Reprieve for Leeds as Revenue defers

Link: Leeds Utd owes tax authorities £10m

A significant portion of Leeds’ crippling £25m debt is owed to the Revenue & Customs.

Chairman Gerald Krasner told Accountancy Age that the club would not go into administration and is in talks with potential buyers – a consortium led by Norman Stubbs, a well-known Yorkshire businessman.

Krasner added that the Revenue had been ‘very understanding and commercially minded’, when dealing with the club’s affairs.

Philip Long, head of corporate recovery at PKF, suggested the Stubbs’ consortium might consider waiting for administration before launching a bid for the club. The club would incur a 10-point penalty from the administration order itself, which would currently put the team into the relegation zone.

‘The problem is whether they want to buy it with its current liabilities, or if they’ll take it from administrators with a 10-point penalty,’ said Long.

The football club has operated under a cloud of debt for a number of years, and last month defaulted on a £1.2m payment to the Revenue. Krasner said when he took on the club its total debts stood at more than £100m.

Leeds has previously relied upon last-ditch efforts by turnaround specialists at Ernst & Young and Deloitte to keep the club afloat.

Related reading

Life Belt with Computer Folders