrawal of ‘benefactor’ Chet Whyte last year following the collapse of his building empire (3).
  • Sheffield Wednesday
    The day before they were due in court it was reported that they had avoided Administration thanks to the Co-operative Bank (4), and as a result HMRC today agreed to dismiss the petitions (5).  Frankly, it’s hard to see why the Bank chose to extend credit even further to the club.
    The club had previously managed to extract a 28-day extension on the basis hat a “substantial” amount had been repaid to HMRC, and talks with prospective new owners were “ongoing” (6).
    The present situation is that the club has at the last minute managed to “broker a deal with the Co-operative Bank to secure their immediate future“.  Specifically, the Bank agreed “to fund a payment of £780,000 to HM Revenue and Customs (HMRC) – the amount sought under the winding-up petition – to buy more time to find a longer-term answer to crippling debts which now total around £30m” (7).  Moreover, “The Owls cannot meet current outgoings and one month’s tax bill of around £300,000 is already overdue“.  The only rationale upon which the Bank could have continued to support the club is the prospect of new owners.
    A number of suitors have been in the frame, including Club 9 Sports (8), former West Ham chairman Eggert Magnusson (9), and a Scandinavian consortium fronted by firmer manager Chris Turner (10).
    Who will succeed is of course a vital question on which we must await an answer, but increasingly ‘when’ is becoming the key issue.  The club will be lucky to get any further help from the Co-operative Bank, and HMRC are unlikely to hold back should ongoing tax payments fail to be made.

HMRC must be feeling reasonably satisfied with the outcomes.  Yet again, today’s proceedings are an indictment of the benefactor model.

ILKESTON TOWN UPDATE – 8 September 2010

The club is reported to have lodged an appeal (A).

ILKESTON TOWN UPDATE – 17 September 2010

The club has been formally expelled from the Conference North (B), meaning that any resurrection club will have to seek a place in the pyramid elsewhere (i.e. lower down) for season 2010/11 at the earliest.

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3 Responses to “HMRC in court today”

  1. Not sure this is quite the right forum to say this but Owls fans, like there Pompay, Southend and Palace equivilants were very vocal and defensive when the impending disaster coming was pointed out to them last season (on a certain LUFC biased blog). Not that I get much pleasure out of the relationship between fans being blind and clubs heading for the cliff, after all no fans quite hide their heads in the side quite like Leeds United. Which brings me to my great fear, HMRC don’t seem (rightly I think) to warm clubs that default on tax, they just issue proceedings. Notwithstanding Portsmouth new place as No1 piss-taker out of HMRC I suspect that Bates et al at Elland Road would only have to miss one payment to set a process going where no mercy would be shown! However I suspect about a dozen clubs will be going there first, my tips for the rest of this season include Port Vale, Accrington Stanley, Hereford United, Crewe A and Rotherham United.

  2. http://www.timetogoprotest.co.uk/the-rise-and-fall-of-swfc-1991-2010/

    [An online document prepared by Sheffield Wednesday fans covering the last two decades]

  3. [...] HMRC have had enough of football clubs. They are involuntary creditors whose Pay as You Earn/National Insurance Contributions arising on wages and VAT on sales mean that they continually owe HMRC money. [...]

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