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What to buy this weekend at the Emirates; and how clubs don’t pay their taxes

By Tony Attwood

Here’s two things: the world of football finance  could be turned upside down later this year; and I want you to buy two things at the Emirates this Saturday if you are there.

An odd combination you will think but there is a link.   One reason to go shopping is to buy a copy of “Making the Arsenal” by, well, not to put too fine a point on it, me. And the link between that book and what follows (which is all about clubs being sued by Revenue and Customs over unpaid tax) is that “Making the Arsenal” is about our club in 1910, when we went into administration due to lack of funds.

Yet there was a difference between Arsenal in 1910 and clubs today.  In 1910 our new owner (Henry Norris) was honourable.  He personally paid off virtually all the debts of the old club when forming the new Arsenal that took over that year – and the main one he didn’t settle was a very curious debt to Archie Leitch, the architect who built many of the famous football grounds of the era.  My colleagues and I who work on Arsenal History still can’t fathom out quite why that very old debt emerged in 1910 but wasn’t on the club’s books, although “Making the Arsenal” gives a hint.

Moving on, and before I get completely into club finance, while hanging around the stadium, please buy a programme.  It took a year to get Arsenal to sell Making the Arsenal on line and in their main shop, and now the book is finally there, it would be terribly embarrassing to me if it didn’t sell well.   Just as a decline in programme sales would not look good if they came along just as I got my regular page in the programme.

Incidentally there is a new book on its way: “Woolwich Arsenal, the club that changed football” which is, I believe, the definitive history of our club up to 1914, but that’s not quite ready yet.  Maybe for Xmas, but if not, then early in the new year.

So that’s my ad, now the rest of football.

It is just possible that the notorious football creditors’ rule could be history as early as November, as HM Revenue & Customs are challenging it again. This is the rule that ensures footballers and other clubs get their money before the “unsecured creditors” when a club goes into administration.  So wealthy players can get the dosh, but the UK government, not to mention the guy who cleans the clubs windows, doesn’t.

The UK government has lost tens of millions of pounds this way just in the past five years, and Sir Guy Newey is having a look at it as part of the Plymouth Argyle case.  (Revenue and Customs who collect money for the government are putting in a claim against the legality of the rule at every administration case they fight.  In the Portsmouth case the judge said he wasn’t qualified to look at it.  This time they got a judge who is).

Even some football men like Manchester United’s chief exec, David Gill, have said that the rule is indefensible, not least because of the crazy state of football finances.

The Premier League’s 20 clubs owe something like £14m in tax between them.  The Football League clubs owe the tax offices £7m.   The figures for 2009/10 for tax owing were…

  • Premier League (20 clubs) £14,407,106
  • Championship (24 clubs) £6,412,370
  • League One (24 clubs) £461,859
  • League Two (24 clubs) £534,242
  • Conference (68 clubs) £344,955

Quite clearly football is a tax avoiding industry that uses every trick to ensure that it gets away with everything it can.

The Premier League is trying to avoid the issue, as Dan Johnson said, “The Premier League’s starting position is that there should be no debt to HMRC, which is why we have introduced a raft of financial criteria to encourage clubs to run themselves in a responsible and sustainable manner.”

Which is a bit like saying, “there should be no crime, which is why we encourage everyone to be honest.”

The Football League says that debt among their clubs is actually decreasing which maybe is right, but as Dave Boyle of Supporters Direct said a while back, “Football clubs make great play of being engaged in their communities, but that rings hollow if clubs don’t contribute to their communities by paying their tax on time, especially in the current economic and fiscal climate.”

Sporting Intelligence, who provided the above tax figures, also revealed that even the little clubs in the Welsh Premier League owed £42,583 in tax at the end of the last tax year.  HMRC issued 40 petitions in 2010 against the limited companies that own clubs in the Premier League, Football League, three divisions of the Conference and the Welsh Premier League, some of these against people who have pulled the trick before.

According to Sporting Intelligence HMRC sought winding up petitions against 19 clubs in 2010, named as: Accrington Stanley, AFC Bournemouth, Bishop Stortford, Cardiff City, Chester City, Crawley, Crystal Palace, Dorchester Town, Forest Green Rovers, Hinckley United, Ilkeston Town, Lewes, Notts County, Plymouth Argyle, Portsmouth, Preston North End, Sheffield Wednesday, Southend United, Welling United.

Making the Arsenal can be bought at the main Arsenal shop, on line at Arsenal.com, plus on line from the publishers, and on line via Amazon.co.uk. If you order from the publisher and want a signed copy just put that on your order, and I’ll do.  Tell me what you want me to say.

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12 comments to What to buy this weekend at the Emirates; and how clubs don’t pay their taxes

  • Kentetsu

    Those taxes owed, is there any indication for how long overdue they are? Basically nobody pays their bills before they’re due, so you are in debt, but in a way that is acceptable – until you let the due date expire without paying. Is that not possibly happening here?

    For the RefWatch: the referee assignments are not posted on the EPL website.

  • Kentetsu

    Arsenal v Swansea City (kick off 15:00)

    Referee: S Attwell. Assistants: S Bennett, A Halliday
    Fourth Official: J Moss
    Match Delegate: P Allen
    PGMO: R Gifford/R Hamer

  • @Kentetsu – they are there for the first time this season – just hiding:

    http://www.premierleague.com/page/Headlines/0,,12306~2441424,00.html

    Walter and I were trying to work out what the Delegate and the PGMO peeps did?

    Sorry to go off topic – buy Tony’s book!

    😉

  • Shard

    I’ve been meaning to buy Making the Arsenal anyway. Any chance it is available in India?

  • osas

    i wil love 2 get d mag.wat d price cuz im in nigeria.tanx.

  • Stevie E

    Shard
    I’m not sure if Amazon ship overseas, I don’t see why not but if they do – http://www.amazon.co.uk/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=making+the+arsenal Either that or Tony could send you a complimentary signed copy… 😉

  • Shard

    @Stevie E

    I think Amazon do ship overseas but the Indian Postal Service isn’t something I’d like to rely on 🙂

    I might be in the UK sometime this year or early next. I guess I’ll pick it up at the club shop then 🙂

  • The publishers will ship overseas, but obviously can’t be responsible for what happens locally. There are details on the publishers’ web site. Sorry, but complementaries are not part of the offer just now.

  • I think the tax amounts are overdue, not due. So at the end of each month my company deducts PAYE and NIC from our staff (including me) and then has a couple of weeks to pay it to HMRC. During that time technically we owe the money, but we are not overdue. So they only start being counted if they are over the time limit. Same for VAT – where of course the HMRC have no idea what you owe until you send in your return.

  • the mickster

    Interesting article, not sure i agree with all of it though !
    HMRC used to be secured creditors on all companies until Blair / Brown thought it would be a good idea to remove it !! The HMRC are challebging it because an ’employee’ in theory shouldn’t have protected status, unless it is a loan etc. (ie directors loan account).
    I also think it would be a good idea to remove it, then if a club got into financial difficulty it could as any other company can do make people redundant, as the main cost to a club is players wages it would make sense to ‘trim’ the squad.
    It would also mean players / agents might actually think about who they were signing for, as if the club got into financial diffuculty, the highest paid, least productive players would get the boot, just think what that would do to curb wage infaltion if footballers were being made redundant !
    just a thought !!

  • Notoverthehill

    Tony how can you be so gullible!

    Every tax office is intertwined. Every tax officer has a spreadsheet with your companies details and similar companies (in the same business) detailed from the year dot.. From any companies’ details and history, any tax inspector can guestimate waht your campany should be paying each month and every quarter as your firm will be above the lower limit!

    A new company or self-employed can in theory be “tax-exempt” until found out, like certain British Premier League managers.

    Nice one Tony, pointing out to the great unwashed what is actually going on in the business world of football. You are certainly better informed than Phil of this parish?

  • tg

    Stiffing the revenue and customs is the first rule of cash flow management, lamentably. This is because historically, you can get away with not paying them longer than you can get away with being a late payer with companies that provide yours with goods or services. Due to the rotten state of the English economy, HMRC strike me as rather desperate for the tax receipts at the current time. The length of time you can expect to get away with is a lot shorter than it used to be! Football clubs should be afraid. Generally, when a company can’t meet all of the payroll ie wages and tax receipts, they are defacto insolvent.