HEART OF MIDLOTHIAN FC has reached a settlement with HM Revenue & Customs after a dispute over tax and national insurance contributions.
The Scottish FA Cup holders agreed to pay £1.5m over three years, and in a separate deal paid a £450,000 tax bill in two instalments in order to stave off a winding-up order.
The first dispute related to players taken on loan from Lithuanian club FC Kaunas, which is controlled by Hearts owner Vladimir Romanov.
The players from Kaunas had paid tax to the Lithuanian authorities and not to HMRC, despite working in the UK.
The Edinburgh club's share issue brochure stated HMRC "claimed unpaid tax liabilities of circa £1.75m (excluding interest and penalties) in relation to the arrangements between the company (Hearts) and FC Kaunas in relation to certain players who were loaned to the company by FC Kaunas".
But it announced on Tuesday that no penalties are payable under its agreement with HMRC and that the tribunal it held last month has now been concluded without any evidence being heard.
Club director Sergejus Fedotovas said: "We are satisfied that this resolution provides the club with an opportunity to now move forward with certainty. We believe that the payment terms agreed with HMRC allow the club to manage repayments in a way that will not be detrimental to longer-term development of the club."
The final settlement figure is lower than the original amount assessed by HMRC of £1.75m, excluding interest and penalties.
The sums of money involved are much smaller than in the Rangers case, but the Hearts club's overall turnover and income is also smaller. It is, however, refreshing that HMRC has chosen in this case to negotiate a payment plan that gets soemthing back. The phyrric approach to its creditor status in the Rangers case simply ensured that it [and the taxpayer]would receive nothing, as the company vehicle was forced, by HMRC's own decision, into liquidation. One hopes that Heart of Midlothian is able to meet the obligations it has undertaken.
Posted by: Iain Rosebery, 05 Dec 2012 | 16:47
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.