Labour MP for Erith & Thamesmead

Teresa Pearce MP

If we are all in this together……

Posted on July 18, 2010 by Teresa Pearce

There is a report on the back page of today’s News of the World which has a headline “TAXMAN GOES TO WAR ON FOOTBALL” .

The truth of this story is that HMRC who are public servants are going to get the tax owed to us ( the public) from the clubs.

The article itself is a fairly written piece by Dan King which sets out the ways that Football Clubs currently avoid paying their fair share to the country’s coffers.  I could not agree more.

Some clubs have always made sure that the directors, shareholders and players get paid in full whilst the money they hold in PAYE deductions or in VAT from sales to supporters has been used as cash flow instead of paying to the treasury which in turn helps fund the schools and hospitals used by the rest of us.

Some of the comments about this story added on the NOTW’s website seem to be saying that HMRC are acting totally unfairly and its a terrible way to treat the clubs. Well that would be true only if you think paying VAT, PAYE and National Insurance is optional.

In reality the taxman has been pushed around by football clubs for years and is now pushing back. Never happy about clubs’ habit of using the taxes due as an interest-free overdraft, HMRC lost its “preferred creditor” status with the introduction of the 2002 Enterprise Act.  Previously HMRC had a right to be paid out before any other creditors when a company went into administration by right of the Crown Preference Act. This right was abolished by the 2002 Enterprise Act which meant HMRC had to join the scrum behind “football super creditors” when a club went bust often only geting around 5-10% of the debt due.  This is not company law but is a football rule set by the Football Association, the Football League and the Football Association Premier League and it means millionaire players, shareholders and other clubs get paid first and the the taxman ( which in reality means you and me) goes to the back of the queue.

This issue is back in the news because HMRC lodged an appeal against Portsmouth FC coming out of administration. I am not sure if this tactic is the right one but HMRC have taken it to protect the £13million they believe is owed to the Treasury by Portsmouth and  we can not blame them for that. It may be that Portsmouth is no worse than some other clubs and that HMRC are singling them out “pour encourager les autres” . If so lets hope it has the desired effect.

If we are all in this together and public services and the unemployed have to feel the pain of cuts then I can not see why the Football Industry should not pay what they owe like the rest of us do.

1 to “If we are all in this together……”

  1. Andy Smith says:

    I’ve long been dismayed at the indulgent way in which mismanagement of these companies is reported.

    Too often HMRC has been painted as the bad guy because they’ve been forced to go in and highlight the appaling way in which some clubs have been run.

    Next time you hear about the wage bill of a club not being met, forget the players and consider the staff in admin or in the club shop. Club loyalty doesn’t go far if your a local cleaning or security contractor wondering if the club’s cheques are good.

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