: Thu Nov 05, 2009 6:21 pm  

Swore I'd never post on here again after the experience last time I did. But I'll make an exception - and certainly not to gloat (although heaven knows, it would be no more than some of the EDIT dont ruin a good post ..Mutts from on here who have been gloating on Bulls board over recent weeks would deserve). Just want to make a point, as someone who probably has more experience and knowledge of this kind of situation than most who post on these boards - given what I do for a living. Firstly, I see people have been asking where the debt came from? I do not know the answer to that, and this does not help much. but I can tell you where the debt to HMRC for most companies who find themselves in this situation comes from. It comes from a combination of: 1. Tax and NIC deducted from employees salaries, which should be paid to HMRC by 19th of the following month. It is money that was never the company's - it is deductions from employees not yet paid over. 2. The employer's NIC contribution for those employees - ditto re payment date. 3. VAT charged to and collected from "customers" (speccies, sponsors, sky, RFL...most club income is standard-rated) on behalf of HMRC. Payable at latest a month after the end of each VAT quarter. And OK its net of VAT incurred, but a large part of club costs are people-costs which are outside of the VAT regime so you always end up with a sizeable VAT liability regardless of what profits or losses you are making. And again, this money was never the company's. In most cases where HMRC has to resort to the High Court for a winding-up order, it is because the business has failed to pay over THESE taxes, which in the main were collected on behalf of HMRC and were NEVER THE BUSINESS's MONEY IN THE FIRST PLACE. The question I always put to people trying to come to terms with this is "how would YOU feel if the tax and NICs deducted from your pay by your employer were not paid over to the taxman, but the employer instead used them to finance their business?" (And many people not unreasonably IMO answer "better in the boss's pocket than the taxman's, if it keeps me in a job") Now there are other taxes which might be unpaid, like corporation tax (which you have to make profits to pay...) and capital gains tax (e.g on sale of ground), so its not always the case that HMRC has lost patience because of the business holding on to money that was never actually theirs. Someone mentioned "image rights" - alluding to arrears of PAYE and NICs following any "grossing-up" settlement with HMRC for payments which should have been treated as pay and therefor taxed. Any or all of these may or may not be involved, although I have not heard Wakey being mentioned as a club most at risk under this last item - other clubs starting with "W" maybe... But, as I said, its usually PAYE/NIC and VAT which triggers a winding up petition. Back in the old days of "Crown Preference", most tax debts were "preferential creditors", paid out before the mass of other "unsecured" creditors. This meant that HMIT and HMC&E (as they then were) were generally a lot less likely to press for winding-up - since they would get paid in preference anyway. But following legislation a few years ago HMRC are now only on a par with all the other creditors. And since they can often be the one who does not get paid because if you don't pay your staff or suppliers or lenders you are dead, HMRC are these days far more worried about getting paid than they ever were. Hence a big increase in HMRC initiating winding-up. And for the avoidance of doubt, the reports refer to a Winding-Up hearing. This is no minor difficulty. If the High Court believes the business is insolvent, in the absence of application by the company for an Administration Order then the High Court may well rule that the business is prima facie insolvent and grant the order. And the minute it does that and the order is stamped by the court, you are in liquidation. No way back. Dead. And it looks like, from what has been reported, that was what your club has very narrowly avoided. Don't be confused by talk of "receivers" and "receivership". That is an increasingly less common process whereby a secured lender's appointed insolvency practitioner/s takes control of the business to "receive" its assets to sell them to pay off the lender (bit like a glorified bailiff!). The reports refer to an "official receiver" - totally different. That is an official appointed by the court to conduct the winding up of a company put into compulsory liquidation by the court. That is a quick and abbreviated few notes of mainly general application, which may or may not be relevant and of some assistance. I take no satisfaction from what I read today (came as quite a shock, to be honest). It is not good for anyone (except maybe the insolvency practitioners, accountants and lawyers). I hope this gets resolved so your club can move on.

Swore I'd never post on here again after the experience last time I did. But I'll make an exception - and certainly not to gloat (although heaven knows, it would be no more than some of the EDIT dont ruin a good post ..Mutts from on here who have been gloating on Bulls board over recent weeks would deserve). Just want to make a point, as someone who probably has more experience and knowledge of this kind of situation than most who post on these boards - given what I do for a living. Firstly, I see people have been asking where the debt came from? I do not know the answer to that, and this does not help much. but I can tell you where the debt to HMRC for most companies who find themselves in this situation comes from. It comes from a combination of: 1. Tax and NIC deducted from employees salaries, which should be paid to HMRC by 19th of the following month. It is money that was never the company's - it is deductions from employees not yet paid over. 2. The employer's NIC contribution for those employees - ditto re payment date. 3. VAT charged to and collected from "customers" (speccies, sponsors, sky, RFL...most club income is standard-rated) on behalf of HMRC. Payable at latest a month after the end of each VAT quarter. And OK its net of VAT incurred, but a large part of club costs are people-costs which are outside of the VAT regime so you always end up with a sizeable VAT liability regardless of what profits or losses you are making. And again, this money was never the company's. In most cases where HMRC has to resort to the High Court for a winding-up order, it is because the business has failed to pay over THESE taxes, which in the main were collected on behalf of HMRC and were NEVER THE BUSINESS's MONEY IN THE FIRST PLACE. The question I always put to people trying to come to terms with this is "how would YOU feel if the tax and NICs deducted from your pay by your employer were not paid over to the taxman, but the employer instead used them to finance their business?" (And many people not unreasonably IMO answer "better in the boss's pocket than the taxman's, if it keeps me in a job") Now there are other taxes which might be unpaid, like corporation tax (which you have to make profits to pay...) and capital gains tax (e.g on sale of ground), so its not always the case that HMRC has lost patience because of the business holding on to money that was never actually theirs. Someone mentioned "image rights" - alluding to arrears of PAYE and NICs following any "grossing-up" settlement with HMRC for payments which should have been treated as pay and therefor taxed. Any or all of these may or may not be involved, although I have not heard Wakey being mentioned as a club most at risk under this last item - other clubs starting with "W" maybe... But, as I said, its usually PAYE/NIC and VAT which triggers a winding up petition. Back in the old days of "Crown Preference", most tax debts were "preferential creditors", paid out before the mass of other "unsecured" creditors. This meant that HMIT and HMC&E (as they then were) were generally a lot less likely to press for winding-up - since they would get paid in preference anyway. But following legislation a few years ago HMRC are now only on a par with all the other creditors. And since they can often be the one who does not get paid because if you don't pay your staff or suppliers or lenders you are dead, HMRC are these days far more worried about getting paid than they ever were. Hence a big increase in HMRC initiating winding-up. And for the avoidance of doubt, the reports refer to a Winding-Up hearing. This is no minor difficulty. If the High Court believes the business is insolvent, in the absence of application by the company for an Administration Order then the High Court may well rule that the business is prima facie insolvent and grant the order. And the minute it does that and the order is stamped by the court, you are in liquidation. No way back. Dead. And it looks like, from what has been reported, that was what your club has very narrowly avoided. Don't be confused by talk of "receivers" and "receivership". That is an increasingly less common process whereby a secured lender's appointed insolvency practitioner/s takes control of the business to "receive" its assets to sell them to pay off the lender (bit like a glorified bailiff!). The reports refer to an "official receiver" - totally different. That is an official appointed by the court to conduct the winding up of a company put into compulsory liquidation by the court. That is a quick and abbreviated few notes of mainly general application, which may or may not be relevant and of some assistance. I take no satisfaction from what I read today (came as quite a shock, to be honest). It is not good for anyone (except maybe the insolvency practitioners, accountants and lawyers). I hope this gets resolved so your club can move on.

: Thu Nov 05, 2009 6:22 pm  

MOPSEY LIVES ON wrote:

i think the people running our club treat it like there little baby, a job for you son,and one for you daughter its pathetic, weve just had our best finish in ages, were trying to get a new ground. the whole thing is a shambles, wheres all the coin off, wheres the atkins money off. theres too many on the wakefield trinity gravy train, we need fresh blood on the board who are forward thinking, we the supporters dont deserve whats coming but if we dont see any sign of this ground then they will kick us out, the club is run by prats.

the club is run like a WMC this board could not run Ossett Central

: Thu Nov 05, 2009 6:42 pm  

it looks quite clear that swag has had prior knowledge to this coming, so im guessing its because of the ground.so where are we heading. were 350 grand in debt that we know of, why cant we pay the bills, arnt players on paye tax and ni so why cant they get that right. it says we nearly went into administation. every time it happens we get well it wont happen again. this club will never again be a sucess with this board running it.deeply gutted at this present time.sorry weve paid a bit off

: Thu Nov 05, 2009 7:08 pm  

actually this to me looks like the cash flow during last year must have got pretty grave, and must have hit the point where offloading players would have been the sensible business decision, however at that poiint we were 6th with a home draw against cats, which on papaer was our to lose, as we then went and did.

strikes me someone gambled on a higher finish by paying the players rather than farming them out and then not getting the payoff they needed to pay the bills,ie from a better playoff finish.

and as a boring accountant who loves the club im asking what would i have done????

sold db/ atkins and co in june..........no tax poroblem but no play off, lot harder call than some are making out......for me benefit of doubt to club on this one.

: Thu Nov 05, 2009 7:10 pm  

MOPSEY LIVES ON wrote:

it looks quite clear that swag has had prior knowledge to this coming, so im guessing its because of the ground.so where are we heading. were 350 grand in debt that we know of, why cant we pay the bills, arnt players on paye tax and ni so why cant they get that right. it says we nearly went into administation. every time it happens we get well it wont happen again. this club will never again be a sucess with this board running it.deeply gutted at this present time.sorry weve paid a bit off

Actually, the press reports say you nearly went into liquidation. The Wakefield Express hack clearly does not understand what a "Winding-up" is when he referred to "Administration".. That is far worse than Administration, since with the latter you can carry on trading whilst the Administrator tries to sort the mess out. With Liquidation, the minute the liquidator is appointed everyone is sacked, every contract is cancelled, and every asset is sold. And there is no way back.

BUT WHAT PUZZLES ME is that if the club agreed a payment plan in September with HMRC, why did HMRC not withdraw the petition to the High Court? Does not make sense, and the club statement seems to suggest likewise. If the club agreed terms, then there was no need for all this?? Or is someone making mischief over old news now no longer applicable?

: Thu Nov 05, 2009 7:17 pm  

Walrus wrote:

I was refering to directors renumeration not salaries of staff players etc.

We should not be in debt to the tax man this is a very poor state of affairs and is not normal for a business despite what people say on here.

When you take in all that money you set aside a proportion to pay your tax and VAT etc. Its not yours to spend and you know its to be paid. If they have spent it and are now scraping around for time to repay etc then we are in trouble.

If only business was that simple, looks great in the text books but believe me real life soon put's a damper on that.

: Thu Nov 05, 2009 7:23 pm  

The Trip wrote:

If only business was that simple, looks great in the text books but believe me real life soon put's a damper on that.

Indeed. Try telling the owner or directors of a business that cannot pay its employees or suppliers AND the taxes it received or deducted on behalf of HMRC that they have to pay the taxes not the employees or suppliers? Regardless of how it got in that state, what would you do if placed in that situation?

And I think "Walrus" might be surprised just how "mormal" it is for (mostly smaller) businesses to be badly behind on paying over the taxes they have collected in the current recession.

: Thu Nov 05, 2009 7:25 pm  

Adeybull wrote:

Indeed. Try telling the owner or directors of a business that cannot pay its employees or suppliers AND the taxes it received or deducted on behalf of HMRC that they have to pay the taxes not the employees or suppliers? Regardless of how it got in that state, what would you do if placed in that situation?

And I think "Walrus" might be surprised just how "mormal" it is for (mostly smaller) businesses to be badly behind on paying over the taxes they have collected in the current recession.

agreed!
and basically validates my thought that we gambled on a better playoff run!...........................and lost!

: Thu Nov 05, 2009 7:29 pm  

MOPSEY LIVES ON wrote:

it looks quite clear that swag has had prior knowledge to this coming, so im guessing its because of the ground.so where are we heading. were 350 grand in debt that we know of, why cant we pay the bills, arnt players on paye tax and ni so why cant they get that right. it says we nearly went into administation. every time it happens we get well it wont happen again. this club will never again be a sucess with this board running it.deeply gutted at this present time.sorry weve paid a bit off

First I heard was from YEP reporter yesterday afternoon - since then I have spoken to several people to find out the full story - or as much as they will tell me.

No-one at the club seems to panicing about this issue - they are all a bit upset that it has gone public, but remain confident that it WILL be sorted in the timescale required.

: Thu Nov 05, 2009 7:30 pm  

Very disturbing and some shocking PR for the club. To come so close to a winding up order being issued is very worrying indeed.