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The taxman is suing the Premier League in a bid to remove the preferential status of football creditors.
HMRC are seeking a legal ruling that the League's 'Football Creditors Rule' is unlawful and can no longer be applied. Since their own preferential status was removed in 2003 the taxman has routinely voted against CVA agreements across football in protest at footballing creditors receiving preference under the individual leagues rules.
Should the taxman be successful against the Premier League, the Football League and Conference will almost automatically have to fall into line - meaning that clubs will no longer have a guarantee of payment should another side go bust. It also means that sides would be more likely to fold and reform at a lower level.
With the Government on an economy drive, the taxman stands to lose 80% of their claim against Portsmouth - up to £28million - if the CVA is passed and cannot allow such losses to be repeated with other Premier and Championship sides said to be in debt to similar levels. A spokesman told Accountancy Age magazine:
"HMRC‘s view is that there is nothing in insolvency legislation that provides for unsecured debts due to “football creditors” to be paid in preference to other unsecured creditors such as HMRC.
"Our view is that the practical application of the so called 'Football Creditors Rule' may be unlawful. We have nothing further to add at this stage."
