Insolvency rule faces final whistle

Link: Solving football’s cash crisis

In a meeting last week with MPs, paymaster general Dawn Primarolo expressed her doubts about football’s insolvency rules, which currently give players – a club’s biggest financial burden – preferential status if the business becomes insolvent.

Primarolo told the MPs that the Football League’s insolvency rules ‘had to be addressed’ because they were at odds with government efforts to put all creditors on ‘an equal footing’.

The news emerged just two weeks before the opening of the new football season and at a time when club finances are hitting the headlines once again. August will also see the second annual Accountancy Age/PKF football finance survey, which will reveal that the super creditor rule is still a matter of concern for the finance directors of leading clubs.

This week, the Football League said it could not comment. ‘If the minister wants to sit down with us and talk to us, we would be happy to discuss the rule with her,’ a spokesman said.

Hugh Bayley MP, who attended the meeting, told Accountancy Age that Primarolo would not only review the super creditor rule but also the tax treatment of clubs.

The meeting came the day before parliament rose for its summer recess and followed a question in the House of Commons from MP Andy Burnham – head of Supporter Direct, a lobby group for fans – who expressed concern at the way the Revenue treats clubs once they are in administration.

At the meeting, the MPs, includ-ing Burnham, also urged Primarolo to consider bringing in new tax treatments for clubs that are owned by supporters’ trusts.

Burnham said: ‘We are asking Primarolo to look at a more standard set of guidelines for the Revenue to deal with football clubs. One proposal is for the Revenue to deal with clubs as if they were a mutual. Another option would be for them not to pay any tax.’

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