Page last updated at 14:04 GMT, Tuesday, 11 November 2008

Football clubs face tax scrutiny

Football finance graphic

Football League clubs could face closer financial scrutiny to prevent them running up large tax bills.

League chairman Lord Mawhinney told the BBC that it was considering a plan for clubs to provide more financial information to the league.

He said that the plan would be put to club chairmen next year.

An industry source told the BBC that between 50 and 60 clubs in the Football League and Football Conference owed a total of 50m in tax.

"We are now looking at whether we should put in place arrangements that require clubs to give more information about their finances," said Lord Mawhinney.

HM Revenue and Customs can often be the major creditor when football clubs go into administration, but it is not a priority creditor.

It is the population that is subsidising football clubs - and that's wrong
Gary Sweet
Luton Town owner

Under both Football Association and Football League rules, other creditors within the game, such as players or other football clubs, get priority.

Several club chairmen told the BBC that clubs running up huge tax debts were effectively being bankrolled by HMRC.

The taxes in question are income tax and National Insurance.

Andrew Fitton, whose consortium took over Swindon Town last December when it owed millions in unpaid taxes, said HMRC was effectively the bank of football.

"The person who did due diligence for me said, when he presented the report, 'that's your bank (HMRC)' - and he was right, they were the major creditor, they were the bank," he said. "There was no money owed to the bank, it was owed to Revenue and Customs."

Luton Town owner Gary Sweet, whose club owed 2.5m in taxes, said the HMRC were wrong to allow the debt to spiral to such a level.

"I would like to know exactly what the Revenue's stance is in moving forward with football clubs and football businesses because I think that position is wholly disastrous for football," he said.

"It is the population that is subsidising football clubs - and that's wrong, not just for the taxpayer but also wrong for the football club, which shouldn't be permitted to get into deep waters like that."

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Listen to File On 4, Radio 4 Tuesday 11 November 2008 2000 GMT, repeated Sunday 16 November 1700 GMT
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File On 4 has been told by a well-placed industry source, with a detailed knowledge of the tax affairs of football clubs, that there are 50 to 60 clubs in either the Football League or the Football Conference who are in arrears to the HMRC.

He said his conservative estimate was that football's current unpaid tax bill was at least 50m.

Lord Mawhinney said the Football League was considering proposals to get more financial information from clubs and to introduce rules to stop clubs trying to build up large unpaid tax bills.

"Of course the clubs would have to vote on that," he said.

But the peer added: "As a former health minister I'm a great believer that prevention is better than cure."

HMRC told the BBC: "For confidentiality reasons we can't discuss specific taxpayers, but football clubs and other employers are well aware of their responsibility to pay over any tax and National Insurance deducted from their employee's pay-packets.

"We are sympathetic to businesses experiencing cash flow difficulties and when appropriate will allow time to pay on a case by case basis.

"The vast majority of businesses pay their tax on time and we owe it to them to ensure that those who pay late do so only when they have good reason."

There will be more on this story on File On 4, BBC Radio 4, at 2000 GMT on Tuesday 11 November, repeated on Sunday 16 November at 1700 GMT.

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