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Pompey operated a tax sham, High Court told
Pompey operated a sham to avoid paying millions of pounds in tax, the High Court was told today.
For Her Majesty's Revenue and Customs, Gregory Mitchell QC said tax officials had worked out that the club owed the taxman 30m.
'This assessment goes back some way - to the tax year of 2006/07 - and has been a very complex investigation.
'PAYE should have been paid and has not been paid. What has happened is that for some years the club has entered into sham agreements under which players were being paid in respect of image rights when in fact there was no commercial basis for it.
'It was a sham. It was a way in which the club could pay the money into a tax haven.'
Mr Mitchell went on to criticise another 'sham' he alleged Pompey used to avoid paying tax.
This concerned money paid into players' employment benefit trusts in what he described as 'tax havens'.
Mr Mitchell said: 'The Revenue says these are disguised payments of salaries on which PAYE should have been paid.'
He told the court that the taxpayer was always the victim when a club went into administration.
'It's's always the Treasury which loses out when a football club becomes insolvent.
'What the football authorities have done is design a set of rules and a payment system which means that football creditors get paid and HMRC doesn't.'
The revenue is unhappy that football creditors are entitled to be paid in full.
Mr Mitchell added: 'That's's why the football authorities always want clubs to win a company voluntary agreement (CVA).
'Their policy is to make it impossible for anyone to challenge this rule and in every occasion it's HMRC which loses out.'
Mr Mitchell added: 'This appeal is not about precise figures, it's about principle.'
Earlier, before the hearing started in earnest, Mr Justice Mann had adjourned proceedings to read extra papers submitted by the Inland Revenue.
One of the first arrivals at court was Pompey chief executive David Lampitt.
As he passed waiting reporters he said he was feeling 'nervous' about the hearing.
HMRC is challenging a company voluntary agreement which would enable Pompey to come out of administration.
It was brokered by adminstrator Andrew Andronikou, who was not in court this morning but took his place among Pompey's legal team as the afternoon session kicked off.
Revenue officials are unhappy that HMRC will receive just 20p in the for unpaid tax bills.
Pompey dispute the size of the debt to HMRC. The taxman says tax is owed through image rights paid to players into offshore accounts.
The afternoon session was dominated by lengthy legal arguments are over whether HMRC might have suffered prejudicial treatment by Pompey and, the crux, whether that prejudicial treatment was unfair.
Mr Justice Mann and Mr Mitchell for HMRC consulted case history as they debated the issue.
The judge was trying to pinpoint on exactly which grounds the Revenue had brought the case against the club.
One of the arguments was based around the differences between the rules of association for the Premier League and the Football League and what happens to a club in either which became insolvent.
The case was adjourned at 4.30pm and will continue tomorrow. Judgment will be on Thursday.
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Weather for Portsmouth
Friday 10 February 2012
Today
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