Football Creditors Rule - HMRC issues Writ

3 June 2010

HMRC seeks courts views on the controversial football creditors rule. if a football club enters insolvency the league rules require the club to enter a company voluntary arrangement (CVA). The CVA MUST pay football creditors in full, this includes footballers, agents and the leagues, otherwise the league will not admit the club to the league and withhold the licence. This ransom creditor approach has always annoyed HMRC as the tax man and "ordinary unsecured creditors" receive modest or small dividends, whilst rich footballers get paid in full.

Seems inequitable?

Well the courts have yet to find in HMRC's favour. With Portsmouth's CVA now in the public domain, the football creditors rule once again sees HMRC get a tiny dividend. Will this writ be successful or will HMRC mount a section 6 (s6 Insolvency Act 1986) action when the Portsmouth CVA is approved?