Gavin Hinks, Accountancy Age, Thursday 10 June 2010 at 00:30:00

In its match up against the Premier League over super creditors, HMRC issending on star legal striker Greg Mitchell QC

The taxman is planning one more attempt to overturn football?s super creditorrule ? the article of faith that insists all managers, players and clubs shouldget their money from a football insolvency before any other creditor, includingHMRC. At the centre of that court room attack will be Greg Mitchell QC.

What?s happened?

While football fans focus on England?s chances in the World Cup they willprobably lose sight of the woeful state football finances find themselves inhere in the UK.

Indeed the administrations of Crystal Palace and Portsmouth, the only Premierleague club to go bust, are now into extra time. But there is one crucial phasefor this particular game to go through ? HMRC?s attempt to overturn the supercreditor rule. Captain of this court room team will be Greg Mitchell of thechambers Three Verulam Buildings.

News of the latest attempt to finish the rule the taxman regards as?unlawful? emerged in the report from administrators on their plans to rescuePortsmouth.

HMRC became particularly aggressive in its statements saying: ?There is nolegal basis for the football creditor rule. Non-football creditors are beingseriously short-changed and enough is enough.?

Mitchell is the man leading this legal battle. He has represented HMRC in theearly stages of its dealings with Portsmouth. His CV says he ?enjoys dealingwith cases which have a substantial technological aspect?. His core areas arecommercial litigation and corporate insolvency, which should give him a stronghand because in his fight for HMRC he will come up against the Premier Leaguewhich will no doubt hire top lawyers itself.

What happens next?

Mitchell will no doubt examine the two key principles. Firstly, the paripassu principle which dictates that all creditors should be treated on an equalbasis and, secondly, the anti-deprivation principle which says that no oneshould be deprived of their assets because of an insolvency.

The court room arguments will be intense because somehow the Premier Leaguewill have to argue it can stand outside these well-established principles. But,as experts have already pointed out, a win by Mitchell for HMRC, could forcemajor changes in how clubs are run and deal with each other. For one thing, ifselling a player, a club will need to know it will receive its money ? thismeans proper credit checks. It also means the introduction of, for want of abetter term, moral hazard into the transfer process.

No longer will clubs be able to rely on the super creditor rule underwritingtransfers. They will have to undertake transfers on a proper business basis.

Football may be a funny old game, but not as far as the taxman is concerned.