Armchair Twats Have Killed Us

Sluffy wrote:To be pedantic Davies is not the major creditor, Moonshift is (although I think the debt was recently transferred to Fildraw?).

I'm also unsure what the exact meaning of the phrase 'football creditor' is.  For instance why are the players wages deemed to be a football creditor whilst the income tax on them is not?  

Sluffy, a football creditor is someone the club owes money to directly. The PAYE on a player's wages is technically owed to HMRC by the player once he has been paid by the club making them a secondary creditor from the club's point of view. It's a loophole but as you can imagine quite a few clubs leap through it by making the players technically self-employed thus laying the responsibility for NI and Income Tax payments on the player's shoulders not theirs.

luckyPeterpiper wrote:

Sluffy wrote:To be pedantic Davies is not the major creditor, Moonshift is (although I think the debt was recently transferred to Fildraw?).

I'm also unsure what the exact meaning of the phrase 'football creditor' is.  For instance why are the players wages deemed to be a football creditor whilst the income tax on them is not?  

Sluffy, a football creditor is someone the club owes money to directly. The PAYE on a player's wages is technically owed to HMRC by the player once he has been paid by the club making them a secondary creditor from the club's point of view. It's a loophole but as you can imagine quite a few clubs leap through it by making the players technically self-employed thus laying the responsibility for NI and Income Tax payments on the player's shoulders not theirs.

If that is the case all players should already be responsible for paying their income tax and NI directly to HMCR and therefore the club will not have been deducting tax in the first place.

Therefore the club would still be responsible to pay the full gross wage to the player (as a football creditor) and they pay their income tax element from it to HMCR.

So I can't quite see how your explanation works?

Am I missing something?

Also thinking about it, how can the players have a contract of employment with the club if they are self employed?  Surely if that was the case they would be invoicing the club for their services rather than being on the clubs payroll?

Breadman wrote:

wanderlust wrote:Question:

Am I right in thinking that if we go into administration it would be in EDs interest NOT to wipe of the debt he is owed? 
My thinking is that if he declared himself as a creditor (he'd be the main creditor) then he would get back x pence in the pound when the assets are sold off and therefore be in the best position to buy the club back relatively intact inasmuch that as the main creditor he would get the majority of the payout after priority creditors.

What are you up to with this......? 

It has a very familiar ring to it.

You know me too well

This is very important and the reason I'm asking the question is not the bleedin' obvious - it's to do with exit strategy/asset retention. It goes something like this...

If ED genuinely loves the club and is doing everything he can to protect the club's future (as intimated by the "buyer criteria" that seem to have stopped Deano etc in their tracks) then I think that EDs strategy would change if we are forced into administration.

By declaring himself as a creditor (or Moonshift  - it doesn't matter which because ED obviously has the power to write off the debt whichever vehicle is the actual creditor) then he would be entitled to full payment. 

That would mean that the assets he (or Moonshift) have paid for wouldn't have to be sold as they could be exchanged in lieu of repayment. 

So he (or Moonshift) would end up with the assets they lent BWFC the money to buy them with in the first instance.

THEN once the dust has settled, he could sign the assets back over to BWFC (in effect the same as writing the debt off) and THEN find a new buyer - thereby avoiding loss of assets.

But if he wrote the debt off first, the assets would be sold and the proceeds would be used to pay off HMRC and other creditors (i.e. not ED/Moonshift) leaving the club with no assets and a poorer backer.

In other words there may be a strategic path whereby he insists on getting paid ahead of HMRC who would then be seeking payment from a club with no assets and be forced to wipe off the debt.

This is just strategic thinking which is why I was asking the question. There are several potential flaws e.g. does the law require going through the motions of selling the assets rather than using them to offset credit? Would HMRC have to write off the debt if there were no assets left (I believe there is precedent) And so forth.

Sluffy wrote:

luckyPeterpiper wrote:

Sluffy wrote:To be pedantic Davies is not the major creditor, Moonshift is (although I think the debt was recently transferred to Fildraw?).

I'm also unsure what the exact meaning of the phrase 'football creditor' is.  For instance why are the players wages deemed to be a football creditor whilst the income tax on them is not?  

Sluffy, a football creditor is someone the club owes money to directly. The PAYE on a player's wages is technically owed to HMRC by the player once he has been paid by the club making them a secondary creditor from the club's point of view. It's a loophole but as you can imagine quite a few clubs leap through it by making the players technically self-employed thus laying the responsibility for NI and Income Tax payments on the player's shoulders not theirs.

If that is the case all players should already be responsible for paying their income tax and NI directly to HMCR and therefore the club will not have been deducting tax in the first place.

Therefore the club would still be responsible to pay the full gross wage to the player (as a football creditor) and they pay their income tax element from it to HMCR.

So I can't quite see how your explanation works?

Am I missing something?

Also thinking about it, how can the players have a contract of employment with the club if they are self employed?  Surely if that was the case they would be invoicing the club for their services rather than being on the clubs payroll?

No mate. The office staff et al are employees and the club has not yet paid their class 1,2 or 6 NI contributions or PAYE to HMRC. They aren't obliged to pay those contributions week by week, they can do so every quarter or any interval the taxman agrees to. In this case the staff have had the deductions made on a weekly/monthly basis (dependent on how they themselves are paid) but the money deducted has not gone to the taxman. It's been spent on other things in the hope revenue would come in from elsewhere before we were due to pass those deductions on. That's where the debt to the taxman has come from. Also, not ALL the players are "self-employed". That tends to be just the highest earners who then hire an accountant or other financial expert to minimise their personal liability. Academy kids and the like are paid employees just like the office staff etc. 

The self-employed status of the players has no bearing on contracts. It's perfectly legal to sign a contract guaranteeing they will provide playing services exclusively to one club for a fixed term in return for an agreed fee without affecting that. Another way around it is for the player to register himself as a "personal service company" much like several BBC and ITV presenters did and as such he pays no IT at all, only Corporation Tax which has a much higher threshold and lower rate once reached. There are so many ways and so many loopholes available to high paid professionals it's almost dizzying.

You didn't miss anything, it's simply that clubs and players tend not to mention those little details except as very small print in the accounts.

wanderlust wrote:

Breadman wrote:

wanderlust wrote:Question:

Am I right in thinking that if we go into administration it would be in EDs interest NOT to wipe of the debt he is owed? 
My thinking is that if he declared himself as a creditor (he'd be the main creditor) then he would get back x pence in the pound when the assets are sold off and therefore be in the best position to buy the club back relatively intact inasmuch that as the main creditor he would get the majority of the payout after priority creditors.

What are you up to with this......? 

It has a very familiar ring to it.

You know me too well

This is very important and the reason I'm asking the question is not the bleedin' obvious - it's to do with exit strategy/asset retention. It goes something like this...

If ED genuinely loves the club and is doing everything he can to protect the club's future (as intimated by the "buyer criteria" that seem to have stopped Deano etc in their tracks) then I think that EDs strategy would change if we are forced into administration.

By declaring himself as a creditor (or Moonshift  - it doesn't matter which because ED obviously has the power to write off the debt whichever vehicle is the actual creditor) then he would be entitled to full payment. 

That would mean that the assets he (or Moonshift) have paid for wouldn't have to be sold as they could be exchanged in lieu of repayment. 

So he (or Moonshift) would end up with the assets they lent BWFC the money to buy them with in the first instance.

THEN once the dust has settled, he could sign the assets back over to BWFC (in effect the same as writing the debt off) and THEN find a new buyer - thereby avoiding loss of assets.

But if he wrote the debt off first, the assets would be sold and the proceeds would be used to pay off HMRC and other creditors (i.e. not ED/Moonshift) leaving the club with no assets and a poorer backer.

In other words there may be a strategic path whereby he insists on getting paid ahead of HMRC who would then be seeking payment from a club with no assets and be forced to wipe off the debt.

This is just strategic thinking which is why I was asking the question. There are several potential flaws e.g. does the law require going through the motions of selling the assets rather than using them to offset credit? Would HMRC have to write off the debt if there were no assets left (I believe there is precedent) And so forth.

HMRC would prosecute him/moonshift for fraud. The League would slam us with a massive points penalty for next season and possibly impose a huge financial penalty to boot. Ken Bates pulled pretty much the same trick you're suggesting here and both the taxman and League closed the loopholes to ensure no one else can do the same. 

If BWFC enter admin and Eddie is listed as a creditor the value of the assets will be determined by the administrator not Eddie himself. Since they probably fall well short of the 170 mil we owe to him (moonshift/fildraw/whateverwecallourselvesthisweek) they would have to be sold by the administrator for maximum attainable value and we'd still owe Eddie money. I understand where you're coming from lusty but it would be seen as a fraudulent attempt to avoid paying off the non preferred creditors at the very least.

luckyPeterpiper wrote:

wanderlust wrote:

Breadman wrote:

wanderlust wrote:Question:

Am I right in thinking that if we go into administration it would be in EDs interest NOT to wipe of the debt he is owed? 
My thinking is that if he declared himself as a creditor (he'd be the main creditor) then he would get back x pence in the pound when the assets are sold off and therefore be in the best position to buy the club back relatively intact inasmuch that as the main creditor he would get the majority of the payout after priority creditors.

What are you up to with this......? 

It has a very familiar ring to it.

You know me too well

This is very important and the reason I'm asking the question is not the bleedin' obvious - it's to do with exit strategy/asset retention. It goes something like this...

If ED genuinely loves the club and is doing everything he can to protect the club's future (as intimated by the "buyer criteria" that seem to have stopped Deano etc in their tracks) then I think that EDs strategy would change if we are forced into administration.

By declaring himself as a creditor (or Moonshift  - it doesn't matter which because ED obviously has the power to write off the debt whichever vehicle is the actual creditor) then he would be entitled to full payment. 

That would mean that the assets he (or Moonshift) have paid for wouldn't have to be sold as they could be exchanged in lieu of repayment. 

So he (or Moonshift) would end up with the assets they lent BWFC the money to buy them with in the first instance.

THEN once the dust has settled, he could sign the assets back over to BWFC (in effect the same as writing the debt off) and THEN find a new buyer - thereby avoiding loss of assets.

But if he wrote the debt off first, the assets would be sold and the proceeds would be used to pay off HMRC and other creditors (i.e. not ED/Moonshift) leaving the club with no assets and a poorer backer.

In other words there may be a strategic path whereby he insists on getting paid ahead of HMRC who would then be seeking payment from a club with no assets and be forced to wipe off the debt.

This is just strategic thinking which is why I was asking the question. There are several potential flaws e.g. does the law require going through the motions of selling the assets rather than using them to offset credit? Would HMRC have to write off the debt if there were no assets left (I believe there is precedent) And so forth.

HMRC would prosecute him/moonshift for fraud. The League would slam us with a massive points penalty for next season and possibly impose a huge financial penalty to boot. Ken Bates pulled pretty much the same trick you're suggesting here and both the taxman and League closed the loopholes to ensure no one else can do the same. 

If BWFC enter admin and Eddie is listed as a creditor the value of the assets will be determined by the administrator not Eddie himself. Since they probably fall well short of the 170 mil we owe to him (moonshift/fildraw/whateverwecallourselvesthisweek) they would have to be sold by the administrator for maximum attainable value and we'd still owe Eddie money. I understand where you're coming from lusty but it would be seen as a fraudulent attempt to avoid paying off the non preferred creditors at the very least.

And exactly what would HMRC prosecute ED/Moonshift for? Doing nothing?

As ED is currently/already listed as a creditor he wouldn't be doing anything fraudulent. He has every right to get paid the money he is owed and the law is squarely behind him.

And further down the road he has every right to give the assets to the club after administration if he wants to. They are his assets to do what he likes with. Absolutely nothing illegal about that either.

No lusty. I think you need to understand that while ED and Moonshift are not legally the same entity Eddie is listed as a major shareholder. An attempt by him to take the assets back the way you suggested could (and likely would) be seen as an attempt to avoid paying other creditors including HMRC. If they're given to the administrator the way you suggest they would cease to belong to him or Moonshift etc and the administrator would be obliged to sell them for a maximum amount he can get. This means Eddie would have to pay market value for them whatever that might be and given he's already said he won't put in any more money now I can't see him doing it after admin, especially not to purchase assets he currently owns or holds a majority stake in. 

When Ken Bates pulled his stunt of buying Leeds Utd for one pound while paying creditors a few pennies in the pound it caused a furore that still hasn't faded. HMRC will not stand by and allow someone else to try and pull that stunt again. That's one of the reasons why footballing creditors MUST be paid in full. Eddie's choices in an admin situation are now incredibly limited as a result. Either he or his company are listed as a creditor in which case he has to be paid and the assets would have to be sold to fund it or he declines the right to be so listed and as such receives zip. 

As I said earlier Manda and rammywhite are much better at explaining this but Eddie couldn't even form a new holding company to buy the assets and exit admin that way because the assets are worth less than the total debt owed to Moonshift/him alone let alone everyone else. 

When Southampton's parent company went into admin a few years back they were still docked points and still had to pay all football creditors despite their claim they weren't the same entity as St Mary's Holdings. I understand where you're going with your question and it would be a great trick that would help the club hugely if Eddie could do it but legally he simply can't any more no matter what his motives might be.

I can't believe my thread has been hijacked by the essay twins.

Natasha Whittam wrote:I can't believe my thread has been hijacked by the essay twins.

Why Nat, how could you say such things?

I thought you loved those little chats between lusty and I? 

I'm truly heartbroken if you don't. 

luckyPeterpiper wrote:No lusty. I think you need to understand that while ED and Moonshift are not legally the same entity Eddie is listed as a major shareholder. An attempt by him to take the assets back the way you suggested could (and likely would) be seen as an attempt to avoid paying other creditors including HMRC. If they're given to the administrator the way you suggest they would cease to belong to him or Moonshift etc and the administrator would be obliged to sell them for a maximum amount he can get. This means Eddie would have to pay market value for them whatever that might be and given he's already said he won't put in any more money now I can't see him doing it after admin, especially not to purchase assets he currently owns or holds a majority stake in. 

When Ken Bates pulled his stunt of buying Leeds Utd for one pound while paying creditors a few pennies in the pound it caused a furore that still hasn't faded. HMRC will not stand by and allow someone else to try and pull that stunt again. That's one of the reasons why footballing creditors MUST be paid in full. Eddie's choices in an admin situation are now incredibly limited as a result. Either he or his company are listed as a creditor in which case he has to be paid and the assets would have to be sold to fund it or he declines the right to be so listed and as such receives zip. 

As I said earlier Manda and rammywhite are much better at explaining this but Eddie couldn't even form a new holding company to buy the assets and exit admin that way because the assets are worth less than the total debt owed to Moonshift/him alone let alone everyone else. 

When Southampton's parent company went into admin a few years back they were still docked points and still had to pay all football creditors despite their claim they weren't the same entity as St Mary's Holdings. I understand where you're going with your question and it would be a great trick that would help the club hugely if Eddie could do it but legally he simply can't any more no matter what his motives might be.

So you're saying that ED is not entitled to the money BWFC owe him? I disagree.

The fact is that it is HMRC who are vulnerable as they are legally down the pecking order (Sluffy will confirm this) and any attempt by HMRC to prevent ED from being paid as a preferential creditor so that they can advance their own claim would be highly illegal.

Do you really think that HMRC can just steal people's money if they want to?

This situation has nothing to do with what happened at Leeds or anywhere else for that matter as it is an entirely different set of circumstances.

BWFC owe ED £180 million and he has every right to get it back as a preferential creditor in the eyes of the law and there is absolutely nothing that HMRC can do about it.

And if he chooses to then give it back to BWFC or the dog's home or anyone else for that matter once the club exits administration he is entitled to so - and again it is my understanding that there is nothing that HMRC can do about it - as it's his to give.

And personally, I hope he does it.

I'd love to see the actual proof written down of how bwfc owe eddie over 180m. Problem is i think it's just a number plucked it if the air. Fuck off eddie

Natasha Whittam wrote:I can't believe my thread has been hijacked by the essay twins.

Aye. Me too. It was always a good experience watching you talking to yourself. 

y2johnny wrote:I'd love to see the actual proof written down of how bwfc owe eddie over 180m.  Problem is i think it's just a number plucked it if the air. Fuck off eddie

Well what is clear is that  whatever the number is, ED made a statement to say that he'd be willing to write off the debt so we can safely assume that it's owed to ED otherwise he wouldn't be in a position to promise to write it off in the first place.

What sort of proof is that?

If I decide the dog owes me eight million quid and I produce a hand-written note saying I've spent that amount on dog food, does that automatically mean he owes me the money?

And should I then be lauded by the local canine community if I rip it up?

Bollotom2014 wrote:

Natasha Whittam wrote:I can't believe my thread has been hijacked by the essay twins.

Aye. Me too. It was always a good experience watching you talking to yourself. 

It's true that some of us can be wordy at times but I guess it's necessary when discussing concepts that involve more than one premise or anything where there are a complicated set of circumstances or factors.

But that's not the same as having multiple user accounts and talking to yourself about benefits.

Breadman wrote:What sort of proof is that?

If I decide the dog owes me eight million quid and I produce a hand-written note saying I've spent that amount on dog food, does that automatically mean he owes me the money?

And should I then be lauded by the local canine community if I rip it up?

Only if you've written down the accruing Baker's Complete debt in your annual tax returns for the last umpteen years and produced receipts as documentary evidence of the payments you made to the satisfaction of HMRC and the auditors.

Unless you're saying HMRC are complicit in some kind of big fraud?

He must of been supplying everything to the club as the only preferred supplier. I got a hold of his price list for things;

Balls (foot ones not testacles) - £250k
Balls (testicles not foot ones) - £1billion (that explains a lot)
Bibs - £75k each
A single bic biro - £50k each
Championship manager scouting edition - £25k
Dervite - £0.75p

As you can see. Every single thing over priced

I'm not saying that HMRC are complicit in any of this (Christ! Even I'm not that stupid) but I've got this idea nibbling away at the back of my head that the accounts aren't perhaps 100% kosher, or at the very least, have been deliberately put together in a way that confuses the whole issue.

From my own (very basic) experience of submitting the accounts for my own Ltd company for auditing (careful how I phrase this now), I know that it is eminently possible to, erm......well....er, you know........?

And all the auditors do is give them the once over and if it all looks generally ok, away you go - crack on, son.

I appreciate that I am just a tin-pot, one-man band in North Manchester, but surely the same basic principles apply?

Provided it all looks ok on paper, nobody's going to go back and start forensically dissecting receipts in any great detail. 

So the stuff put forward for audit, substantiated by receipts, may not be 100% accurate in terms of money actually spent, if you get my drift......

Breadman wrote:I'm not saying that HMRC are complicit in any of this (Christ! Even I'm not that stupid) but I've got this idea nibbling away at the back of my head that the accounts aren't perhaps 100% kosher, or at the very least, have been deliberately put together in a way that confuses the whole issue.

From my own (very basic) experience of submitting the accounts for my own Ltd company for auditing (careful how I phrase this now), I know that it is eminently possible to, erm......well....er, you know........?

And all the auditors do is give them the once over and if it all looks generally ok, away you go - crack on, son.

I appreciate that I am just a tin-pot, one-man band in North Manchester, but surely the same basic principles apply?

Provided it all looks ok on paper, nobody's going to go back and start forensically dissecting receipts in any great detail. 

So the stuff put forward for audit, substantiated by receipts, may not be 100% accurate in terms of money actually spent, if you get my drift......

Depends on which set of books are taken out for inspection!!!  (I know you are shocked)!