Taxman loses CVA battle with Pompey

HMRC's high-profile legal battle with Portsmouth Football Club came to an end yesterday, when the High Court ruled against the taxman.

The Revenue said it would not pursue the long-running case further, after losing its appeal against the company voluntary agreement (CVA) that was put in place by the club – known as Pompey – earlier this summer with the aim of settling its debts.

HMRC had sought to have the CVA dismissed, claiming it unfairly favoured soccer-based creditors over others – as a result of a Premier League stipulation that all football creditors must be paid 100% of the money owed to them – and would leave million of pounds of taxes unpaid.

Mr Justice Mann dismissed the department’s argument, saying, ‘This case turned on commercial validity, and not the [Premiership’s] football creditors rule’. The taxman will now receive £6 million of £24 million owed by Pompey.

‘In my view, HMRC will not be worse off by the situation left by the CVA, bearing in mind what the alternatives could be for the club,’ said the judge. ‘Those alternatives are liquidation, or expulsion from the Football League or worse.’

The Revenue said it was ‘naturally disappointed not to have won this appeal, and we can confirm that we do not intend to appeal [further]’.

The department added: ‘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 football creditors rule.’

Pompey’s chief executive, David Lampitt, remarked: ‘We will wait to see the detailed findings [of the case]. However, it’s obviously a massive step forward in the process towards getting this great club back on its feet.’

Issue: 4267 / Categories: News , company voluntary agreement , CVA , David Lampitt , football , Mr Justice Mann , Pompey , Portsmouth Football Club , Premier League