Writer: SFC Forever
Date:Monday July 19 2010
Her Majesty's Revenue and Customs has launched a savage and what looks like prolonged attack on Porstmouth Football club.
The reason is becoming increasingly clear as more details start to appear. Football clubs have a loophole which saves them millions of pounds in tax.
The taxman's aim, according to the paper, is to reclaim more than £100 million that they claim should have been paid, when players are paid for image rights.
A tax spokesman is said to have admitted that the Government is committed to the task of ensuring that everybody pays a fair share of tax.
That people who endeavour to avoid payment will not be able to. Image rights and VAT reclaiming from fees paid to agents are the main areas of interest.
In the case against Pompey the taxman is claiming £13,293,651.72 for just this type of evasion.
Stupidly it seems that the almost unknown players involved in this are players like Tal Ben Haim,John Utaka and Lauren.
For the same period of time it is estimated that Manchester United, which is one of the biggest clubs in the world, would have a bill worth approximately £5.3 million.
United can probably claim that the £760,000 they pay Wayne Rooney every six montha is worth the expence. But how do Pompey justify £1.7 million that they are supposedly still owing Sol Cambell.
The Hong Kong based company that owns Birmingham estimate a potential bill of around £5 million. Somehow the figures for Pompey are strange to say the least, when seen to be so large.
The main suspicion is that clubs who are after a certain level of player use the image rights deals to avoid paying tax so that they can meet a players wage demands.
This to me seems a perfectly feasable argument. If this loophole is indeed found to be a way of cheating the taxman many more clubs will suddenly be pulled into the limelight as they fail to make ends meet.
The taxman will also apparantly be fighting to have VAT rebates which clubs claim on agents fees confiscated.
The taxman will also be going for the Premier League and it's rules. The rule where all football bills have to be paid in full when all others have to agree to a percentage of the debt owed, is the biggest target.
Not before time, lots of people will say. Why should local businesses suffer and sometimes fail, because their biggest unpaid debt is owed by a football club.
Players can earn in a week, much more than most people will earn in a year. Yet if their club goes under they will be paid before the local businessman who is owed a few thousand pounds. Money that if paid would keep his small business afloat.
Pompey were being run by incompetent fools. They had a ground that can hold just over 19000 and yet paid millions to players worth less than half of what they were earning, in hidden bank accounts. All IMHO.
In June Pompey's creditors were able to agree a CVA for the club which meant the club paying 20p in the £ for all non football debts.
This meaning that after the players and other football bills which undoubtedly will include the odd high wage earning management member, everybody gets a fifth of what is owed.
This is the part of the agreement that the taxman has the biggest problem with. I believe that this section of the rules is the bit that set the wheels turning for this push by the taxman.
Many clubs will almost certainly be forced to suffer if this does get pushed through. Me, although I feel this would be fair, I do not believe making Pompey the scapegoat to be fair.
I know that the taxman has his reasons but there has to be a certain element of fair play in their quest. Just over £1 million could see the taxman gain a poaition whereby the Pompey CVA can be blocked, I think. It may be slightly more.
This in itself would be fair if it was the normal way of doing things. It hasn't been so I am hoping that the agreement for all bills to be treated the same way would then appease the HMRC enough to accept any new agreement.
I know that HMRC have to win the case but morally there is no argument. They have right on their side and thus, if given the rights by the court I would hope that then the taxman shows a degree of common sense.
Not something for which they are known perhaps but a genuine hope. If they win their case and are then able to block the CVA, is it possible for them to accept a revised offer which includes all debtors. The amount offered may rise a penny or two but all would be in the same boat.
The alternative is too drastic to comprehend and could mean lots of clubs instantly hitting the wall.
Pompey in their defence are not the Pompey of yesteryear. They still have a faithful band of heartbroken soldiers ready to stand behind their team.
Lots of other fans will be watching closely. Some will swear, and curse the stupid Pompey boards that have wasted millions over the last few years.
They will say that all bills should be met no matter what. Sadly that is neither the way of life nor is it going to happen.
Still more will turn and shout that Pompey have brought this upon themselves. True!!! But, and this is my personal but, nobody really knew that the World economy was about to collapse so drastically.
The main requirement now is one of speed. While this case is dragging it's heels, the club is unable to operate fully as one would want.
The longer this is dragged on the worse the creditors could become tangled in their own tale of torment over money problems.
Win or lose time is off the essence. Now we want to see some action taking place, because the case prepared for the appeal must be ready, so let it be heard and sorted.
It is in the Governments own interests to see this is finished as quickly as is possible. Time is money, as we are always being told.
Date:Monday July 19 2010
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