HM Revenue & Customs is poised to challenge the deal offered by Ken Bates at Leeds United, which will see creditors receive only one penny in the pound.

The taxman is owed £7m, and is said to be on the warpath over Bates' proposal, which will see him regain control after putting the club into administration at the end of last season.

An HMRC insider told The Daily Telegraph: 'We are furious at the raw deal we have got out of this debacle. We are getting a penny in the pound for £7m of public money which should be used to pay for hospitals and schools and other important public services.'

Creditors have until next Tuesday to dispute the settlement. A meeting was held yesterday, attended by economic secretary to the Treasury Ed Balls, to discuss a possible challenge, the Telegraph said.

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Bates blames revenue for Leeds collapse

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