• QC says some clubs 'are repeat offenders'
• Football League insolvency policies challenged
Plymouth Argyle are unlikely to be the last Football League club to suffer financial collapse. It has emerged in court that the HM Revenue & Customs has issued 25 petitions to wind up clubs in the past two years.The revelation was made by Greg Mitchell QC, who is acting for HMRC as it challenges the Football League's controversial insolvency policies. Some of the clubs involved – who were neither identified nor enumerated – have received multiple petitions.
"In the past 24 months there have been 25 winding-up petitions against football clubs in the Football League," Mitchell said. "Some are repeat offenders, so it is not 25 clubs in trouble."
Mitchell explained that when clubs fail there is a "substantial" loss to the exchequer.
"The debts principally owed to HMRC in football insolvency are PAYE and VAT," he said. "In the case of Portsmouth it was approximately £7m in VAT. This relates to player transfers, because at least in relation to domestic transfers VAT is always charged. It is standard practice for VAT to be charged against player transfers in the UK."
Mitchell cited the Crystal Palace insolvency last year. Victor Moses was sold to Wigan Athletic for £2m and the League exercised its insolvency policy to deduct almost £1m to pay Palace's football creditors, including a Premier League club.
"Here we have property that is clearly the government's – money from the transfer fees – and that was deducted and went to particular football clubs: Blackburn Rovers and Charlton [Athletic]," Mitchell said. "It should be up to the administrator to decide who the ransom creditors are and how to make distributions."
Administrators have statutory powers to make payments to creditors as they see fit, in order to maintain the future resale value of a business.
"Undoubtedly it greatly clips the wings of any administrator," Mr Justice Richards said.
