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Pompey on the brink

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Dan Roan | 09:26 UK time, Tuesday, 3 August 2010

Her Majesty's Revenue & Customs (HMRC) may have reached a deal with Southend United over the League Two club's £340,000 debts but the taxman returns to the High Court on Tuesday to take on a far more significant footballing quarry.

When HMRC begins its appeal in Court 52 against the Company Voluntary Agreement (CVA) put together by Portsmouth's administrators this morning, the saga surrounding the stricken club's finances will reach its most crucial moment yet.

And the very existence of Pompey hangs in the balance.

The CVA agreed in June offers to pay 20p in the pound to the club's unsecured creditors over four years. But HMRC is challenging this on the basis that footballing creditors such as millionaire players and rich Premier League clubs are unfairly given preference and 100% of monies owed under the sport's rules, while local businesses and charities like St John Ambulance receive only a fraction of what they are due.

Furthermore, HMRC is confident of convincing the court that Portsmouth have been avoiding tax and claims it is owed £37m, a full £13m more than the administrators have stated, on the basis that extra money is owed through image rights paid to players into offshore accounts, another issue the tax authorities are keen to tackle across the sport. The taxman will also point to alleged "material irregularities" in the creditor vote that led to the CVA being approved.

If Mr Justice Mann rules in favour of HMRC, Portsmouth could face a deduction of up to 20 points by the Football League, almost certainly condemning them to relegation again and perhaps leaving chief administrator Andrew Andronikou with little choice but to place the club into liquidation. However, if Portsmouth fend off the challenge, they can exit administration, making it significantly easier for Andronikou to find another new buyer.

With the Championship season starting at the end of this week, the club's transfer embargo would also be lifted in the nick of time, allowing new manager Steve Cotterill to finally bolster his depleted squad with loan players. The size of Pompey's debt means the club currently has only 15 senior players and, with the departure of David James to Bristol City, not one single goalkeeper in the first-team squad.

dj595.jpgJames was also wanted by Celtic. Photo: Getty Images

With Pompey's first home game - against Reading on 14 August - in jeopardy because of a dispute with former owner Alexandre Gaydamak over car parking charges on the land he owns that surrounds Fratton Park, Portsmouth need some good news - and fast.

HMRC is in the strange position of knowing that if it wins the case, it could lose the £6m currently being offered to it by the CVA. However, it appears the tax authorities are willing to accept such a loss if it means setting an important legal precedent in this test case against what it sees as football's failure to pay its due tax, both in terms of the football creditors rule and the payment of image rights.

Andronikou is confident of success but Coventry University's Dr John Beech, one of the country's leading football finance experts, is less sure. "I would have to say that I think it is less clear-cut," he said. "This is the biggest moment yet in this saga. HMRC seem intent on bringing all the issues to a single head against Portsmouth. It's a mess. and one which, in the worst-case scenario, could see Portsmouth liquidated and HMRC ending up with much less than the 20p in the pound that it is rejecting. No-one's a winner if that happens, except, of course, the lawyers."

Back in May, the HMRC filed a separate High Court action against the Premier League, alleging that the football creditor rule is unlawful and has cost taxpayers millions of pounds. The case is not due to be heard until November but could be brought forward depending on what happens in the case against Portsmouth.

The Premier League says it will "robustly defend" its position and argues football's bankruptcy laws help "contain" the contamination of a club going bust. Without the rules, it argues, Watford would have followed Portsmouth into administration last year because of monies Pompey owed to the Hornets for the purchase of players. Instead, the Premier League was able to give Portsmouth's TV money directly to Watford to pay for the transfers of Tommy Smith and Mike Williamson.

When Sheffield Wednesday received notification of a petition to wind them up in July, it was the fifth time in three months that the taxman had taken action against a football club after papers were served against Cardiff City, Portsmouth, Preston North End and Southend United. Portsmouth's fate in Court 52 over the next 48 hours could have serious consequences for football far beyond Fratton Park.

Comments

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  • Comment number 1.

    Totally agree with the HMRC and their actions, why should the millionaire footballers and the greed is good league get paid 100% before others. Seem to remember that the premier league held back some of pompeys payment money to pay other teams transfer money owed by pompey. How is that right that other teams recieve 100% and the other creditors only 20%. Fottball and the greed is good league stinks, it's a cartel that isn't interested in anyone else.

  • Comment number 2.

    Lets hope the HMRC win the case against the football creditors rule!! It wouldn't stop the Premier League handing out money to other clubs as I'm sure they could make it into another rule.

    I'm also sure that this image rights thing is another way to get round tax as well because why would clubs be paying players in offshore accounts otherwise!!

    Salaries of players need to come down and clubs need to be run as a business. Maybe the FA, PL and FL should change the way transfers are done so clubs have to pay the whole amount within a year or 18 months.

  • Comment number 3.

    as i stated several months ago portsmouth football club will not exist as an football playing entity in this years championship.
    the current and former owners know this, Androniku's approach was the last roll of the dice. they have been found out and admitted to massive tax avoidance (image rights) and no court in the land would rule in favour of tax avoidance. it will be a sad, sad day for pompey fans come thursday night. RIP PFC.

  • Comment number 4.

    They do not need to win against the football creditors rule itself, nor declare it illegal.

    It is established precedent (HMRC vs Wimbledon) that it is fine to pay off football creditors in full with "new" money, and not the money of the company that is in administration, which must be equitably shared with the non-preferred creditors. The football creditors rule is merely an agreement between a bunch of football clubs and carries no weight in law.

  • Comment number 5.

    I have a feeling it may not be settled today, with Pompey still in administration, which will be bad news for them. Transfer embargo still in place and a further penalty deduction the likely outcome.

  • Comment number 6.

    Mr Justice Mann. lol

  • Comment number 7.

    Why have HMRC waited so long to start tackling missed payments? If a private individual owed them money they would act immediately.

  • Comment number 8.

    Although I think the fact that all of a sudden (from what I read here) Pompeys debt shot up so the HMRC couldnt block the CVA, I wouldnt want to see any club put out of business like this.

    The people who were accountable though need to be dragged into court and made to pay the price (so to speak) for what they have done to the club.

    Good luck Pompey fans.


    [Unsuitable/Broken URL removed by Moderator]

  • Comment number 9.

    HMRC have the best legal brains in the country and if they think they have a case they go for it.I feel sorry for portsmouth and their long suffering supporters but portsmouth's owners have been a dodgy lot,they've used every dirty trick in the book to avoid paying tax and numerous businesses what they owe whilst alledgedly pocketing and milking the club of every last penny.But the pigeons have finally come home to roost,pompey as a cash cow is now barren and it remains to be seen what the outcome will be,i hope the club survives for the sake of the supporters and that the people who brought the club to it's knees are called to account.Football at the top is fast becoming a cesspool and in portsmouth's case the solids have well and truly settled.

  • Comment number 10.

    The ONLY people I feel sorry for here are the Pompey fans. As a Saints fan I will take no pleasure in seeing a professional club go to the wall like this. If Pompey were to be placed into liquidation, we'd have no rivalry, and the Bournemouth fans will get what they've always wanted; Saints would be their big local rivalry.

    Having said that however, what this club has done to small businesses and charities is disgraceful, and they would deserve even the most severe punishment thrown at them. HMRC are completely justified in fighting their corner.

    Is there any possible outcome from all of this that would suit all parties involved?

  • Comment number 11.

    I have to say that preferential treatment for football creditors - who get 100%, when local suppliers, sometimes small businesses, might get just 20% - is totally unfair. At the same time, I don't understand why HMRC have given Pompey so much more tax latitude than the rest of us could expect...

  • Comment number 12.

    I hope the HMRC do not give up on this. £6m is a "small" price to pay to set a precedent. I would also hope that the HMRC goes after the excessively paid footballers getting paid into their offshore accounts and the people responsible (ie. company directors) for getting the club in this mess.

  • Comment number 13.

    This comment has been referred for further consideration. Explain.

  • Comment number 14.

    Football Clubs are like millions of households, living beyond their means. I cannot understand why the likes of Portsmouth are haul before the Courts time and time again only to be given another stay of execution.

    They have done wrong and should face the consequences!!

  • Comment number 15.

    HMRC will probably win the image rights case, as how can John Utaka be paid £1m for these rights, but the football creditors rule is another story.That could go either way. If HMRC wins it, all football transfer fees will have to be paid up front,instead of being spread over a period of time which they currently do.

    And I see our old mate Andrew Andronikou is confident of success, but then again he always said that, when he was at Swindon, when the old owners were trying to get new investors to prop them up... and this never happened.We only got new owners when they eventually sold up at the last minute.


  • Comment number 16.

    Portsmouth (and others) should consider themselves lucky that the PFA don't have as big cojones as HMRC. I seem to remember during David Beckhams era that it was explained that traditionally players waived their image rights and in return the PFA got a chunk of TV money. Unless the rules have changed since then, surely any player receiving image rights should be expelled from the PFA and therefore be ineligible to play anyway?

  • Comment number 17.

    It may be true that HMRC, by pushing this, actually end up with less money that the paltry bag of crisps and a Mars bar on offer. Why do it then, Dr Beech seems to be asking?

    In the long term, HMRC will win out because if it continues to allow this kind of practice, then club after club will not pay them and they'll end up losing even more money.

  • Comment number 18.

    ....Meanwhile at Man City Yaya Toure has been promised his initial weekly wage of £185,000 will rise to £221,000 when the 50% tax rate comes in next April to 'cover any of his losses'

    how the other half lives heh? - football definately needs a severe reality check!!

  • Comment number 19.

    I'm 47, and I can't play every game, but I'm sure I could turn out between the sticks a few times if Pompey have need...

  • Comment number 20.

    This comment has been referred for further consideration. Explain.

  • Comment number 21.

    I'm sure any sane person would wish HMRC the best of luck with their challenge.

    This nonsense has gone on long enough and a precedent needs to be set.

    Including HMRC in the Football Creditors' rule would prevent such abuses. Unlike every other creditor they are the only un-secured one that does not CHOOSE to do business with a football club.

  • Comment number 22.

    As a football fan I've no wish to see Portsmouth or anyone else go bust.

    However, I can not see how they can effectively get away with their ridiculous spending, awful financial management and over priced signings by only having to pay back 1/5 of what they owed, while still being in existance - if I failed to pay my mortgage I doubt I could offer to pay 1/5 of the remaining fee while keeping my house and car - yet Portsmouth will still have a club in the football league, will still have the players contracts and their other assets.

    As a by product, what's the case with the fans of Portsmouth - I'm presuming several bought season tickets (which was quite a gamble) what would happen to that money??

    David, having read yours and Matt Slater's blogs on the situation, is it right that one of the HMRC's points over how much they were owed is that would have given them a higher percentage of the initial vote when it came to the debtors deciding whether to accept the CVA? And that they were also unhappy that the previous owners were named as owing so much, so that they got a higher proportion of the vote?

  • Comment number 23.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 24.

    "HMRC have the best legal brains in the country"

    Ho ho ho. If only that were true!

  • Comment number 25.

    HMRC have been angry for a long time against the preference that football related debts such as player wages and transfer fees get in administration proceedings over tax and other debts such as that to St. John's Ambulance. They're out to make an example of Portsmouth and lay down a marker for the other clubs.

    Obviously I feel sorry for Pompey fans, the real villans here are the succession of owners and the Premier League for failing to ask hard questions of those owners.

    "Fit and Proper Persons Test? My ****!!"

  • Comment number 26.

    A friend of mine with a business is paranoid about his tax and VAT returns because the penalties for getting it wrong a high.

    How is it that football clubs are allowed to build up such tax debt.

    There must surely be a case to have clubs submit their accounts on a quarterly or six monthly basis at least until they get their act together.

  • Comment number 27.

    Of course HMRC used to be regarded as a preferential credito who had to be paid first, until someone changed the law.

    The football creditors rule is ridiculous, and the argument that it protects other clubs is totally irrelevant, just those in the football "club" seeking to look out for themselves, contrary to previous legal principles. Of course the approach makes other businesses that have supplied the club in good faith even more likely to go bust.

    Still, its a shame for the Pompey fans and no doubt once again directors who risk taking the heart out of a community will walk away untouched.

  • Comment number 28.

    HMRC only lost their Crown Preference in 2003 (i.e. they had to be paid back in full before all other creditors, including football ones) and that decision left the door open for football to repeatedly abuse them when it comes to its clubs going into administration.

    It's a pretty simple matter of closing a loophole that should have never been allowed to have opened in the first place.

    Hopefully this case will help force football to do that.

  • Comment number 29.

    "The Premier League says it will "robustly defend" its position and argues football's bankruptcy laws help "contain" the contamination of a club going bust."

    Absolutely true, but it only applies to football clubs. The "contamination" will be even worse for the local businesses that go bust because of unpaid debts by football clubs.

    It is this rule along with the loss of Crown Preference that is forcing HMRC's hand here. They simply must take the strongest possible line. If they don't, well, paying tax, paying creditors and even paying over deductions from employees will have de facto become optional for football clubs.

  • Comment number 30.

    please let pompey go under

  • Comment number 31.

    On the bright side, we should never have to clap eyes on that that guy with the hat, "Mr Portsmouth", again!

  • Comment number 32.

    Why isn't Matt Slater continuing his excellent series of blogs on this issue? They have been the best blogs on the website as of late, and by the by Tim Vickery's South American football blogs are also great.

    Whilst I do think that it would be terrible for Pompey to be wound up, maybe this needs to happen for the good of football in the future.
    They have really been playing the Tax man for fools for a long time.
    The differences in the initial debt figure at the first Winding Up hearing and the total outlined under the CVA procedings tell you all you need to know...

    I think the best case is that Pompey still exist in the Championship but with a points deduction. Even if they go down into League 1 it's still better than not existing at all. Then draw up a new CVA and hopefully come out of administration in the future with the club being run much more responsibly.

  • Comment number 33.

    When the boot is on the other foot, HMRC seem less forthcoming.

    I have been owed back tax for 2008-2009 since highlighting this to them in February this year but, despite three letters, I've not even had a reply.

    Since my football club is being hounded with a winding up order over alleged unpaid tax, it would be nice to do likewise on HMRC for not refunding me in a timely manner.

  • Comment number 34.

    You have to feel sorry for the Pompy fans, none of us would like to see our club go out of business due to financial miss management. Having said that I feel this is exactly what should happen.
    The footballers’ creditors agreement can't feasibly have any legal standing, it may help other clubs stay in business, however these clubs should act more like businesses themselves. Any normal business would run thorough credit checks on any customer that it was giving such favourable credit terms to. No well run business would fall behind on their payments to the exchequer as they know the penalties for failing to pay tax or VAT would be severe and potentially detrimental to their long term continuation. Portsmouth and all of the other football clubs who currently are in this position need to wake up to the realities of the business world.
    If Portsmouth did go under I think this would be a good thing in the long run for football as clubs will have to live within their means. They wont be able to make expensive transfers being underwritten by future income, they would only be able to do so if they had the means to pay them in the short run.
    Hopefully any knock on effect wouldn’t affect too many other clubs as I fear it may end up doing.

  • Comment number 35.

    33. At 1:03pm on 03 Aug 2010, Martin wrote:

    When the boot is on the other foot, HMRC seem less forthcoming.

    I have been owed back tax for 2008-2009 since highlighting this to them in February this year but, despite three letters, I've not even had a reply.

    ---

    Three letters - have you tried calling them? It is common knowledge that HMRC are particularly hopeless at opening their mail. My advice is call your local office and make sure your letter has been received. In my experience it isn't too difficult to retrieve your money if you have spoken to someone.

  • Comment number 36.

    This comment has been referred for further consideration. Explain.

  • Comment number 37.

    My view for its worth...

    If they are liquidated then its a real shame for the Portmouth fans, luckily they have a large following which should be enough to finance them back to the top leagues fairly rapidly.

    On going forward, the Premier League should only sanction tranfers with installment agreements for less than or equal to the amount GUARANTEED to the buying club via the League, i.e. TV money, within a single season.

    Effectively the Premier League would be extending credit ahead of guaranteed income. Should the buying club fail half way through a season then the selling clubs would still be paid.

    Any larger transfers would need outside funding paid up front, basically a deposit. Or the whole amount paid up front.

    There should be equal protection for all staff and creditors at a failed club including the players.

  • Comment number 38.

    36. At 1:13pm on 03 Aug 2010, charlie_hurley wrote:

    Is it actually part of Company Law that means HMRC are not seen as a preferential creditor or just football league rules? If it is the latter then surely Company Law takes precedence.

    ---

    It's part of company law. It ceased to be on 15 September 2003.

  • Comment number 39.

    I feel sorry for the Pompey fans but Portsmouth FC have lived beyond their means for too long.

    They are guaranteed "parachute payments" from the Premiership and will generate a good income in the Championship (although not as good as when they were in the Premiership).

    I think one season parachute payment will almost certainly cover the amount owed to HMRC.

    If Portsmouth were a business, they would have been told to pay up immediately or we'll close you down.

    They have had long enough to pay this debt so they should be told, no more stay of execution and pay up now or we'll force you into liquidation and close you down.

    I am not being bitter, I support Rangers and Lloyds HBOS are chasing money from us all because they can't run themselves properly which caused the economy to go into freefall.

  • Comment number 40.

    Wrexham fan living in Southampton, in peace...

    Sorry to all the Pompey fans, if the HMRC want to make an example of Portsmouth FC then they will. Taking a £6m hit to ensure that a precedent is set to make it even harder for scoundrels to take up football club ownership seems like a very good idea!

    The FA cannot attempt top rebutt anything here as it would be ludicrous, there aren't many clubs outside the UK leagues entering administration and this is because the FA stood by and let the money come flowing in and then straight back out to the Cayman Islands when they had the chance to strengthen the leagues beyond any other in the world. Sure there is grassroots investment filtered down, but the reality is that in League Two £500k a year for one players salary is too much for the clubs, yet the likes of Man City pay that to one player in two weeks. It isn't fair and it is killing the British game.

    Fair play to clubs like Blackpool, Hull City and the likes for breaking the order and it seems that they are doing it with safe investment, but this is something that should have been enforced by the PL in 1992. Over in the states, sure everything is commercially funded, but the revenues of the 32 NFL clubs is shared. All gate receipts, and merchandising sold by Reebok are redistributed centrally from the NFL. There is a wage cap which isn't too far below what the PL players are on now. And as for the FA who fear that the likes of Didier, Wayne & Stevie will leave if they force a wage cap, where would they go...really? The Spanish/Italian leagues? sure...some will but Real, Inter, AC & Barca don't have room for all the top paid PL players, and the commercial opportunity isn't as vast.

    I say it's time to bring in these caps, remove the excessively top heavy wages in British football and regenerate the game back to the way it should be!

    Good luck to the followers of what will probably become Portsmouth City FC est. 2010 playing in the Unibond from next season, they will bounce back, look at the MK Dons! If the support is there then the inflow of cash will provide for sustainable development.

  • Comment number 41.

    The English players you mentioned wouldn't go abroad anyway...
    All we would lose is the top foreign players.

  • Comment number 42.

    HMRC do not let these clubs build up a large amount of unpaid PAYE/VAT. I think people forget the huge salaries that the players get. Wage bills of over 3 million per month is common place in the premiership so when you deduct all the PAYE you can see that it only takes a couple of month for a large amount to accumulate.

    The Premier League should now make all clubs produce proper accounts before the start of each season before being allowed to play.

    How the FA and both Leagues allowed Portsmouth to be allowed to buy and have loan players come in last January is a joke and these suits should also be held accountable in some ways.

  • Comment number 43.

    #40

    they will bounce back, look at the MK Dons !

    --------------------------------------------------

    Don't you mean AFC Wimbledon, who are are back in the Conference after their club was stolen from them. If there is one club that I would like to go bust it would be the Franchisers.

  • Comment number 44.

    The only people who deserve any sympathy have to be the fans; any small businesses that have been owed money for any length of time should've pursued it previously & considered withdrawing their services - there's no point working/providing a service unless you're getting paid for it unless you're in the line of charity work.

    I really don't know why HMRC was removed from the preferential creditors list, but that is a corporate law issue, and doesn't just relate to football clubs; maybe the new government will consider doing something to re-instate this as ultimately it's you & I as honest hard working tax payers that suffer in the long run

    It's been quite a surprise to see so many comments on here actually supporting the HMRC; football has for too long, collectively considered itself beyond normal commercial morality (let's look after our own first, and not worry so much about local businesses & community....except to get them to pay ever extortionate ticket prices) and something needs to be done to prompt it to get it's own house in order, for instance, why should clubs be owed money re old transfer deals, pay for the player when he signs the contract - I don't imagine for one minute that the (overpaid) players would wait for months on end for any of the payments they are owed.....

    So, full support for the HMRC, and hopefully football will be leaner & financially stronger in the long run

    PS ...as an interesting aside, recent figures showed that the premier league clubs collective debt was more than that of ALL other European clubs put together...something needs to be addressed, don't you think?

  • Comment number 45.

    "Since my football club is being hounded with a winding up order over alleged unpaid tax, it would be nice to do likewise on HMRC for not refunding me in a timely manner."

    What a daft comparison!

    Perhaps if HMRC get more of OUR money back from Pompey and its corrupt ex-directors, or set a precedent that the rest of football will actually notice, then you are more likely to receive prompt repayment from them.

    I'm sure the amounts aren't remotely similar either.

  • Comment number 46.

    "The Premier League says it will "robustly defend" its position and argues football's bankruptcy laws help "contain" the contamination of a club going bust."

    Perhaps this threat would force clubs to behave a bit more like businesses. With less credit extended transfer fees could be paid in full upfront and make clubs a hostage to relegation fortune. Then we may get some common sense back into the whole charade. With the current TV deal and ticket prices, football is a not unattractive business opportunity - but when you factor in the excessive wages and the corrupt practices only fools and billionaires should invest.

  • Comment number 47.

    I can't believe all the indignant self rightousness that this has provoked. This happens every day in the business world and I for one find it disgusting. The protection of Limited Liability goes much too far in this country. In my opinion there should be no preferential creditors at all and there should be much tougher action taken against all these business men who line their pockets taking unacceptable risks. It's the same as the bankers yet we don't seem to demonise these company directors for doing the same thing, albeit on a smaller scale.

  • Comment number 48.

    "they will bounce back, look at the MK Dons !"

    You mean bounce back as in being hopelessly insolvent, never having made a profit, playing in a lower division to when their league place was franchised just to fulfill a supermarket property development, in a stadium they still don't own and playing to smaller paying crowds than they did in South London?

  • Comment number 49.

    #18 JoC wrote:
    ....Meanwhile at Man City Yaya Toure has been promised his initial weekly wage of £185,000 will rise to £221,000 when the 50% tax rate comes in next April to 'cover any of his losses'
    .........................................................
    I think you'll find the 50% rate is already here, so Mr Toure will already have had his "losses" covered, poor lamb.
    As for Pompey, it really does look like curtains this time, and, as ever, it's the fans who suffer. The real culprits (and we all know who they are) get away scot free. A sad day for football.

  • Comment number 50.

    "The footballers’ creditors agreement can't feasibly have any legal standing"

    The Football Creditors' Rule doesn't have any legal standing.

    But if you want to play with the Premier or Football League ball you had better obey it.

    Football would be even more ridiculous without it too.

    Google the no-win situation Exeter City found themselves in for a good example.

  • Comment number 51.

    43 Too right mate. MK Dons are a franchise impersonating a football club, and should have been made to start at the bottom rung of the ladder. I would love to see AFC Wimbledon draw MK Dons in the cup and hand them the stuffing they deserve.

  • Comment number 52.

    As I see it,the move by HMRC is designed to ensure Pompey go into liquidation. The Liquidator would then be funded (possibly by HMRC themselves) to pursue the bad guys who have bled this club dry to get some money back into the pot, some of which would go back to HMRC as a preferential creditor. It is not the Administrator's job to do this and if Pompey go into a CVA it will all be swept under the carpet anyway because the Supervisor of the CVA (probably Andronikou)only has to adhere to the terms of the CVA, oh and draw a fat fee.

  • Comment number 53.

    I feel really sorry for the pompey fans who are amongst the best in the country.

    The time has come however for football to have a reality check!

    HM Revenue & Customs should do whatever they need to do to recover the taxes owed to them. Dont forget that if the players were not on such ridiculous money - the amount of tax due would not be as high.

    It is time for more realistic contracts to be given to players and the total paid out should be a maximum percentage of the total income generated by the club. This will ensure that clubs live within their means.

    If the top players dont like this - tough but where else would they go?

    As for the Sky money etc.... this should be filtered down to grass roots to develop better facilities for the players of the future - it should not be given to the top clubs just to be taken offshore by players who dont really need it anyway.

    Good look to Blackpool this year for keeping some sort of realism.

  • Comment number 54.

    A couple of clarifications:-
    1) It's not all Football creditors, foreign clubs (i.e not English or Welsh FA registered) are not covered.
    2) There is a certain amount of irony as Leicester City were the first club affected by the decision of HMRC losing their Crown Preference in 2003 and therefore treated as normal creditors.As a result,the rules changed and clubs after Leicester City have been subjected to losing points including my own.

    Whilst I have some sympathies for Pompey fans, they were able to win the FA Cup, go into Europe and stay in the Premiership due to the debts incurred.

    Portsmouth FC were only unlucky with their dealings with the HMRC as they are the only Premiership club to have gone into Administration.

  • Comment number 55.

    "Fair play to clubs like Blackpool, Hull City and the likes for breaking the order and it seems that they are doing it with safe investment,"

    You obviously don't know that Hull City are next in line for this nonsense.

    "Good luck to the followers of what will probably become Portsmouth City FC est. 2010 playing in the Unibond from next season"

    Unibond? So wrong both geographically and sponsorshiply...

  • Comment number 56.

    #51

    Agreed. If they ever did meet, TV companies better televise it because there would be fans all around the country wanting to cheer on AFC to see them as you say,give the Franchisers the stuffing they rightly deserve.

    Anyway back to the Football creditors rule, why are all transfer fees not paid as soon as you buy a player is beyond me? You either can afford to buy them or you can't...as proved in Pompey's case.

  • Comment number 57.

    "I would love to see AFC Wimbledon draw MK Dons in the cup and hand them the stuffing they deserve."

    Many Wimbledon fans hope we never play them.

    We would only lose (gate money to them, validation for them, PR and more lies from Winkelman) even if we won.

    Far better would be for them and their failed White Elephant stadium to just go bust before we're ever likely to meet.

  • Comment number 58.

    57 - I'm a lapsed Cobblers fan of old, so having that jumped up lot down the M1 stealing what would have been natural fans for us, from our catchment area grates more than a little. Despite what you say, I'm sure a lot of Wimbledon fans would love to hand MK a thrashing, surely? And you'd have virtually every neutral supporter rooting for you.
    Are MK Dons in financial trouble too? Shame! Who owns that two-thirds empty shed then?

  • Comment number 59.

    You're going to have to explain to me how Portsmouth's fans are 'long suffering'? Two FA Cup finals (including one win) and UEFA cup football in the last 3 years doesn't seem too much to grumble about to me.

  • Comment number 60.

    Of course we'd love to beat them, but that's not very likely yet, is it?

    My preference, if we really *have* to play them, would be as the opening match in front of a full house at a new converted Plough Lane Greyhound stadium as we won promotion and thrashed them 10-0 to seal the remains of their property deal's relegation out of the League and into liquidation :)

    They have lost millions every year in MK, even the season they won promotion, that Paint cup thing and sold a player for £1m!

    "Who owns that two-thirds empty shed then?"

    Inter MK, a property development company, now itself heavily reliant on a massive loan from the Clydesdale Bank.

  • Comment number 61.

    "You're going to have to explain to me how Portsmouth's fans are 'long suffering'?"

    Indeed. Apparently Liverpool's fans are "long-suffering" too because Liverpool only finished 7th in the top flight last season...

  • Comment number 62.

    ClassyBandwagoner
    Thanks for all that - I feel better already! Good luck to AFC Wimbledon in the coming season - hopefully it won't be long before we meet on the pitch (in League 2 - or maybe even League 1 - of course!).
    I can remember going on away trips to the old Plough Lane - you lot were a good set of fans, nice pies too :)

  • Comment number 63.

    The fans that I feel sympathy for right now are those of Swindon Town.

    They got relegated two divisions for financial irregularities that by recent standards (Pompey, Leeds, Southend etc) make what happened at the County Ground look like nicking £1 from the petty cash.

  • Comment number 64.

    Surely if anyone else was to hide money in offshore accounts to avoid tax they would be arrested for fraud? The board should be up in court defending themselves and begging to be able to pay back the money in full.

  • Comment number 65.

    I thought it was wimbledons owners who relocated the club to MK .....then promptly abandoned it, putting it into administration.

  • Comment number 66.

    such a shame the fans have to pay for this and not those who mis-managed the club into oblivion, Harry Redknap included.

  • Comment number 67.

    When any ordinary company goes into administration there are no exceptions to who gets a share of the payout. Assuming there is one. i do not see why the premier league fat cats will get more that others. When clubs buy and sell players they should be able to show proof of funds before commiting to buy or sell that player. It is a completely unfair system HMRC should brake into it. They had their preferential creditor rights stopped so why not the FA. The FA should be setting rules that are fair for all not just one sided so they don't get any problems to deal with

  • Comment number 68.

    2 points on this thread

    Firstly if Portsmouth had paid their tax on time they wouldn't be in this mess. I can understand how debts can rack up but if money is coming in you remove the tax whether it be VAT or PAYE and pay it immediately then HMRC wouldn't be acting against them.

    Secondly Wimbledon FC moved to Milton Keynes as Merton Council turned down their planning application and Wimbledon's crowds were not viable and with no stadium available moving really became the main aim especially given the clubs board had initially looked at it in 1979. It wasn't ideal and no-one likes to see their club move but it was that or keep getting relegated and I guess the board didn't want to keep slipping down teh leagues in front of smaller and smaller crowds

  • Comment number 69.

    #66 Peter Storrie and Gadyamek are the men to blame. They made money available to Harry and he spent it. If they had said there is no money he would have cut his cloth accordingly

    http://adampsb.blogspot.com/2010/07/way-it-used-to-be.html

  • Comment number 70.

    'Whilst I have some sympathies for Pompey fans, they were able to win the FA Cup, go into Europe and stay in the Premiership due to the debts incurred.'

    Indeed we were. Though it seems we spent a few years in the Prem before the debt was incurred, at least to the astronomical levels now seen. The main difference between us and the numerous other clubs also in dire financial straits is that we did actually win something worthwhile in the process - most have not done. That's not a matter of pride or justification, just fact. Few fans would turn down an FA Cup win if offered it. The other difference is that our not quite mega rich enough owner, having helped load us with debt, bailed out and sold up to someone without a bean to his name. It was obvious that normal income streams would not cover the type of player we signed in later Prem years. We just have to assume the guys in the Boardroom know what they are doing and are willing to fork up. When they don't and aren't - you have problems. In any case, the fans' influence with them is between zero and nil.

    Hard to argue that HMRC are wrong to pursue this (and Pompey fans are taxpayers too). The older ones among us have seen us in Div 4 before and will be ready to again. Will we get the chance? Looks like one Mann will decide.

  • Comment number 71.

    " I thought it was wimbledons owners who relocated the club to MK .....then promptly abandoned it, putting it into administration."

    Sounds like you weren't there and don't know much about it to me.

    Winkelman engineered the move from the start.

    He tried to lure Luton, Barnet, QPR and even Crystal Palace to fulfill his supermarket property development first before finding Wimbledon's clueless Norwegian billionaire owners desperately seeking an exit strategy for their very unwise investment.

    Anyway, back to Pompey. Has the franchise precedent case in 2003, Exeter or Chester last summer been raised at the court case yet?

  • Comment number 72.

    The only people who really suffer are those who are given the unpleasant end of the stick: the local businesses.

    Yes, i get that the tax man wants his tax, but they're hardly going to get much sympathy. That they have allowed this situation to exist all this time (not just with Portsmouth) is the real problem.

    The other interesting thing is that James has gone to Bristol City (I missed that one, apparently). Funny. To think that people wanted him to represent the country at the world cup, a keeper only good enough for Bristol City.

  • Comment number 73.

    69. "Secondly Wimbledon FC moved to Milton Keynes as Merton Council turned down their planning application and Wimbledon's crowds were not viable"

    Please can you explain how making millions in losses every year, still not owning a stadium and being in hock to the Clydesdale Bank is somehow more viable then?

    It was all just to build Europe's largest supermarket, that's all.

  • Comment number 74.

    Pompey have lived a Premiership lie for years. Whatever happens to them they'll deserve. It won't be the death of Football in Portsmouth, but it may mean the supporters need to start from scratch.

    I'd ask the Pompey supporters who seek sympathy what their mood was when their small club was spending huge sums of money on wages. Did they ask questions as to how they could out-bid bigger clubs? Maybe if the punishment for administration was more severe (2 relegations) supporters may be more pro-active when it comes to asking these dull but very serious questions.

  • Comment number 75.

    As a football fan I can't wait for HMRC to win this case. It's about time that football came to its senses. As a fan I'm sick of being ripped off by my club, by Rupert Murdoch etc etc. Football needs to get a good dose of reality. The economy is still staggering about like a 65yr old drunk, yet football/footballers still expect to live the highlife. £120,000 per week for playing football is obscene. It's the local businesses etc that will end up with nothing that I feel sorry for.

  • Comment number 76.

    I don't have much sympathy for the fans.
    They were happy in the "glory" days and just wanted more and more success, no matter what the cost. They were happy for the club to continue with the big spending on transfer fees, salary etc.
    Now they have to accept the consequences.

  • Comment number 77.

    If Pompey lose this case and are liquidated,only the fans will suffer Mr Redknapp will still be a multi- millionaire as will Peter Storrie and the 5 different owners in the last year or so.Not only will HMRC lose £6m in tax now, but also the tax generated in the future,200 staff will lose their jobs, putting more strain on the economy, Surely someone will see sense in this matter and come to a conclusion that will suit all parties

  • Comment number 78.

    Ok so I got the MK Don's bit wrong, however AFC Wimbledon have done far better than expected in the time & have done well.

    Our local rivals Chester City have now well and truly gone to the wall and we won't be playing them for some time, (I am expecting Wrexham can be relegated 3 straight years jokes :P)

    It isn't on how people come into Football looking for a quick buck or fame of being the owner of a club that wins trophies (Glazers with the Miami Dolphins & now Man Utd.) ownership of success for show rather than the right reasons.

    Or even worse, what happened with us, an investor who saw a good bit of land on the cheap...oh and it had a century old football stadium on it but who care's about that? If you cleverly seperate the ground from the club you can slam the club to the wall and then keep the land. Luckily the HMRC didn't see it that way and Mr Hamilton didn't get away with it, but now we're left reeling like so many other clubs.

    I agree with everyone here that HMRC are correct to pursue this one, it finally sends a message to those in the business that they aren't ****ing about if you miss your PAYE obligations.

    It is about time the FA did take a step back, look at the mess and finally decide OK it's time to consider a wage cap, and fair parent club deals that guarantee that talent isn't vacuumed from the Blue Sq. before it's been given it's due. Sure there's the young academy payment obligations for players whose contracts expire aged 22 or whatever it is, but financial repayment won't cut it, especially if the big clubs won't end up paying anyway!

  • Comment number 79.

    Vast numbers of companies have immediately gone to the wall for their debts yet football clubs are given chance after chance after chance to repay some or all of what they owe. Why do they receive this preferential treatment?

    Let them be liquidated.

  • Comment number 80.

    A few random thoughts:

    HMRC will make up their 6m "loss" within a year at the current rate.

    Contrary to what the PL & FL say, removing the Footbal Creditors preferential treatment will not cause contagion as it will actualy deter clubs from behaving in their current manner. This rule actually encourages clubs to live beyond their means (where they know that if their business model goes bust they can clear 80+% of their "real world" debts and start again).

    If HMRC claim the Pompey tax bill is higher as Pompey should have been paying tax on the "Image Rights" and other such fees typically paid offshore, then why are they not pursuing all the other clubs who routinely do this for their unpaid taxes as well?

    Pompey should bite the bullet, take a 15 point hit and get on with it. With the extended parachute payments available Pompey is still a viable business model and the 15 point penalty wouldn't ensure relegation. Every week that goes by with them arguing is another week with a transfer embargo, no parachute payment, more legal fees, etc etc.

  • Comment number 81.

    I hope... oh I hope... that HMRC wins this battle. Pompey are a great old club with a rich tradition. Sad to see them in such a state. But for the greater good I would rather see them go to the wall than see the continuation of disgusting greed that has become the premier league circus. Players wages are mind numbingly high and so out of step with reality that it puts me off football altogether. Agents are like estate agents or in many cases lawyers. Totally unneccessary blood sucking leeches. And don't tell me there is'nt a way to get rid of them. Where there is a will there's a way. And that applies to ANYTHING. No matter how seemeingly impossible it may seem at the time. Sick and fed up with the whole bloated, stinking, so far up it's own backside premier league and all it stands for.

  • Comment number 82.

    HMRC need to take a stand and bury Pompey. Make an example, but more importantly, set a legal precedent that allows them to go into all clubs and check on this "image rights" offshore payments. I think a lot of Prem clubs will be very nervous, because they could well find themselves with huge tax bills overnight. As a taxpayer, I only just missed the deadline for tax return submission, first time in 12 years, and instantly got a £100 fine. I missed the date because my wife passed away, and I needed some info. No leniency, because that is the rule. So why do these clubs keep getting away with it?

  • Comment number 83.

    Not a football fan as such, never been to a football game in my life but i can admire many aspects from afar. This is one of the aspects that really disgusts me.

    Yes, its sad to see any football team, or company collapse and go into liquidation etc. But its not because Pompey is a small hairdressing salon that can't afford its mortgage. Theres nothing accidental here. They knew exactly what they were doing and were clearly gambling on 'winning' and they really should be made an example of.

    I can see Portsmouth going down here because they have the pedigree of being a Premier League team, big enough to win the FA Cup and get to the final again. They are a well known team. But now they are already a smaller team in the championship, without David James and a lot of other good players. If they lose, it will serve as a very strong warning, but it would only be at the loss of a championship (if that) team.
    We all know that more problems can strike when you are relegated to a lower league. All the players leave, then new players join, they then take time to adjust, and probably aren't good enough to get into the playoffs straight away - look at Middlesborough FC.

    Long story short: Portsmouth FC currently resembles a red giant: massive but totally hollow, on the brink of collapse.

  • Comment number 84.

    To be honest I think most of the commentators are seeing this situation the complete oposite way to HMRC

    The media is full of comentators saying it's "loose-loose" and no-one wins.

    I don't think that at all (from HMRC's PoV)

    In fact I think they see a win-win situation. Here's why

    -If they loose the case, they get 6Mil, hardly small change, and much more than they get if Pompey go bust.

    -If they win the case then their is legal precedent for this whole image rights and "football" creditors that puts them firmly in the driving seat in future. It'll send out a message to other clubs not to get behind, and it'll open the door for them to take on big clubs using this whole "image rights think" to (in HMRC's view) aviod tax. This would result in much more money than the 6mil they could loose if they win and Pompey goes bust.

    I believe the HMRC is in the position where they will walk away with 6Mil, but possibly a whole lot more, from their point of view there is nothing to loose!

  • Comment number 85.

    ChocolateBoxKid re #63

    Thanks for your thoughts.

    We were screwed by the football authorities in '90, as proved by Chelsea (ironically Ken Bates was on the commission that relegated us), Spurs and Chesterfield to name but three clubs.

    The amount of money involved was £100k, which is less than one weeks wages to a Prem player these days.

    Going back to Pompey, I wouldn't have wished dumping Andrew Andronikou onto any other football club (except Franchise) after all the fun and games he caused here at Swindon. He called fans, who was trying to put a consortium to buy the club 'busybodies' and the Chairman of the Trust said AA was behaving like 'God'.

    http://www.swindonadvertiser.co.uk/sport/1679412.Andronikou_talks_about_end_of_financial_woes/

    http://www.swindonadvertiser.co.uk/sport/1478034./

    I personally can see HMRC winning the case in regards to the image rights,so I can see an increase in the outstanding tax bill, which will mean HMRC being able to block the CVA.

    I would like to see AA's face if that happened.

  • Comment number 86.

    As some people have said, it is sad too see a fellow football club in this kind of trouble. As the years have progressed a football club has had to change to keep up with the ambitions of owners and fans alike. To do that they have changed from being fully fledged football clubs to fully owned/co-owned businesses. Every aspect of running a football club whether its a top flight club or minnow in the lower regions of the football pyramid is treated as a business. Unfortunately I can see the HMRC winning the case here and making an example out of Portsmouth just to show that this is enough. If they do, Sheffield Wed and Cardiff could be next.

    I really wish Portsmouth the best and hope that it doesn't come to the worst, especially as I have friends who are Pompey fans. Good luck guys!

  • Comment number 87.

    I've no sympathy for any football club that lives beyond its means, and I hope the HMRC win and teach the whole lot of them a lesson,
    Image rights indeed! They should be paid for playing football, not creating TV images, and that pay should be in a weekly payslip with the £10K - £60k PAYE tax for a week's work already deducted, like the rest of us for the paltry sums we get paid in comparison.
    This huge-spending, allegedly tax-fiddling, Premier league is killing the game in this country. With foreign players we've never heard of, nor particularly want to see, keeping young British players out of the top flight (and why shouldn't we give preference to young Scots, Welsh and Irish men as well as English?) Clubs with years of tradition are owned, bartered, and chucked aside when their billionaire owners get bored with them. The average Premiership game now sparks about the same team loyalties as Matsushita playing Hitachi on a wet Saturday in a Mongolian mining town (if there are such things)
    In the meantime all that 'The Best League in the World' has to offer to the best supporters in the world is the recent embarrassing performance dished up by the supposed best 11 men the country could put on the field in South Africa.
    I watch MOTD and the Football League Show on a Saturday. The best thing the BBC could do if it wants to show good football is to give the Football League Show the 10pm spot and put MOTD where it currently belongs, in the small hours of a Sunday morning

  • Comment number 88.

    To be clear on this 'image rights' issue, this has been tested by HMRC before the courts in 2000 in the Sports Club case of Evelyn & Jocelyn (Platt and Bergcamp) in which HMRC lost so it will be interesting to see what fresh evidence they have this time around.

    The mere payment of image rights is not avoidance in itself and is perfectly legal and this is entirely plausible when you consider the exploitation of images such as Beckham, Torres, Lampard etc by football clubs to generate revenue. In Rugby League, an agreement with HMRC was reached last year that image rights payments are typically capped at a figure of 15% of the players salary which although I don't necessarily agree with is more sensible and prohibits widescale abuse.

    What has happened here is that football clubs have become increasingly greedy by inserting similar cluases into the contracts of many foreigners with no image whatsoever or reserve team players who do very little to promote the brand of the football club for the sole purpose of avoiding tax.

    The foriegn players have these paid into offshore companies and trusts and HMRC have no right to collect tax and NIC when the money is eventually extracted by the individuals. Whilst it is correct that HMRC crack down on this, it is very frustrating from the perspective of both HMRC and equally Portsmouth fans that the incompetent lawyers/accountants who acted on behalf of the Club failed to include any clauses the these foreign players should indemnify the football club in the event that the payments become taxable. The players as usual are the ones who appear to be covered in teflon and never lose out.

  • Comment number 89.

    Zidou:

    I'd ask the Pompey supporters who seek sympathy what their mood was when their small club was spending huge sums of money on wages. Did they ask questions as to how they could out-bid bigger clubs? Maybe if the punishment for administration was more severe (2 relegations) supporters may be more pro-active when it comes to asking these dull but very serious questions.
    ==========================================================

    Oh.. if only you were there. Let me tell you that the question as to where the money was coming from did the rounds week in week out in the pubs prior to kick off. This was during the good times when we won the FA cup. Many of the stalwart Pompey fans smelt a rat and we all had the nasty feeling that it would all go belly up. "Are we going to do a Leeds", some fans used to wonder.


    The numbers didn't add up - or they may have done up until Gaydamak's father was imprisoned having his assets frozen in the process. The club now left with it's reputation in tatters whilst the previous regime walk scot free - even having the bare faced cheek to charge fans to park on a piece of adjacent land to the ground last Saturday.

    What could the supporters do? We had no control whilst it was going on, and we have no control now. If we turn our back on the club now and vote with our feet it would prove to be an even more financial hit to them.

    Explain how any supporter can be more proactive? To be procative they have to have some form of ownership share of the club. Now there's something worth considering for the future...

  • Comment number 90.

    Clearly if there is any justice, HMRC will collect 100% of what it is owed on behalf of all taxpayers, and any monies left can be distributed to the other creditors.

    No time, I'm afraid, for sympathy. The Pompey Board are attempting to commit what appears to be fraud on a massive scale.

  • Comment number 91.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 92.

    I totally agree with the HMRC, enough is enough, time for the FIFA, EUFA the FA and the ever greedy Premier League to actual do something to ensure that clubs are run properly and not in the haphazard way they are run now.
    How can it be right that millionaire footballers get all their money and yet charities like St. Johns get only 20%.
    Those making the financial decisions are hiding behind these rules knowing that if it all goes wrong it won't matter. But the fans get to watch their team be relegated or try and get over a points deduction, the taxpayer gets screwed, local businesses go bust and the footballers come out of it unscathed.
    How hard was it to predict Cardiff's trouble's, every sane fan could have pointed to Wimbledon and Leeds, the clubs ruined by the previous and current Chairman of Cardiff. If the average fan can predict it why can't the FA.
    I am a Leicester fan and have had to suffer idiot chairman and managers (Peter Taylor) wasting money and ruining the club and I now see the current chairman, former owner of Pompey, buying the club and now looking to sell to mysterious foreign investors...similar pattern developing....are we the next Pompey...

  • Comment number 93.

    #88

    I don't think HMRC are complaining about image rights per se, it's the percentage of their salary of the Portsmouth players that make up those image rights that HMRC are complaining about.

    Apparently most of the players salary were made up of image rights. I read somewhere that Pompey at their peak sold £7m of merchandise, yet they paid £45m of image rights in that year.

    Now that is a lot of image rights for a John Utaka shirt !!!

  • Comment number 94.

    Image rights payments should, in theory, bear no relationship with salary as they are completely separate payments, One is calculated by a players ability to do his job ie play football whereas the second is taken as a function of the ability to exploit the individuals image through a license agreement for commercial gains.

    HMRC are attacking this now as the common practice has become to pay part of an individuals salary in the form of these image payments under which no tax is deducted.

    Although part of the payments generate merchandise, they are also a factor in the payments made by the premier league, tv companies, shirt sponsors etc so to focus on the merchandising revenue int he accounts is what the incompetent journos have focussed on.

  • Comment number 95.

    78. At 5:49pm on 03 Aug 2010, Stu Nicholson wrote:
    Ok so I got the MK Don's bit wrong, however AFC Wimbledon have done far better than expected in the time & have done well.

    It isn't on how people come into Football looking for a quick buck or fame of being the owner of a club that wins trophies (Glazers with the Miami Dolphins & now Man Utd.) ownership of success for show rather than the right reasons.

    ________________________________________________

    Sorry Stu but your quote about the Glazers is very inaccurate!!

    Firstly they dont own the Miami Dolphins!!! Its the Tampa Bay Buccaneers and when they bought the Tampa Bay it wasnt because the Buccaneers were winning trophies, it was actually the glazers who turned the franchise into Superbowl Champions!!

    Tampa fans have only started to hate the glazers since they bought Man United because they have reduced the spending on players salaries in the States.

  • Comment number 96.

    Football will be better off without second rate clubs like Portsmouth; prepared to invest millions in salaries for 10 minutes of glory but with a rotten stadium and facilities thus gaining an unfair advantage. The fans can't even fill the stadium whilst in the premier league. Good riddance, let a club that can pay its debts (to taxpayers) into the league.

  • Comment number 97.

    One has to ask why HMRC are being so vindictive against Portsmouth.

    They are contesting two points which I think are actually very fair.

    Firstly the fact that football debts are treated as preferential. OK - but they already have an action against the Premier League who are the instigators of this rule and represent all the PL clubs, not one ex-Premier League club that will be wiped out of existence.

    Secondly the tax treatment of Image Rights Payments. OK again - but why not take action against say Man Utd whose payments will be many times more than struggling Pompey.

    Why? Because they know that the Premier League and Man Utd will wheel out the most expensive barristers to stand up against their QC, whilst Portsmouth haven't got two ha'pennies!

    Pretty cowardly eh? But if they win, I wouldn't want to be working for HMRC in the Posrtmouth area!

  • Comment number 98.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 99.

    Pay Up Pompey Pompey Pay Up

  • Comment number 100.

    chiptheduck:
    Taking legal action to recover money owed isn't vindictive. The board at Portsmouth have refused to pay the correct amount of tax for a number of years which is why this case is being used to highlight the reality of football creditors first and image rights. A reality which sees local businesses left with unpaid bills, debts and staff not being paid.

 

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