Celtic On The Brink – No, Not That One

By on Jun 29, 2009 in Finance, Non-League | 11 comments

The icy touch of the Grim Reaper threatens to blow across non-league football yet again this summer with the news that Farsley Celtic of the Blue Square North face a winding up order at the hands of Her Majesty’s Revenues and Customs on Wednesday over an unpaid tax bill said to be in excess of £200,000. Farsley merited a mention on here once before over talk of their intention to change their name to “AFC Leeds” in an attempt to boost the support in the city that they inhabit. It didn’t happen, and it remains unknown whether such a decision would have made that much difference with regards to their salvation. What we know for sure, however, is that this is another example of a club managing a combination of bad management with a small amount of somewhat bad luck.

Farsley have been an example of a small club that has over-extended itself. They were members of the Yorkshire League and the North East Counties League until the formation of a second division for the Northern Premier League in 1987. They were promoted into the Football Conference via the play-offs in 2007 but lasted just one season (with all the attendant financial strains that such a promotion brings upon a club of limited means and a comparatively small support) before being relegated back into the Conference North, and it is at this point that their difficulties started. The club owns its own ground, The Throstle Nest, but sold a proportion of it in the expectation of planning permission to develop it. When planning permission fell through, they fell into financial difficulties. Meanwhile on the pitch the club struggled to adjust to life back in the Blue Square North and finished last season just one place above the relegation positions.

This, however, only tells what looks like part of the story. If Farsley’s debt to the tax man is anything like £200,000, it would indicate that the club has paid no – or very little – tax for several years, and herein lies a wearyingly familiar tale. There can be little question that Farsley carried on blowing its cash over that period of time, and whether they were successful on the pitch or not is largely irrelevant. For a company that owns its own land to not pay its tax bill is little short of irresponsible. The club are seeking to enter into administration before the winding up order can be brought but, no matter what happens over the next couple of days or so, the stark fact remains that the ongoing existence of The Throstle’s Nest is endangered by such recklessness.

In some respects, it is suprising that as many non-league clubs have survived for as long as they have in this long, barren summer. The collapse of Setanta has thrown an even longer shadow over the summer, with most clubs in the top three divisions of the non-league game now likely to lose a five figure sum as a result of their collapse. This, however, seems to be a quite seperate issue. Farsley’s chairman John Palmer said it all when he commented upon HMRC reluctance to help the club out of its current predicament. “That is their prerogative”, he said, “and it has perhaps not helped that in the past our payment record has not been the best”. Such plain talking from a Yorkshire club perhaps shouldn’t be surprising. Such financial mismanagement would be, were it not for the fact that this is a non-league club that we are talking about.

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    11 Comments

  1. It’s spot on, the sadness at another club feeling the pinch in this way is tempered with irritation that the owners couldn’t see the most basic rule of any business: pay the taxman. And it’s astonishing how many clubs cannot understand this simple rule of business.

    Gervillian Swike

    June 29, 2009

  2. How on earth do HMRC allow clubs not to pay their tax? How can any business be allowed to rack up YEARS worth unpaid tax? Now the owners of clubs like Farsley are certainly responsible for not living within their means but surely HMRC should take a look at their procedures and put a stop to any non payment of tax. Lumping a winding up order on a club they have allowed to get away with not paying tax almost borders on unfair.

    Halifaxian

    June 30, 2009

  3. In reply to Halifaxian:

    “Lumping a winding up order on a club they have allowed to get away with not paying tax almost borders on unfair.”

    I’m afraid that for me that falls squarely in the “ignorance is no defence of the law” camp. To somehow twist this and appportion blame on HMRC is incorrect – the responsiblity of non-payment of taxes (VAT, PAYE, NI contribution) is solely that of the club involved. What is unfair is that some clubs choose to use the taxman (i.e. our collective money as taxpayers!) as a form of credit, whilst other clubs they compete against choose to keep their tax affairs reasonably up to date. That creates a financial disparity between clubs that affects the competitive balance of a league.

    The underlying problem needs to be addressed by the footballing authorities. Forget ten point deductions – how about having to prove to whatever league you are in that you are up to date with your tax payments before you are allowed to compete?

    I would wager that the vast majority of football clubs entering administration in the past few years have owed a substantial proportion of their overall debt to the taxman. Why should we as taxpayers subsidise financial mismanagement?

    Simon Cope

    June 30, 2009

  4. Simon – “The underlying problem needs to be addressed by the footballing authorities. Forget ten point deductions – how about having to prove to whatever league you are in that you are up to date with your tax payments before you are allowed to compete?”

    The Football League have managed to do just that at their AGM earlier in the month, Any club that falls behind with their payments for PAYE and NI.

    http://www.football-league.co.uk/page/News/FLNewsDetail/0,,10794~1691419,00.html

    The transfer embargo is a good-ish idea, as if you’re not paying the PAYE of your current employees, then you’re not allowed to bring any new ones in, but once again, it will be the actions of individuals that will cause the club as a whole to be punished.

    Rob

    June 30, 2009

  5. Unfortunately the Football League’s new ruling with regards to a transfer embargo does not go far enough.

    By virtue of the fact that the club cannot pay it’s bills shown that they are closing the stable door after the horse has bolted.

    A transfer embargo may be ineffectual if the club in question has got into debt by buying 20 players , and further into debt by paying them huge salaries.

    Quite simply a transfer embargo should be invoked once they fall behind on HMRC payments, and then the club thrown out of the league if any re-scheduled payments are missed.

    A transfer embargo will do nothing to stop the clubs from spending what they haven’t got.

    Amaazingly, the last line of that article goes on about introducing 2 more subs onto the bench, thereby fuelling the clubs need for extra players – players that half the teams can ill afford to sign.

    Madness.

    Jertzee

    June 30, 2009

  6. Simon,

    I agree entirely with what you say but why are clubs not dealt with immediately after they have missed a payment? HMRC should be getting on their case the minute the first payment is missed.

    Halifaxian

    July 1, 2009

  7. Jertzee: “Quite simply a transfer embargo should be invoked once they fall behind on HMRC payments”

    Which is the rule that the Football League has introduce, isn’t it?

    Rob

    July 1, 2009

  8. Rob
    Not so , in my opinion.
    The link states “Once necessary practical arrangements have been made, any club that falls behind with its employee related payments to HMRC will be subject to a transfer embargo until such time as the debt is cleared.”

    My understanding is such, that if you cannot pay HMRC you then make arrangements with them to pay reschedule the debt. The transfer embargo is only invoked once THOSE RESCHEDULED payments are missed. e.g. if you cannot pay the May salaries by 19th June you can reschedule to pay them , say, over 2 months in July and August.

    As HMRC will have agreed to the rescheduling in July and August the embargo only comes into effect if the July and/or August payments are missed, not the June one.

    Jertzee

    July 1, 2009

  9. “The cheque’s in the post…”

    Leagues should chuck out any club that doesn’t pay their tax on time.

    Martin

    July 2, 2009

  10. Halifaxian, do you know how many companies HMRC are supposed to monitor in this way? Literally millions. It would be impossible for them, unless you want to pay more tax to vastly expand their operations. Don’t blame them for others’ dishonesty.

    Martin

    July 2, 2009

  11. I’m not blaming HMRC I just wondered why they allowed clubs to get away with it.

    Halifaxian

    July 3, 2009

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