Judge decides against taxman in Pompey row

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A HIGH Court judge has upheld a rule that allows football clubs in administration to pay their football creditors in full ahead of anyone else.

Yesterday’s decision by judge justice David Richards is a mixed result for Pompey as club languishes in administration for the second time in two years.

It avoids the risk of Pompey, as an insolvent club, being thrown out of the Football League, which would have happened had the case been upheld.

And it means that a bid to buy the club by Balram Chainrai’s Portpin can continue.

But, had the rule been overturned, Pompey could have immediately cancelled the contracts of players, like Tal Ben Haim, who are paid Premiership wages despite Pompey’s relegation.

Her Majesty’s Revenue & Customs launched its action against the Football League shortly after Pompey went into administration in 2010.

Under the Football Creditors Rule, HMRC would have only been paid a small proportion of the £37m it was owed by the club, while football players, agents, and other clubs were guaranteed their money in full and paid first.

It argued that the rule was unfair.

Pompey administrator Trevor Birch said: ‘We had been working on the assumption that the Football Credit Rule would remain in place because we did not know for sure when the High Court’s judgement would be announced or which way the decision would go.

As a result, our strategy for solving Portsmouth’s financial problems remains unchanged.

‘An HMRC victory would, in theory, have given us additional options to cut the club’s wage bill, such as potentially making players redundant.

‘However, we hadn’t been pinning our hopes on the rule being overturned so we’ll continue with our plans to sell players and renegotiate contracts.’

HMRC says it will appeal.

Meanwhile global law firm, Linklaters – which acts as the bankruptcy administrator for former Pompey owner Vladimir Antonov’s Lithuanian bank Akcine Bendrove Bankas Snoras – has issued Antonov with a world-wide freezing order of his finances.

This means any company he is involved with which he owes money to might not get the money unless the freeze is lifted.