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Page last updated at 16:47 GMT, Thursday, 5 August 2010 17:47 UK

Portsmouth win High Court fight against tax authorities

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Portsmouth reaction to High Court win

Portsmouth are free to begin the new Championship season after a challenge to their Company Voluntary Agreement by HM Revenue & Customs failed.

HMRC had wanted the agreement blocked, arguing that it unfairly favoured football creditors over others.

The proposed CVA will give Pompey's administrators time to try to settle the club's debts and find new owners.

HMRC, which claims it is owed £37m in total by Portsmouth, said it was "disappointed" but would not appeal.

Pompey's lawyers had stated that the club faced extinction if it lost the case, which was fast-tracked through the courts to get it resolved ahead of the 2010-11 Football League campaign, which starts on Saturday for the men from Fratton Park with a trip to Coventry.

HMRC's lawyer Gregory Mitchell QC said the way the club's CVA favoured football-based creditors - including players, who could recover 100% of money owed - over others, such as HMRC itself, meant "one class scoops the pool and the rest are left out in the cold."

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After Mr Justice Mann dismissed its application, HMRC said in a statement: "We are naturally disappointed... and we can confirm that we do not intend to appeal.

"Our aim when pursuing debt of any kind is to achieve a fair outcome for the taxpayer and we will take this forward in the wider context of the football industry through separate and outstanding legal proceedings over the status of the so-called "Football Creditors Rule".

Portsmouth chief executive David Lampitt said the club was "still under fairly significant financial constraints" but they could at least start to look towards the future.

"The transfer embargo is not lifted straight away and we're not out of administration fully yet but obviously it makes our discussions with the Football League and the Premier League hopefully a little bit easier, puts us on a better footing."

He added: "There's no magic wand anyone can wave. There's a lot to be sorted out but we need to keep winning the battles put in front of us - hopefully today is a good demonstration of that."

Previous owner Balram Chainrai is now in talks with Portsmouth's administrators about buying the club and is "the only one in the frame", according to his spokesman.

Chainrai was one of Pompey's four different owners during the 2009-10 campaign as the club became the first in Premier League history to enter administration.

They were docked nine points as a result under Premier League rules, contributing to their relegation with total debts of approximately £130m.

Portsmouth 'not strong enough' - Cotterill

Hong Kong-based businessman Chainrai took control of the club after the previous majority shareholder defaulted on money owed to him.

At the time, it was understood he had taken over on a temporary basis until a new buyer could be found, but it now seems he may have a longer-term strategy for the Fratton Park outfit.

"A way has been found to go forward and he is finalising terms with the administrators," claimed Chainrai's lawyer Ashok Patel.

"Mr Chainrai [is] very happy because it opens the way for the only realistic solution, which is for his company to purchase the club and stabilise the club and to continue in the Championship."

Former Portsmouth player Steve Claridge told BBC Sport the club had had a lucky escape and anyone finding themselves in a similar situation in the future would know what to expect from the taxman.

"The tax people have laid down a marker, they've said 'enough's enough - next time this happens we'll go after anyone to the nth degree and we'll put you out of business if you abuse the system'," he said.

"Even in the realms of Portsmouth there were some people saying the club had got its just desserts. No-one wants to see it go out of business, but this is a reminder you can't run a club with money you don't have."



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see also
Portsmouth 'not strong enough' - Cotterill
05 Aug 10 |  Portsmouth
Pompey call for sporting chance
04 Aug 10 |  Portsmouth
Pompey to learn fate on Thursday
03 Aug 10 |  Portsmouth
Pompey suffer fresh embargo blow
19 Jul 10 |  Portsmouth
Portsmouth debts close to 120m
21 Apr 10 |  Portsmouth
Portsmouth enter administration
26 Feb 10 |  Portsmouth
Pompey takeover to be challenged
04 Feb 10 |  Portsmouth


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FROM OTHER SPORT SITES
AOL UK HMRC loses Portsmouth challenge - 8 hrs ago
Telegraph Portsmouth win vital case - 11 hrs ago
Liverpool Echo Court approves Portsmouth debt deal - 14 hrs ago
Newcastle Evening Chronicle UK & World News: Court approves Portsmouth debt deal - 14 hrs ago
TEAMtalk Pompey saved by High Court victory - 17 hrs ago


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