@carrickblue if the Administrators can convince HMRC & MDS to agree payment schedules over say 5 years then instead of a purchaser needing to find £50m to cover those debts they only need to find £10m immediately
In terms of the overall purchase price; add on the football debts of c£8m, running costs till the end of the season of £6-8m plus the administrators costs of £5m or so and you have a purchase price of £30m give or take (as opposed to £70m without debt rescheduling); its then the purchasers problem to deal with the rescheduled debt not the admins.
This immediately makes DCFC more attractive (in the short term) particularly as Morris has agreed a price with the admins at which he would be prepared to sell the stadium etc. to the purchaser of DCFC.
Where does WWFC sit in all this, well either a settlement is agreed through negotiation with Morris (per MFC) or our claim is noted as a potential future liability in the terms of sale, given its likely size it is only marginally material to the price any purchaser would have to pay.
@Erroll_Sims thanks. I get what you’re saying and appreciate your clear explanation. Do you know if, generally rather than DCFC specific, HMRC would allow repayments at a going interest rate, at least that in the commercial market, or would a company negotiating such terms be benefitting from a rate lower than generally available? If the latter then we as taxpayers are subsidising poorly run companies by providing loans they could not normally obtain. Appreciate it may be lesser of evils as far as HMRC is concerned as they do eventually get the tax owed back rather than losing it
I think @carrickblue that you're making a false comparison - in trying to equate HMRC v a commercial lender.
Rather in the general case either HMRC receive next to nothing, if the business is liquidated, or they agree a payment plan and get (hopefully) all the money due but over 3-5 years.
If a business had been run fraudulently in the years prior to going into administration then the directors would be liable to prosecution.
If Derby have taken deductions from player and staff salarys for Tax and NI and then not passed them on to HMRC it's not a big stretch to see that as theft or fraud. I'd be interested to know wether the staff are considered to have individually paid their contributions, particularly for National Insurance or if they are asked to make this up at some stage as people who take the a working break are. If I'd paid my NI but HMRC didn't recognize that as they never received it I'd certainly be upset with my employer. The comparison with commercial lenders while a stretch isn't entirely without basis either as other clubs will have borrowed to pay their dues in recent times.
At the extraordinary EFL meeting earlier this week, it appears they made linear depreciation of player values a rule. Does that mean it wasn't a rule, previously? If it wasn't, why did DCFC get fined £100K and ordered to resubmit all accounts from the 15/16 season onwards which led to us exceeding FFP and getting a 9 point deduction?
Is that why we are now in Admin and saddled with a 12 point deduction? Yes.
We are, obviously, from different sides of the viewpoint on this and I understand that. However, folk aren't out to get DCFC, we know that because they keep saying so. Much of the blame for the current situation lies with Mel overspending. Spending roughly twice what we got in income. That is poor behaviour and we can't argue with the 12 points deduction for going into Administration. However, if linear depreciation of player values, as it seems, only became a rule this week, why did we get the £100K fine and instructions to resubmit amended accounts using linear depreciation as opposed to the sliding scale we had used since 2015? A method the EFL knew about from 2015 and never complained about until Boro owner Gibson threatened them with a £100M+ lawsuit in 2019.
IMO, DCFC isn't totally innocent due to the vast overspend. However, if linear depreciation has only just become a rule, the club isn't as guilty as some would suggest.
At the extraordinary EFL meeting earlier this week, it appears they made linear depreciation of player values a rule. Does that mean it wasn't a rule, previously? If it wasn't, why did DCFC get fined £100K and ordered to resubmit all accounts from the 15/16 season onwards which led to us exceeding FFP and getting a 9 point deduction?
Is that why we are now in Admin and saddled with a 12 point deduction? Yes.
We are, obviously, from different sides of the viewpoint on this and I understand that. However, folk aren't out to get DCFC, we know that because they keep saying so. Much of the blame for the current situation lies with Mel overspending. Spending roughly twice what we got in income. That is poor behaviour and we can't argue with the 12 points deduction for going into Administration. However, if linear depreciation of player values, as it seems, only became a rule this week, why did we get the £100K fine and instructions to resubmit amended accounts using linear depreciation as opposed to the sliding scale we had used since 2015? A method the EFL knew about from 2015 and never complained about until Boro owner Gibson threatened them with a £100M+ lawsuit in 2019.
IMO, DCFC isn't totally innocent due to the vast overspend. However, if linear depreciation has only just become a rule, the club isn't as guilty as some would suggest.
Clutching at straws maybe? Dotting the I's and crossing the T's by the league now, possibly shutting the stable door after horse has bolted. Doesn't make any of the other stuff or the general approach any less of an issue.
@StrongestTeam said:
If Derby have taken deductions from player and staff salarys for Tax and NI and then not passed them on to HMRC it's not a big stretch to see that as theft or fraud. I'd be interested to know wether the staff are considered to have individually paid their contributions, particularly for National Insurance or if they are asked to make this up at some stage as people who take the a working break are. If I'd paid my NI but HMRC didn't recognize that as they never received it I'd certainly be upset with my employer. The comparison with commercial lenders while a stretch isn't entirely without basis either as other clubs will have borrowed to pay their dues in recent times.
Not paying debt due to HMRC on time is not legally theft or fraud. It has no effect on employees NI or tax records. When cash flow is tight and the business is struggling to pay wages and critical suppliers, it would be one of the first places I would look to preserve cash and get through the month.
In an administration or liquidation, HMRC has the same dilemma as other creditors. It wants the maximum possible pay out even if it has to wait a while. Sometimes accepting 25% from an arrangement is better than holding out and possibly getting nothing from a liquidation.
@StrongestTeam said:
If Derby have taken deductions from player and staff salarys for Tax and NI and then not passed them on to HMRC it's not a big stretch to see that as theft or fraud. I'd be interested to know wether the staff are considered to have individually paid their contributions, particularly for National Insurance or if they are asked to make this up at some stage as people who take the a working break are. If I'd paid my NI but HMRC didn't recognize that as they never received it I'd certainly be upset with my employer. The comparison with commercial lenders while a stretch isn't entirely without basis either as other clubs will have borrowed to pay their dues in recent times.
Not paying debt due to HMRC on time is not legally theft or fraud. It has no effect on employees NI or tax records. When cash flow is tight and the business is struggling to pay wages and critical suppliers, it would be one of the first places I would look to preserve cash and get through the month.
In an administration or liquidation, HMRC has the same dilemma as other creditors. It wants the maximum possible pay out even if it has to wait a while. Sometimes accepting 25% from an arrangement is better than holding out and possibly getting nothing from a liquidation.
I'm sure there must be some legislation around protecting these payments otherwise dodgy employers would do it all the time but tbh they aren't technically refusing to pay yet, they are asking for more time, allowances for various things they'll claim are either unforseen or not their fault and preferential terms
Not sure I understand your point but deductions of PAYE and NI made in say January are due to be paid to HMRC on or before 22nd February. If not paid by then, HMRC has a legally enforceable debt against the employer. Its a civil not a criminal matter though.
@DevC said:
Not sure I understand your point but deductions of PAYE and NI made in say January are due to be paid to HMRC on or before 22nd February. If not paid by then, HMRC has a legally enforceable debt against the employer. Its a civil not a criminal matter though.
Makes sense, general point was really that it's a bit dodge , suspect they must have stopped paying a while back to have racked up the suggested debt level. I'm sure it's our fault or the EFLs though...
Clutching at straws maybe? Dotting the I's and crossing the T's by the league now, possibly shutting the stable door after horse has bolted. Doesn't make any of the other stuff or the general approach any less of an issue.
Not straw clutching IMO. Did Mel recklessly overspend? YES. Did that lead to Administration? YES. Was the 12 point deduction for it justified? YES
No argument from me on that.
Is the sliding scale amortisation methodology used legal under UK Law? YES
DCFC informed the EFL of the change in 2015. Was it against any EFL rule. NO.
So, if the method is legal and also not against EFL rules until earlier this week, what is the justification for the £100K, fine, resubmission of accounts that led to exceeding FFP limits and the extra 9 points? If we didn't, as it seems, break the Law and didn't break any EFL rules, does that question the validity of any claims by MFC and/or WWFC?
@carrickblue I would need to check but as far as I can recall there is a statutory rate of interest that HMRC charge on late payments etc.
It is also worth reminding everyone that tax is an assessed liability (but not VAT or NI) and everyone has the right to challenge HMRCs assessment of your tax, my experience is that as long as your challenge is reasonable HMRC will negotiate.
I think you're missing the main point here raminpeace. Amortisation policy gave Derby a short (2-3 year) advantage over other clubs but then it caught up with them as a club when large amortisation charges arose in final contract year for players. No one YET knows what figures would have been in 18/19 & 19/20 as Mel Morris broke several laws deciding not to submit accounts and inform Companies House - hence the validity of Boro and our claims. He's cheated the whole system, until the above accounts are published (after yet another deadline extension) we don't know. However given the amount of time its taking to submit the accounts it's clear the difference will be HUGE - at one point salaries paid to footballers employed by DCFC were running at 154% of income - you couldn't afford the players, broke laws in signing players by creating a "better looking balance sheet" with stadium sale and a huge deficit of share prices. the last accounts show a share deficit of nearing £160m.
Not paying debt due to HMRC on time is not legally theft or fraud. It has no effect on employees NI or tax records. When cash flow is tight and the business is struggling to pay wages and critical suppliers, it would be one of the first places I would look to preserve cash and get through the month.
"Get through the month" I could except as a valid reason to preserve cash.
Are you suggesting that the c£29M debt to the HMRC is one months deductions? They must have been, at least in my opinion, deliberately avoiding paying this for years in order to try to have enough cash to fend off those creditors who may have had more balls than the HMRC and pushed for compulsory liquidation earlier.
DCFC informed the EFL of the change in 2015. Was it against any EFL rule. NO.
However, you can't change the way you amortize assets (players) at will - which I believe was the case as Derby previously used the same method as everyone else.
Surely you can agree - with the Independent Appeals Panel - that this WAS a deliberate attempt to hide the overspend and obscure the fact they would otherwise have exceeded the FFP limits. MM himself acknowledge that was the case - in the now deleted BBC Radio Derby interview - that's why he delayed resubmitting the accounts.
Comments
Brighthouse seemed to think it was a good business model to follow and look how well they did..... Oh, wait a minute.?
@carrickblue if the Administrators can convince HMRC & MDS to agree payment schedules over say 5 years then instead of a purchaser needing to find £50m to cover those debts they only need to find £10m immediately
In terms of the overall purchase price; add on the football debts of c£8m, running costs till the end of the season of £6-8m plus the administrators costs of £5m or so and you have a purchase price of £30m give or take (as opposed to £70m without debt rescheduling); its then the purchasers problem to deal with the rescheduled debt not the admins.
This immediately makes DCFC more attractive (in the short term) particularly as Morris has agreed a price with the admins at which he would be prepared to sell the stadium etc. to the purchaser of DCFC.
Where does WWFC sit in all this, well either a settlement is agreed through negotiation with Morris (per MFC) or our claim is noted as a potential future liability in the terms of sale, given its likely size it is only marginally material to the price any purchaser would have to pay.
Those huge coffee mugs, although sometimes with cringy words on the side, are a real godsend
Is my Twitter ptofile
Tinder
We’ll probably be hearing that shout quite a lot tomorrow.
Guy Fawkes?
Lumberjack lingo.
I work all night and I sleep all day
@Erroll_Sims thanks. I get what you’re saying and appreciate your clear explanation. Do you know if, generally rather than DCFC specific, HMRC would allow repayments at a going interest rate, at least that in the commercial market, or would a company negotiating such terms be benefitting from a rate lower than generally available? If the latter then we as taxpayers are subsidising poorly run companies by providing loans they could not normally obtain. Appreciate it may be lesser of evils as far as HMRC is concerned as they do eventually get the tax owed back rather than losing it
I don't wanna be a weather forecaster
We've already got @micra so we don't need you.
I think @carrickblue that you're making a false comparison - in trying to equate HMRC v a commercial lender.
Rather in the general case either HMRC receive next to nothing, if the business is liquidated, or they agree a payment plan and get (hopefully) all the money due but over 3-5 years.
If a business had been run fraudulently in the years prior to going into administration then the directors would be liable to prosecution.
If Derby have taken deductions from player and staff salarys for Tax and NI and then not passed them on to HMRC it's not a big stretch to see that as theft or fraud. I'd be interested to know wether the staff are considered to have individually paid their contributions, particularly for National Insurance or if they are asked to make this up at some stage as people who take the a working break are. If I'd paid my NI but HMRC didn't recognize that as they never received it I'd certainly be upset with my employer. The comparison with commercial lenders while a stretch isn't entirely without basis either as other clubs will have borrowed to pay their dues in recent times.
At the extraordinary EFL meeting earlier this week, it appears they made linear depreciation of player values a rule. Does that mean it wasn't a rule, previously? If it wasn't, why did DCFC get fined £100K and ordered to resubmit all accounts from the 15/16 season onwards which led to us exceeding FFP and getting a 9 point deduction?
https://www.efl.com/news/2022/february/meeting-of-efl-championship-clubs/
Did Mel vastly overspend? Yes.
Is that why we are now in Admin and saddled with a 12 point deduction? Yes.
We are, obviously, from different sides of the viewpoint on this and I understand that. However, folk aren't out to get DCFC, we know that because they keep saying so. Much of the blame for the current situation lies with Mel overspending. Spending roughly twice what we got in income. That is poor behaviour and we can't argue with the 12 points deduction for going into Administration. However, if linear depreciation of player values, as it seems, only became a rule this week, why did we get the £100K fine and instructions to resubmit amended accounts using linear depreciation as opposed to the sliding scale we had used since 2015? A method the EFL knew about from 2015 and never complained about until Boro owner Gibson threatened them with a £100M+ lawsuit in 2019.
IMO, DCFC isn't totally innocent due to the vast overspend. However, if linear depreciation has only just become a rule, the club isn't as guilty as some would suggest.
Clutching at straws maybe? Dotting the I's and crossing the T's by the league now, possibly shutting the stable door after horse has bolted. Doesn't make any of the other stuff or the general approach any less of an issue.
Not paying debt due to HMRC on time is not legally theft or fraud. It has no effect on employees NI or tax records. When cash flow is tight and the business is struggling to pay wages and critical suppliers, it would be one of the first places I would look to preserve cash and get through the month.
In an administration or liquidation, HMRC has the same dilemma as other creditors. It wants the maximum possible pay out even if it has to wait a while. Sometimes accepting 25% from an arrangement is better than holding out and possibly getting nothing from a liquidation.
I think you misspelled "All" at the start there.
I'm sure there must be some legislation around protecting these payments otherwise dodgy employers would do it all the time but tbh they aren't technically refusing to pay yet, they are asking for more time, allowances for various things they'll claim are either unforseen or not their fault and preferential terms
Point C might help with the definition although as above they aren't refusing to pay I don't believe.
https://www.taxinsider.co.uk/what-would-happen-if-my-employer-has-not-been-paying-my-tax-qa
Not sure I understand your point but deductions of PAYE and NI made in say January are due to be paid to HMRC on or before 22nd February. If not paid by then, HMRC has a legally enforceable debt against the employer. Its a civil not a criminal matter though.
Makes sense, general point was really that it's a bit dodge , suspect they must have stopped paying a while back to have racked up the suggested debt level. I'm sure it's our fault or the EFLs though...
Not straw clutching IMO. Did Mel recklessly overspend? YES. Did that lead to Administration? YES. Was the 12 point deduction for it justified? YES
No argument from me on that.
Is the sliding scale amortisation methodology used legal under UK Law? YES
DCFC informed the EFL of the change in 2015. Was it against any EFL rule. NO.
So, if the method is legal and also not against EFL rules until earlier this week, what is the justification for the £100K, fine, resubmission of accounts that led to exceeding FFP limits and the extra 9 points? If we didn't, as it seems, break the Law and didn't break any EFL rules, does that question the validity of any claims by MFC and/or WWFC?
@carrickblue I would need to check but as far as I can recall there is a statutory rate of interest that HMRC charge on late payments etc.
It is also worth reminding everyone that tax is an assessed liability (but not VAT or NI) and everyone has the right to challenge HMRCs assessment of your tax, my experience is that as long as your challenge is reasonable HMRC will negotiate.
Interesting, but without the original post it’s impossible to get the joke (if any!).
I think you're missing the main point here raminpeace. Amortisation policy gave Derby a short (2-3 year) advantage over other clubs but then it caught up with them as a club when large amortisation charges arose in final contract year for players. No one YET knows what figures would have been in 18/19 & 19/20 as Mel Morris broke several laws deciding not to submit accounts and inform Companies House - hence the validity of Boro and our claims. He's cheated the whole system, until the above accounts are published (after yet another deadline extension) we don't know. However given the amount of time its taking to submit the accounts it's clear the difference will be HUGE - at one point salaries paid to footballers employed by DCFC were running at 154% of income - you couldn't afford the players, broke laws in signing players by creating a "better looking balance sheet" with stadium sale and a huge deficit of share prices. the last accounts show a share deficit of nearing £160m.
"Get through the month" I could except as a valid reason to preserve cash.
Are you suggesting that the c£29M debt to the HMRC is one months deductions? They must have been, at least in my opinion, deliberately avoiding paying this for years in order to try to have enough cash to fend off those creditors who may have had more balls than the HMRC and pushed for compulsory liquidation earlier.
@micra click on ‘show previous quotes’ to see the original post.
@Raminpeace said
DCFC informed the EFL of the change in 2015. Was it against any EFL rule. NO.
However, you can't change the way you amortize assets (players) at will - which I believe was the case as Derby previously used the same method as everyone else.
Surely you can agree - with the Independent Appeals Panel - that this WAS a deliberate attempt to hide the overspend and obscure the fact they would otherwise have exceeded the FFP limits. MM himself acknowledge that was the case - in the now deleted BBC Radio Derby interview - that's why he delayed resubmitting the accounts.
@Raminpeace and the tax? It's not JUST a bit of silly overspending by that slightly naughty Mel is it?