Tax man tells Town 'Don't look at Foxes'

IPSWICH Town should not look to Leicester City's unusual tax situation or a new business law as a way out of the mire, tax officials said today. The Inland Revenue has pooh-poohed Ipswich MP Chris Mole's hope that that the Blues could save millions – and creditors have a greater chance of collecting their money – if new legislation that comes into force in April removes automatic right for the Inland Revenue to claim back all its money from a company in administration will be removed.

IPSWICH Town should not look to Leicester City's unusual tax situation or a new business law as a way out of the mire, tax officials said today.

The Inland Revenue has pooh-poohed Ipswich MP Chris Mole's hope that that the Blues could save millions – and creditors have a greater chance of collecting their money – if new legislation that comes into force in April removes automatic right for the Inland Revenue to claim back all its money from a company in administration will be removed.

But it is not a foregone conclusion that the taxman won't take the lion's share, officials today told the Evening Star.

A spokeswoman for Inland Revenue said the arrangement they had with Leicester, where it was agreed the club would pay one tenth of its £7 million tax bill, was totally different to what any company or individual would expect from the Enterprise Act.


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"The Enterprise Act will take away the Inland Revenue's automatic right to be a preferential creditor by allowing the administrator to decide who is a priority case.

"The administrators look into the whole company situation so they are best placed to decided who should get whatever money is there to be had.

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"Leicester City was in receivership, which is a different case to Ipswich anyway but Leicester made arrangements with us to pay what they could. We would expect any company or individual to contact us if they find themselves in difficulty.

"We are not in business to put people out of business and are always happy to try and come to mutual arrangements with anyone over their tax bill," she added.

The spokeswoman said that if the administrators decide the Inland Revenue should be a preferential creditor then they will announce that.

"At the end of the day we could get little from what is owed to us or we could get all that is owed to us. The decision will not be ours," she said.

The news comes as the club's chief executive Derek Bowden yesterday admitted it will be weeks rather than days before the club's financial future is decided.

"We have been working as speedily as possible and talks have been positive and construction," he said.

"But there are a large number of parties involved and talks have ebbed and flowed. We are still some way off reaching a final agreement and it will be a matter of weeks rather than days before everything is concluded."

Administrators Deloitte & Touche are in the middle of talks with the club's most significant creditors of a total debt believed to be £45million.

Discussions with creditors were held last weekend and more will be held this week and next as the club and administrators try to finalise two five-year plans which they can present in an attempt to get a Company Voluntary Agreement (CVA) accepted.

It is expected to be early May before a creditors' meeting is held when the administrators of Ipswich Town, Deloitte and Touche put their proposals to those owed money by the club.

The administrators will before then have spoken with some of Town's major creditors suggesting various scenarios that would work whether the club stays in the First Division or is relegated.

Fact File:

Administration:

An administrator is a specialist accountant who is called in to save the business. This may mean reorganisation of its assets but it does not mean the company is already insolvent. Administrators also protect the company from creditors while the business is being assessed.

Receivership:

An administrative receiver is appointed to carry on the company's business with the aim of selling it or its assets in order to pay off secured and preferential creditors.

Secured creditors:

They have the legal right over property. Property can mean anything from bricks and mortar to plant and equipment, vehicles, fixtures and fittings.

Preferential creditors:

This class of creditors is usually related to the Crown and also includes National Insurance contributions; Customs and Excise and VAT.

Unsecured creditors:

Trade, suppliers and some claims from employees, ie non-payment of salaries, come under this category.

CVA:

Company Voluntary Arrangement put in place as a negotiating agreement with the creditors under the control of the administrators.

Source: Internet

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