The Sweeper: Portsmouth Only One of Many In Debt to the Taxman

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Portsmouth
have seven more days to breathe after a stay of execution was given to them in the High Court over £11.5 million that they owe the taxman, HM Revenue and Customs (HMRC).

Meanwhile, Cardiff City were also in court today, receiving a 28 day adjournment on they £2.7million they owe HMRC.

And Southend United also procured an adjournment from the court over the £200,000 debt they have to HMRC.

Noticing a theme?  David Conn at the Guardian sums it all up:

Yet the very appearance of two of football’s bigger clubs – and Southend United – who continue to receive millions of pounds in TV and other income, in a court where scores of small, hard-hit businesses will be wound up today, has concentrated minds again on the game’s inability to balance the books, even in this boom time.

Since 1992, the year the Football League’s First Division clubs broke away to form the Premier League, and therefore not share their TV rights bonanza with the other three divisions, Football League clubs have fallen into insolvency a staggering 53 times.

For three of them – Aldershot, Maidstone and, later, Scarborough – the histories of the original clubs did truly end, in liquidation before subsequently being re-established. For others, administration meant they could be bought by new owners, who paid a fraction of the debts that were owed – except at Southampton, where last year Markus Liebherr paid Saints’ debts in full. Since 2002, when ITV Digital’s collapse helped push 10 clubs over the edge, an estimated £200m due to creditors has been left unpaid, including sums owed to the police, local ­councils, hospitals, universities and other public bodies, a Yellow Pages-worth of small businesses and, most unforgivably, St John Ambulance.

Appallingly, as Conn mentions, St John Ambulance, whose volunteers tend to the sick and injured at football stadiums, are often left unpaid as the Premier League and Football League’s rules ensure footballing creditors (other clubs, players) are paid first.  HMRC have been unhappy about this for themselves for some time, and have this past year stepped up their efforts to get paid for debt owed to them, with King’s Lynn already wound-up.

Two Hundred Percent, a month ago, foresaw today’s events, with three clubs now facing a final chance to pay the taxman or go under:

All of this brings us back to the question of whether it is right that HMRC should pursue football clubs this aggresivlely, and the answer to this is, of course, “yes”. Football seems to continue to exist in a world in which all that ever matters is what happens on the pitch. Even now, clubs seem fundamentally immoral in their financial dealings. Why should Portsmouth pay hundreds of thousands of pounds per week on players’ wages and not settle their tax bill? Why should Cardiff do the same? And the ultimate responsibility for this sort of fiasco lies with the authorities that run the game. They have it within their power to make it compulsary that all clubs settle all of their debts in full each month before they even start thinking about signing new players or even starting to pay the ones that they already have. It’s their choice. The fact of the matter remains a stark one: one of these days, HMRC will catch up with another Kings Lynn, who can’t settle their bill in full, and that club will close. Just like that. In the middle of the season. And everyone will be shocked that it has happened, when the bitter truth of the matter is that the biggest surprise of all is that it hasn’t happened already.

What to make of all this? Supporters Direct says there is no “magic bullet” to sort football out, but that it’s time to look at “solutions; they may be salary caps, luxury taxes, loss caps, a more comprehensive, single Fit and Proper Test, built in supporter-representation at clubs to ensure protection against grounds like Crystal Palace’s Selhurst Park being split from the club, or the countless number of small London clubs seeing their homes sold to pay for wreckless spending (in some cases, something a little more sinister at play by property developers).”

Quick Hits

The Sweeper appears every weekday, and once at the weekend. For more rambling and links throughout the day every day, follow your editor Tom Dunmore @pitchinvasion on Twitter.

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