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Football 1-0 HRMC

The "football creditors rule" that gives football clubs and players preferential financial treatment when a team goes into administration has long been a source of complaint by the taxman who failed in an attempt in the high court last week to get it abolished.

The taxman argued that it was unfair that football creditors were head of the queue when a club went into administration, often meaning there nothing left for other creditors including HRMC.

MP Damian Collins, a member of the House of Commons' Culture Media and Sport Committee, has said he will move to legislate to remove the rule after failing in the high court.

The decision by Mr Justice David Richards to find against HMRC follows a five-day trial in November and December 2011.

"We are naturally disappointed with today's judgment," said the HMRC.

"Our view remains that the football creditor rule is unfair to all other unsecured creditors who are forced to make do with much smaller returns - if anything - on monies owed to them by football clubs which enter administration," the spokesman from HM Revenue and Customs added.


HMRC, which says millions owed to the tax authorities has been lost by the rule, argued that the most fundamental principle of insolvency law is that creditors share equally in a loss.

Since 1992, clubs have gone into administration more than 50 times in English football.

SM

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