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HMRC and the Football Creditors Rule

October 01 2011

Long standing financial regulations laid down by the Football Association and the Football League means professional football clubs have to commit to a certain way of dealing with debts. These differ from the rules which apply to a typical corporate insolvency procedure such as a Creditor’s Voluntary Arrangement (CVA) or administration.

Under the Football Creditors Rule certain creditors (such as such as players, managers, other football clubs, the Professional Footballers Association and the league) are paid out from the clubs assets in preference to others.

When section 251 of the Enterprise Act 2002 came into force it removed Crown preference which previously meant the Revenue were paid first. The net effect of section 251 and the Football Creditors Rule was that HMRC were not only no longer treated as a preferential creditor but that they were outranked by what can be described as football super-creditors.

Later this year HMRC are presenting a High Court challenge to the Football Creditors Rule which may have a major impact on the operation of all professional Football Clubs.  If the court decisions ultimately go HMRC’s way then professional football in this country will be effected massively and the number of professional clubs is likely to shrink.

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