HMRC Stay Tough with Football Clubs with Winding Up Petitions

In the first few weeks of 2015 football clubs have again been in the national news for the wrong reasons, arising out of financial problems with a number of clubs being unable to pay their debt to HMRC as and when it falls due. This articles looks briefly at 4 clubs that have faced such difficulties, with the message being that football clubs, just as much as any other business, are at risk from insolvency and winding up petitions when they cannot pay HMRC. Importantly, we go on to look at how companies can respond when they receive a winding up order.

Glasgow Rangers took out a crisis loan to avoid an HMRC winding up order

Glasgow Rangers Football Club (see full story here) it would appear had to take out an emergency loan of £500,000 to pay HMRC to avoid being compulsorily wound up, as it was believed that they were handed a seven-day notice letter at the end of December 2014 relating to non-payment of National Insurance.

Hereford United was wound up in the High Court

Hereford United Football Club reached the end of the road and were compulsorily wound up by the High Court last December (see full story here) for a failure to pay up to £100,000 of debt to HMRC.  They are the first senior football club to be wound up since Scarborough went into liquidation is 2007.

Kettering Town have been handed a winding-up order

Kettering Town Football Club would also appear in recent times to have faced and appealed a Winding Up Order following a ruling in the High Court,  (see full story here) although it is not clear who presented the winding up petition. The Club needs £58,000 to eradicate its debt.

Birmingham City FC’s owners in receivership

Most recently, the parent company to Birmingham City Football Club would also appear to be having difficulties although they state that no winding up petition has been presented (see full story here).

All businesses are at risk of a winding up petition if they cannot pay HMRC

It does not matter whether your business is a football club or an engineering business. Dealing with a winding up petition is a very stressful experience, and can be potentially terminal for your business. So what can you do if your business is served with a winding up petition?

What needs to be done if your business is served with a winding up petition?

As a director or business owner you have to immediately consider whether the debt petitioned for is disputed and if so on what grounds and/or whether your business has a cross claim against the Petitioner for example. Your decision making time is usually time critical as there will be only a few weeks before the final Petition hearing.

Your business will have to consider paying the ‘Petitioned For’ debt in full, plus the Petitioning costs to avoid a winding up order when the Official Receiver then takes control of your business to realise any assets for creditors.

Invariably all of these considerations have to be addressed prior to the Winding Up Petition being advertised in the Gazette . The advertisement notifies the wider world of the existence of the Petition which may mean that your business bank accounts are frozen by your bank.  Other creditors may come out of the woodwork to support the Petition.

HMRC will resort to presenting winding up petitions eventually as there is no other way from their perspective to force the company to pay all of its debt to HRMC. HMRC produce a brief factsheet on winding up.

NDP can help with legal advice if your company is faced with a winding up petition

Whether in response to a Winding-Up petition or the threat of it, the well advised director should immediately take legal advice as to the company’s options moving forward. NDP are experienced in opposing and presenting winding up petitions and providing the right advice at the right time. It is always the case that the earlier you seek advice the less the criticism that can be levelled at you as a company director (for not dealing with the Petition appropriately).

Both the Company and the Director have options: the Company may be able to survive (by seeking to enter into Administration or a CVA) or may just need to be wound up other than by compulsory petition.  We have strong links with reputable IPS; we can help.

If faces with a winding up petition – take advice quickly

It is absolutely imperative that the right advice be sought early. You should contact us straight away, or call us on 0121 200 7040 for a free initial discussion. The earlier you get in touch, the more we can do to help.