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FootballNewsPortsmouth win High Court case against tax man

Portsmouth win High Court case against tax man

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By Nick Harris

5 August 2010

Portsmouth have won their case against the tax man in a High Court ruling today, securing their immediate future, subject to appeal. The case focussed on the terms of the CVA proposal Pompey agreed with creditors to allow them to emerge from administration.

Portsmouth’s barrister, Richard Sheldon, QC, had said the club would “probably be liquidated” if they lost the case. Instead they can begin the new Championship season as planned, with an away trip at Coventry on Saturday.

Ownership of the club will now revert to Balram Chainrai, the owner before Pompey went into administration and “the only bidder in town” now for the club, according to a spokesman. Chainrai took ownership from the mysterious Ali Al Faraj, who in turn had taken control from Sulaiman Al Fahim, who had bought the club from Sacha Gaydamak.

HMRC argued the CVA was unfair, claiming that Portsmouth owed £37m in taxes. Pompey argued they owed only £24m. The differential of £13m was key because it made the difference between the CVA being approved (it was), and not being approved (it wouldn’t have been approved if HMRC’s vote related to £37m rather than £24m).

The tax man, represented by Gregory Mitchell, QC, argued that the CVA was unfair because it gave preferential status to “football creditors”, and also disputed the amounts as described above.

It had been thought that the verdict would be appealed and time had been set aside for the Court of Appeal to deal with it tomorrow (Friday). But HMRC has now said that it does not intend to appeal.

HMRC said in a statement: “HMRC is naturally disappointed not to have won this appeal and we can confirm that we do not intend to appeal.

“Our aim when pursuing debt of any kind is to achieve a fair outcome for the taxpayer and we will take this forward in the wider context of the football industry through separate and outstanding legal proceedings over the status of the so-called Football Creditors Rule.

“This is an important and complex judgment and until we have had the opportunity to study it in detail we can’t comment further.”

In a statement on Portsmouth’s official website, the club’s chief executive, David Lampitt, said: “We’re delighted and relieved at the outcome announced today in the High Court. We will wait to see the detailed findings. However, it’s obviously a massive step forward in the process towards getting this great club back on its feet.”

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