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The club had huge fears that they would be forced to be liquidated if the taxman had won their appeal but High Court judge Mr Justice Mann ruled that the CVA was valid.

HMRC’s appeal was based around two focal points; the ‘football creditors’ rule and the level of debt owed to them.

HMRC argued that the CVA was ‘unfair and seriously flawed’ as preference is given to football creditors who can claim 100% of monies owed whilst unsecured creditors, such as the taxman, receive considerably less.

As the CVA has now proved to be valid, HMRC will now be paid only 20% of the total £24 million they are owed which comes to a mere £6 million.

Mr Justice Mann had ruled against HMRC’s appeal stating that HMRC would be worse off if the CVA was blocked and the club had in fact been liquidated.

“In my view, HMRC will not be worse off by the situation left by the CVA bearing in mind what the alternatives could be for the club. Those alternatives are liquidation, or expulsion from the Football League or worse, bearing in mind the loss of a lot of their assets. There is no worthwhile way of coming into the club other than by the CVA.”

The taxman has also been ordered to pay £200,000 to Portsmouth for legal costs within 14 days.

HMRC have confirmed in a statement that they will not be appealing the High Court decision stating:-

“HMRC is naturally disappointed not to have won this appeal and we can confirm that we do not intend to appeal.”

HMRC were hoping that if this appeal had gone their way it would pave the way for a legal precedent for the entire UK sporting industry.

Although this appeal has not gone their way, HMRC have vowed to instead bring separate legal proceedings over the status of the football creditors rule.

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