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FootballNewsHMRC turns coy on football’s tax debts as ‘Creditors’ Rule’ case looms

HMRC turns coy on football’s tax debts as ‘Creditors’ Rule’ case looms

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By Steve Menary

14 November 2011

Her Majesty’s Revenue & Customs have changed their approach to disclosing British football’s tax debts just as a court case over the controversial ‘Football Creditors’ Rule’ (FCR) is about to come to the High Court.

HMRC’s case against the Football League and the Premier League, which will challenge the legality of the FCR, is due to start at the High Court in London on 28 November.

The FCR essentially gives ‘football creditors’ (clubs and players) privileged and preferential status when clubs go bust, meaning they get paid in full as local suppliers and non-football creditors – including the tax man – often lose out or get just a few pennies in the pound.

The ‘football family’ has always argued that the FCR helps maintain stability in the game, and without it an insolvency at one club could cause a domino effect of financial problems elsewhere.

Opponents of the FCR argue it is a selfish football stitch-up that prevents the game and struggling clubs from facing the economic realities that apply is most other areas of commercial life.

The HMRC’s sudden change in stance on what it will reveal about football’s tax debt comes after a policy review prompted by a series of Freedom of Information (FOI) requests by Sportingintelligence that came close to identifying the debts of individual clubs.

In a final response to Sportingintelligence’s latest FOI request, submitted on 14 October, an HMRC spokesperson said: “Whilst I appreciate that HMRC has, in the past, provided information to answer similar enquiries, following a review of our treatment of such requests we are no longer able to do so.

“I must therefore advise that HMRC neither confirms nor denies it holds the information because saying so would necessarily tell you something about this person or persons. Such information, if held, would be held for HMRC’s function to assess and collect.”

HMRC cannot disclose information on the tax affairs of individual clubs, but Sportingintelligence asked for details on the total debts for each league not individual clubs, just as had been requested in two earlier FOIs that were both answered.

Previous stories on this subject on this site are linked here (from March 2011) and here (from June 2011).

What differed with Sportingintelligence’s latest FOI request is that we asked HMRC to disclose the amount of money owed by senior British clubs that was included in agreed payment plans with the tax authorities, or in other words, for information on deals that have been agreed (secretly thus far) between clubs and the taxman ahead of the FCR case.

The HMRC rejection came after a review of government guidance on FOIs, which suggested that the previous responses to Sportingintelligence requests for information on tax debts came too close to identifying individual clubs.

Sportingintelligence did not actually identify any individual clubs in its coverage of football’s tax debts, although the Premier League did insist that the League’s £22.4m debts at the end of the last tax year were due exclusively down to Portsmouth’s woes.

This claim was disputed by sources close to HMRC, who insisted that while the bulk of the debt was due to Portsmouth, other Premier League clubs also had small tax debts.

Sportingintelligence asked HMRC to clarify matters, and HMRC requested the review of the guidance on answering FOI requests – and did not supply an answer.

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The details about tax and football that HMRC now declines to answer:

  • The amount of direct & indirect tax owed by the clubs in the Premier League, the three divisions of the Football League & the three divisions of the Conference (Blue Square Premier, Blue Square North & Blue Square South) & the Welsh Premier League.
  • How much direct & indirect tax is owed by the clubs in the Scottish Premier League & the three divisions of the Scottish Football League & the Carling Premiership in Northern Ireland.
  • The most up-to-date figure for each of these competitions.
  • The amount of tax owed by clubs in payment settlements that have been agreed (but not yet publicised) to resolve long-term debts with HMRC.

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Links to some of the lowlights from the Portsmouth saga last year

Other stories on this site mentioning sport and tax

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2013-05-28 11:34:43