PracticeConsultingHMRC calls for administration at Southend United

HMRC calls for administration at Southend United

Southend United given until 2 August to prove it is solvent and pay its £238,710 tax bill

Football club Southend United has 14 days to prove it is solvent or face
administration, a court heard yesterday.

The club was handed a stay of execution by the courts yesterday, despite HMRC
seeking the appointment of administrators.

HMRC petitioned the High Court to wind up Southend United yesterday for
non-payment of £238,710 in tax.

Southend United is also facing another winding up petition next week from
Charterhouse Commercial Finance for £140,000.

HMRC said the club’s history of failing to pay its taxes demonstrated it was
insolvent.

The High Court has given the club until 2 August to prove it is solvent and
able to continue trading.

The club said in court it had paid tax, albeit late, and was due to receive
transfer payments of more than £180,000 for selling midfielder Nick Bailey.

A source close to the case told Accountancy Age, the tax office was
getting tough on clubs from the Premiership down to the smaller clubs. He said
petitions added weight to its challenge of the Football Creditors Rule against
the Football Association Premier League.

The Football Creditor Rule entails football creditors, including the players,
being paid in full first if a club enters administration, ahead of the taxman
and banks. HMRC, which decribe the rule as “unlawful” filed a writ against the
rule in May.

The football club has faced two other winding up petitions from the tax
office in the last 12 months, one in November for £690,000, and one in April for
£400,000 – all were paid the
BBC
reported.

An HMRC spokesman said: “HMRC doesn’t initiate insolvency action against
football clubs or any other business lightly but we will not hesitate to do so
when that is the right way to protect the country’s tax revenues and other
creditors from those who trade whilst insolvent and run up debts that they
simply cannot pay.

“Ensuring tax is paid on time should be at the centre of football’s business
strategy just as it should be for any other enterprise. Any business that
regards paying tax as an optional extra after other expenses are met or that
uses tax collected from employees or customers as working capital is potentially
heading for trouble.”

Further reading:

HMRC
tackles Premier League football creditor rule

Portsmouth
FC CVA approved

Football
star Colin Hendry declared bankrupt

Football
League agrees Stockport sale out of administration

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