HMRC rejects football insolvency rule appeal

by Rachael Singh

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03 Jul 2012

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High Court London

HM REVENUE & CUSTOMS has decided not to appeal a controversial football insolvency rule after it lost its challenge against the Football League's earlier this year.

Judge David Richards at the Royal Courts of Justice dismissed HMRC's earlier attempt to overturn the football creditor rule (FCR).

The taxman had filed a legal claim against the Football League in May 2010 claiming its FCR, which prioritises some creditors over others, was unlawful.

A statement from the taxman said: "HMRC has carefully considered the judgment handed down by Mr Justice David Richards in respect of its challenge to the football creditor rule and has decided that it would not be in the interests of the taxpayer to lodge an appeal.

"The Judge didn't rule that the football creditors rule was lawful - neither did he say that it was unlawful. He did say that the question could not be tested in an action such as the one brought by HMRC."

Justice Richards sympathised with HMRC but added the case was based on a technical legal challenge against the Football League.

"The Football League should not regard the result of this case as an endorsement of its approach to football creditors. It is, as I said at the start, a decision on a challenge brought on a particular legal basis," he said.

At the time of the judgement an HMRC spokesman said: "We are naturally disappointed with today's judgment.

"Our view remains that the football creditor rule is unfair to all other unsecured creditors who are forced to make do with much smaller returns – if anything – on monies owed to them by football clubs which enter administration."

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