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15 Jul 2010
The taxman could face a multi-million pound bill if it fails in its appeal, expected to be filed at court today, against the Portsmouth FC company voluntary arrangement (CVA).
Should the appeal fail administrators said they would "pursue HMRC for costs and potentially for any loss suffered by the creditors".
Administrators said they had lined up a buyer for the club. The appeal will delay the sale and potentially kill the deal, even if HMRC fails, as costs mount each day the club is not sold.
"This could amount to millions should the current purchaser withdraw," administrators told Accountancy Age.
HMRC has told Portsmouth administrators it would appeal the CVA ahead of
today's
deadline.
In a statement, administrators at Portsmouth FC said: "HMRC have advised …they are appealing the outcome of the CVA meeting."
HMRC voted against the CVA at the creditor meeting held in June. A CVA needs 75% or more of creditors, by value of their claims, to vote in favour for its approval.
At the creditor meeting, in which the CVA was approved, voting was 81.3% for and 18.63% against.
As part of the CVA for the former Premiership side, the club will repay creditors approximately 20p in the pound over the next five years. After nine months the "business of football" which includes players, will be transferred to a new company and the old company will enter liquidation. This will allow administrators to investigate the books at Portsmouth FC to ensure no " antecedent" activity took place, essentially forms of fraud.
The new club will continue to make CVA payments to the old company.
Peter Kubik, joint administrator for Portsmouth, said: "If HMRC is successful in its appeal the administrators may be forced to sell the club in administration meaning a 15-17 point reduction for the Championship side. This could dramatically affect the return to creditors."
Joint administrator Andrew Andronikou is reported to have said an appeal may not be heard until October or November this year.
An appeal can be retracted before its court date.
Andrew Andronikou, Peter Kubik and Michael Kiely, from UHY Hacker Young, were appointed joint administrators to Portsmouth FC on 26 February.
An HMRC spokesman said: "If the appeal is unsuccessful then it would be normal for the court to order HMRC to pay the joint administrators reasonable legal costs. HMRC would not expect these costs to 'run into millions'.
"If the joint administrators were to seek to claim an unreasonable amount, HMRC would have the right to ask the court to rule on what amount would be reasonable."
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Visitor comments Add your comment
It is the taxpayer who will lose.
The "taxman" is a government department. Every time a case is lost we all pay. HMRC should be made to work on an equitable basis. Most cases that are reported have a solution that a reasonable person could work out in a few minutes
Posted by: Richard Falconer, 15 Jul 2010 | 00:00
Portsmouth City Football Club Limited
It doesn't help the administrator's credibility when (a) he can't sort out his debits from his credits and (b) doesn't obtain documentary evidence for all the reported creditors, whilst at the same time trousering £100K per month in fees. I refer to the reported £1.9M debt to Canterbury Europe which turned out to be a debtor.
Posted by: Tom Egerton, 15 Jul 2010 | 00:00
Dream On!
AA is such a pratt. How can you sue a creditor for exercising their right to appeal?
As for costing millions, the only way you can get a costs order against anyone for millions is to spend it on lawyers first and they don't have the money, unless his lawyers are going to defend his conduct on a CFA. Would you?
Posted by: Dave, 16 Jul 2010 | 00:00
HMRC Claim
81% of the creditors have agreed the CVA. The law provided that if 75% have agreed then it can go ahead. The HMRC claim must fail otherwise future arrangements will be open to challenge and the 75% rule rendered useless. Hopefully the judge will not allow smart technical points/arguments to overide this fundemental principle.
Posted by: Chris Lenton, 21 Jul 2010 | 00:00
ref: HMRC Claim
CVA was agreed, with 81% voting in favour, I undestand that HMRC are concerned that their voting rights were reduced drastically, prior to this meeting. If the full debt to the public purse was included HMRC would have had sufficient power to vote down the CVA.
Posted by: James McCardle, 29 Jul 2010 | 00:00