The Wrong Message?

By Gary Pettit, Director, Marshman Price

What a week it was for football!  Tuesday (9 February) saw four league sides fighting for survival as winding up petitions were being heard at the High Court.  The following Saturday witnessed Portsmouth play Southampton in the F.A. Cup.  Then, on Valentine’s Day, Crystal Palace held Spurs to a draw.

With the exception of Spurs, they have all been through administration or faced insolvency proceedings.  But that is only the thin end of the wedge, as there are over 140 football clubs in some form of insolvency or facing severe financial difficulties according to recent reports.  One club has seen its winding up petition adjourned on four occasions so far.  Quite frankly, it is highly unlikely any other type of business would get that degree of leniency.

Football clubs generally report their largest creditors as loan accounts and unpaid taxes.  The added difficulty for football clubs is the approach adopted by the governing bodies.  A “Five Live” reporter asked me recently about the approach by the Football Association.  I replied, “They do an excellent job but with antiquated laws”.  This can also be said of the leagues and I currently have an interesting battle with the Conference over a legal point as administrator of Northwich Victoria Football Club. 

Regardless of your views about football clubs, their current plight represents a huge wake-up call for any business that fails to meet its tax obligations.  If HM Revenue & Customs (“HMRC”) are prepared to seek the winding up of high-profile football clubs, then what is their attitude likely to be to local businesses?

Rather than the media debating the financial situation of our national game, perhaps they should instead remind other businesses that football clubs appear to live a charmed life and this cannot be relied upon when it comes down to ”ordinary” companies.  If you have difficulties addressing a tax liability speak to your accountant immediately or, if necessary, an insolvency practitioner.  HMRC do not wish to kill off industry; they just want to be paid like everyone else.  However, burying your head in the sand and hoping it “goes away” will only serve to aggravate them and make them less willing to discuss a turnaround solution.

The key message must be that taking advice at an early stage is essential.  At Marshman Price we saved jobs in over 35% of businesses that sought our help last year and it cannot be a coincidence that most of those were due to owners coming to us before things went into meltdown.

For those businesses who are concerned about the continued viability of their business,

info@marshmanprice.co.uk

Return to News...