Bankruptcy news – HMRC shows John Barnes the red card

The former England and Liverpool winger John Barnes was declared bankrupt on 23 September after HMRC petitioned for his bankruptcy on the basis of an unpaid personal tax bill.  John Barnes has faced five previous bankruptcy petitions since 2010 which, until now, he has been able to fend off.  John Barnes’ bankruptcy comes just over a year after he signed a disqualification undertaking, disqualifying him from acting as a director for three and a half years.

The difficulties faced by John Barnes all stem from his company, John Barnes Media Limited, which went into liquidation in March 2023 owing over £1.5 million.  That, in turn, followed HMRC’s rejection of a “time to pay” proposal from Barnes.  The most recent liquidators progress report for John Barnes Media indicates that the company owed £776,878 to HMRC in unpaid VAT, NI and PAYE, and £461,849 to unsecured creditors.  In addition, investigations by the Insolvency Service indicated that the company had failed to pay for more than £78,000 in Corporation Tax between 2018 and 2020.  At the time he was made bankrupt, John Barnes had already repaid £60,000 to the liquidator in respect of a directors loan of over £200,000 owed by him to his company.

The Insolvency Service has confirmed that the reason for John Barnes’ disqualification was because of the level of outstanding tax owed by John Barnes Media to HMRC.  Mike Smith, chief investigator at the Insolvency Service, has said that Barnes’ failure to ensure taxes were paid “should serve as a deterrent to other directors”.  John Barnes’ disqualification, now coupled with his bankruptcy, underlines how HMRC are clamping down on directors and individuals who seek to avoid paying tax.  It is also worth noting that, since the Finance Act 2024, the Insolvency Service has been able to bring disqualification proceedings against director, shadow director, or manager of a company that promotes tax avoidance schemes.

Separately, leading football players, clubs and agents have been told to hand over £888 million to HMRC as a result of an HMRC probe into tax avoidance schemes in football, which began in 2015.  This includes £90 million recovered by HMRC last season alone, broken down into £73m paid out by clubs, £15m by players and £2m by agents. Over the last five years HMRC has collected £384 million in unpaid taxes from footballers, their clubs and agents, including £67.5 million in 2023.  HMRC cites incorrect or fraudulent repayment claims as the main reason for underpayment of tax.  HMRC still have 397 investigations ongoing, 32 investigations into clubs, 277 into players, and 88 into agents.

The Restructuring & Insolvency team at DMH Stallard have extensive experience in advising individuals and insolvency practitioners in relation to personal insolvency, disputes with HMRC, director claims and directors’ disqualification.  Please get in touch or call 03333 231580.