Southend United to 'prove' to HMRC it is solvent
Mon 26th Jul 2010 | Football Club Administration
Southend United Football club has until 2nd August to prove it is solvent or face administration.
According to reports, the club was handed a stay of execution by the courts, despite HMRC seeking the appointment of administrators.
Southend United’s precarious financial position prompted HMRC to petition the High Court to wind up the club for non-payment of £238,710 in tax. As well as this, 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 and the High Court has given the club until 2nd August to prove it is solvent and able to continue trading.
The club are reported to have 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.
However, the 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, both of which were paid.
HMRC are using the petitions to add weight to their challenge of the Football Creditors Rule against the Football Association Premier League which sees other clubs, players and ‘football creditors’ being paid in full first if a club enters administration, ahead of the taxman and banks.
HMRC is challenging this rule which it described as "unlawful" when they filed a writ against the rule in May.
“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” said a HMRC spokesman in Accountancy Age.
“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."
Don’t forget to subscribe to F.C. Business Magazine to keep up to date with the latest comment from the football world. Click here to subscribe
Fri 19th Feb 2016 | Football Club Administration
Bolton Wanderers have today confirmed the sale of its Euxton training ground to ‘another North West football club’. The Championship club have debts totalling £172.9m and are...
Fri 11th Dec 2015 | Football Club Administration
Northampton Town Football Club has confirmed that the application for administration has been officially withdrawn. Legal agreements had been reached this week between the club and Northampton Borough...
Thu 10th Dec 2015 | Football Club Administration
Bolton Wanderers have been handed a winding up petition by HMRC it’s been confirmed. The club, who are currently bottom of the SkyBet Championship, have debts of over £170m and have failed...