HMRC v All Football Clubs

Portsmouth has rumored to be on the brink of being wound-up by HMRC following failure to pay its tax liabilities. This is the latest club being chased down by HMRC who are certainly holding no prisoners. Back in July last year HMRC served a winding-up petition on King’s Lynn, showing they will chase non League and League teams alike. It is questionable whether it is the money or the principle that HMRC are after!

Portsmouth FC are said to be “shocked and surprised this action has been taken in respect of VAT, PAYE and National Insurance Contributions which either have been, or are about to be paid, or are disputed”. Although on this blog I may sometimes question HMRC’s approach, you do have to question with football clubs, just maybe if they didn’t pay their players so much and factored in the tax bills (which are not unexpected ones) they could simply manage their cash flows just a little better! Here I think I am treading on dangerous ground and I may open a football debate rather than a VAT one – so let’s move on.....

On a serious note, more and more of our commercial clients are finding HMRC going for winding-up order once a ‘Time to Pay’ agreement is broken. Commercial businesses that struggle to pay due to their customers struggling to pay due to their customers struggling and so on. The failure to pay therefore stems from real cash flow issue rather than greed. There seems no scope to negotiate, despite the economic climate and the previous promises that HMRC will strive to help businesses through the recession, we have to ask whether the reality is anything like the press releases HMRC ever issue!

The problem certainly stems from the change in the ‘preferred creditors’ status of HMRC on insolvency orders, but the recent heavy tactics makes me cynically question (and yes that is most unlike me to be cynical about HMRC), but are Debt Management Unit Officers simply told to panic that they will get nothing if they leave a company to try to struggle through the recession and the risk doesn’t pay off? Yes, HMRC are not a bank, but are they not part of what should be helping to keep this economy going, taking a risk therefore that UK businesses can eventually ride this recession out........ ?