The Inland Revenue is facing demands to change the way it deals with insolvent football clubs from MPs convinced the taxman's treatment is not fair to all the teams battling with financial crises.
The parliamentarians have now forced a meeting with paymaster general Dawn Primarolo, the minister in charge of the taxman, so they can put their demands for an ‘overhaul’ of the way the Revenue tackles recovering tax liabilities from stricken clubs.
Their concerns stem from what they see as disparities in the tax demands made on clubs going into administration procedures. They cite the treatment of Leicester City, where the Revenue settled for a return of 10p in the pound, while York City was forced to pay 63p.
The moves come at the end of one of the worst seasons in memory for football clubs struggling with their finances. The future is especially bleak for teams relegated from the Premiership at the weekend, including Sunderland which will see its income from football’s governing bodies drop from £15m to £7m while struggling with debts of £26.5m.
Joan Walley, one of the Labour MPs due to confront the paymaster general, said: ‘There is a real need for an overhaul of the system. All stakeholders of clubs should set up a review of how the clubs are run and go through the financials of the clubs.’
She will be accompanied by Andy Burnham MP who said he will be asking for new guidelines to govern how the Revenue deals with struggling clubs. But the Football League this week told Accountancy Age that treating all clubs in a uniform way would be impossible. ‘Each club is different,’ said a spokesman. ‘You have to look at each case individually. Each is in a different situation. We don’t see how it could work.’
And insolvency experts say they fail to see how targeting the Revenue is going to help. Lee Manning of Kroll said: ‘The heart of the issue is that far too much money goes in to players’ pockets. There is reckless spending as opposed to inadequate revenue.’
A spokesman for the Revenue said: ‘We expect the clubs to pay their tax on time, but we help when there are problems with rescue.’