New football tax crisis

Saturday 10 November 2012

Dunfermline Athletic could become the latest Scottish football club to face the wrath of the taxman after they were given just 12 days to raise £81,000 owed to HMRC.

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Alan Temple

At the end of a week that has seen Hearts announce they are on the brink of extinction due to unpaid PAYE totalling £450,000, it has emerged the Fife club are facing a race to pay two tax bills.

In a turbulent afternoon it was also confirmed that John Yorkston, chairman of the club for the past 14 years, would step down from his post at the end of this season.Yorkston will become the club's honorary president, being replaced as chairman by Rodney Shearer on June 30.Three new directors have been appointed – Bob Purvis and Jim Thomson, respectively chairman and managing director of construction firm the Purvis Group, and Bob Garmory, chairman of Carnegie College in Dunfermline. The developments follow the exit of seven directors last month.HMRC's unwillingness to negotiate a payment plan forHearts, as alleged by Tynecastle director Sergejus Fedotovas, is indicative of a hardening attitude towards football clubs which fail to meet financial commitments.Dunfermline have no home matches to boost flagging income before £50,000 is due to HMRC on November 19 and another £31,000 two days later.It is not yet known if the three new members of the board will bring fresh investment which could help avoid a run-in with the taxman. If Dunfermline fail to raise the money, HMRC's response could be devastating. It would be within its rights to issue a winding-up order and push the club towards administration or, as in the case of Hearts, liquidation.Staff at Hearts have already endured wage delays this season, with last month's salaries being delivered in a staggered fashion behind schedule. Dunfermline tried, and failed, to re-arrange April's home match with Falkirk to last Saturday in a move which would have raised significant funds.If the club can find the money to pay HMRC, the move would prompt inevitable fears over whether enough money would be available to meet November's wage bill.It is thought that, as of September, Dunfermline had accrued a loss of around £140,000 for the year to date, £60,000 over the deficit which was budgeted for. It has been put down to a poor average attendance, lack of home games and the general economic downturn – among other factors.It has also been suggested that the club are still looking to slash up to £400,000 from their annual costs if they are to survive in the long term, based on current income.Dunfermline are more than £8 million in the red and that debt is owed to a series of directors, past and present, rather than a bank.Despite the upcoming tax deadline, the club attempted to put a positive spin on matters last night following the boardroom reshuffle.Majority shareholder Gavin Masterton said: "All new board members are highly successful professionals who are willingly giving their time and energy to take the Dunfermline overall team forward in the future on a sound and secure basis."However, fans remain concerned about the precarious financial situation. Margaret Ross, chairman of the Pars Supporters Trust, said: "The new directors will be there to support us, I'm sure. However, the supporters still have concerns over funding."I plan to talk to the directors, so we do not yet know whether these changes will alleviate concerns regarding the tax. That is an open question. "As fans we will continue to fundraise, because there is no doubt the club is in a challenging position."

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