Taxman joins Lehmans insolvency battle

THE TAXMAN and the Premier League have become embroiled in a Lehman Brothers Supreme Court case over a controversial insolvency rule.

The two sides made written submissions to the court, where Lehmans' administrators are battling to defend an insolvency principle that creditors should be treated equally.

The Premier League is fighting against the taxman on the same issue. HMRC is trying to remove the super-creditor status afforded to players and managers of insolvent football clubs, status that allows them to be paid ahead of all other creditors including HMRC.

A court battle between the Premier League and HMRC was halted earlier this year to await the Supreme Court ruling, which is likely to affect the outcome.

A spokesman for the taxman said: "Both HMRC and the Premier League were given permission to intervene in the Supreme Court proceedings and made written submissions to the Court."

The Premier League declined to comment.

Lehman's US administrators are pitched against a consortium of investors arguing that its contract confers super-creditor status.

The Premier League is fighting against the taxman in court on a similar issue. However, that case was halted earlier this year to await the Supreme Court ruling, which is likely to affect the outcome.

HMRC launched the legal claim last May to overturn the football creditor rule – which prioritises the payment of players, managers and clubs in the event of a club entering administration – because it believes the rule is "unlawful".

The taxman is an unsecured creditor, so is paid after secured creditors such as lenders; the football creditor rule means that unsecured creditors are less likely to receive a return.

The Lehman Brothers case has concluded and judgment is expected later this year.