lyspy
01-09-2007, 03:06 AM
Taxman pulls out of Leeds United court challenge
By Paul Robinson
Leeds United's summer of discontent took a dramatic final twist today as the taxman abandoned a legal challenge to the club's administrators.
The concerns of HM Revenue and Customs about the way accountancy firm KPMG handled United's time in administration were due to be heard at the High Court on Monday.
Today, though, the Revenue confirmed it had formally withdrawn its challenge.
However, it said it would continue to take all possible steps to secure a "fair return" on the £7.7m in tax and VAT it was owed when Leeds went into administration.
News that the legal challenge had been dropped was welcomed by Leeds United Supporters' Club chairman Ray Fell. But he also questioned the motives behind the Revenue's decision to take KPMG to court in the first place – a move which indirectly led to United being docked 15 points by the Football League.
He said: "If this challenge had never happened there would have been a lot less heartache and worry for fans."
The taxman's unhappiness with KPMG related in part to the voting process used at a meeting on June 1, when United's creditors backed a company voluntary arrangement (CVA) deal to resell Leeds to chairman Ken Bates.
The CVA would have been worth just 1p-in-the-pound to creditors like the Revenue.
Its opposition prompted KPMG to scrap the CVA and put the club on the open market before again agreeing to sell to Mr
Bates. That second deal could be worth as much as 52.9p-in-the-pound to creditors.
Yet the Football League claimed that, by failing to exit administration via a CVA, Leeds had breached its insolvency policy.
As a result the club began its first ever season in the third tier of English football on minus 15 points.
United have said they will appeal to the Football Association against that punishment.
Today a spokeswoman for HM Revenue and Customs said its legal challenge had become "academic" when the CVA was ditched in early July.
She would not be drawn on why it had taken the Revenue nearly two months to formally kill off the case.
The spokeswoman was unable to elaborate on what steps the taxman now intended to take regarding the money owed by United.
KPMG declined to comment.
A United spokesman said the club was "following developments with interest".
By Paul Robinson
Leeds United's summer of discontent took a dramatic final twist today as the taxman abandoned a legal challenge to the club's administrators.
The concerns of HM Revenue and Customs about the way accountancy firm KPMG handled United's time in administration were due to be heard at the High Court on Monday.
Today, though, the Revenue confirmed it had formally withdrawn its challenge.
However, it said it would continue to take all possible steps to secure a "fair return" on the £7.7m in tax and VAT it was owed when Leeds went into administration.
News that the legal challenge had been dropped was welcomed by Leeds United Supporters' Club chairman Ray Fell. But he also questioned the motives behind the Revenue's decision to take KPMG to court in the first place – a move which indirectly led to United being docked 15 points by the Football League.
He said: "If this challenge had never happened there would have been a lot less heartache and worry for fans."
The taxman's unhappiness with KPMG related in part to the voting process used at a meeting on June 1, when United's creditors backed a company voluntary arrangement (CVA) deal to resell Leeds to chairman Ken Bates.
The CVA would have been worth just 1p-in-the-pound to creditors like the Revenue.
Its opposition prompted KPMG to scrap the CVA and put the club on the open market before again agreeing to sell to Mr
Bates. That second deal could be worth as much as 52.9p-in-the-pound to creditors.
Yet the Football League claimed that, by failing to exit administration via a CVA, Leeds had breached its insolvency policy.
As a result the club began its first ever season in the third tier of English football on minus 15 points.
United have said they will appeal to the Football Association against that punishment.
Today a spokeswoman for HM Revenue and Customs said its legal challenge had become "academic" when the CVA was ditched in early July.
She would not be drawn on why it had taken the Revenue nearly two months to formally kill off the case.
The spokeswoman was unable to elaborate on what steps the taxman now intended to take regarding the money owed by United.
KPMG declined to comment.
A United spokesman said the club was "following developments with interest".