Portsmouth joy as High Court tax case dismissed
Portsmouth and their long-suffering supporters last night finally had something to celebrate after Her Majesty's Revenue and Customs (HMRC) had a case against the club dismissed by the High Court.
The decision by Mr Justice Mann meant Pompey avoided being ordered to pay a bill to the taxman they could not afford and may have threatened their existence. Instead they were awarded £200,000 to cover their legal costs and HMRC will not appeal the decision.
“It was a very real prospect that it could have been the end for the club,” said Peter Kubik, joint administrator for Pompey.
HMRC had challenged a proposed Company Voluntary Agreement (CVA) put together to help the club out of administration, asking for more than 20 pence in the pound for creditors. Effectively, they were told it was the best offer they would get.
Ruling in favour of HMRC had the potential to change the rule on clubs paying football creditors first and in full.
Mr Justice Mann insisted it was “not the right place to decide whether creditors rules are fair or not”.
The club’s administrators are now in a position to sell the club to Balram Chainrai, who was regarded as the only serious potential owner for the club who were relegated from the Premier League last season.
“There is no reason to suppose any other person would be interested, let alone anybody who would come in with a binding deal that would preserve the club's position in the Championship,” the High Court judge added.
Chainrai's lawyer, Ashok Patel, said: 'Mr Chainrai was very happy because it opens the way for the only realistic solution, which is for his company to purchase the club and stabilise the club and to continue in the Championship.”
He said Mr Chainrai's was “prepared to work with the administrators and do all things necessary to allow the club to play in this season's Championship and to take the club forward.”
Portsmouth chief executive David Lampitt said: “We're delighted and relieved at the outcome announced today in the High Court. It's obviously a massive step forward in the process towards getting this great club back on its feet.”
Lampitt added manager Steve Cotterill has yet to finalise his plans for the season which starts against Coventry tomorrow.
“Steve has actually been very measured in the way in which he's approached this and he's not going to panic buy, he wants to make sure he brings in players of sufficient quality to be an important part of the team,” he added.