As has been evident for some time, the taxman has been losing patience with football and has not been allowing clubs to run up big PAYE bills but is asking them to pay promptly like other taxpayers. This is not surprising when one considers that HM Revenue and Customs has lost an estimated £30m from clubs going into administration and failing to pay all the tax they owe.
As has been evident for some time, the taxman has been losing patience with football and has not been allowing clubs to run up big PAYE bills but is asking them to pay promptly like other taxpayers. This is not surprising when one considers that HM Revenue and Customs has lost an estimated £30m from clubs going into administration and failing to pay all the tax they owe.
For example, when Luton Town went into administration in 2007 they owed £2.5m to the tax authorities. They paid back only £270,000. The spectacular collapse of Leeds United saw them owe the revenue a little under £7m. The Revenue was an unsecured creditor and got less than a tenth of that. Until recently, it confined its displeasure to voting against proposed Company Voluntary Arrangements.
The taxman has lost out because of the ‘football creditors’ rule. This requires that when a club goes bust, all ‘football debts’ such as outstanding transfer fees and payments to players and coaching staff are to be settled in full before other creditors are paid. For example, after the collapse of Bradford City in 2002, the taxman was owed £2.5m but Italian striker Benito Carbone, who was earning £40,000 a week at the time, was entitled to be paid in full.
The taxman has also been taking a close look at payments to agents, many of which, it suspects, have been held in offshore accounts with tax liabilities not being settled in full.