2008 - 2009 Accounts Now Available

[ty cobb]

Yeah thanks GY really interesting and useful comments.

As I've mentioned elsewhere KT was also involved when we made the decision to run at such a big loss. Although he seems to be doing a decent job now he still made a pigs ear of it when he was here to begin with.

Worrying about the interest point as it shows that WPL still don't have our interests at heart.

I would also be interested in if we've broken even purely as a result of Deanos money than in my view we have made a loss of £1 million this year. If we have broken even and repaid £1 million debt this is impressive and credit to KT and CW for managing to do well in the league despite severe cut backs. Given the size of our squad I rather fear that our debts haven't been reduced at all. OxVox should clarify this point.

So FK left the club with £2 million of debt (and a £1 million asset in Deano money owed) in nearly 10 years of chairmanship. WPL in under half that time have rattled the debt up to £5 million with no improvement on the field to show for it.

[ty cobb]

http://oxvox.yourcrm.co.uk/PageContent.aspx?id=79

I'll answer my own question here.

Fair play to OxVox for asking about this and fair play to KT and CW for manging to spend £800,000 less than Patto/Smith and yet get us in the play offs - I can see why CW may be a little annoyed given the bigger picture here.

[Mally]

http://oxvox.yourcrm.co.uk/PageContent.aspx?id=79

I'll answer my own question here.

Fair play to OxVox for asking about this and fair play to KT and CW for manging to spend £800,000 less than Patto/Smith and yet get us in the play offs - I can see why CW may be a little annoyed given the bigger picture here.

What's the source for believing that KT &amp CW have spent £800,000 less than Patto/Smith &amp Merry?

[Swissbloke]

Note that Southend were taken to the High Court on a winding up order for a debt of £400,000 to the HMRC

[GodalmingYellow]

Mally and Ty have both made the point about Kelvin Thomas's part in hte debt build up, but I'm less convinced that too much blame can be attached to him.

Firstly, the playing budget, which was one of the major causes of the club's rising debts was due to the signing of some truly poor players and ridiculously high wages for long contracts. For example Eddie Hutchinson. And those contractual costs carried over to the accounts we are now reviewing. There were also a lot of players whose contracts were partially or completely paid up in that season. It would have been impossible for anyone to eliminate those costs immediately. Therefore, for me the blame lies primarily wth Nick Merry, and also Ian Lenagan for allowing Merry such a free hand.

Secondly, the loan financing costs. This was a contract put in place (I think by Merry, but I will have to check back copies of the accounts) and the bank loan was contracted to be largely repaid in the period covered by these accounts. That was about £350k including interest to be repaid inside 12 months, and with our turnover, that was always going to put a big hole in the finances. Again nothing Kelvin Thomas could do about this.

Those two items together account for a substantial element of the operating loss, and the blame for them lies with those who were in situ before Kelvin Thomas.

Don't get me wrong, I have no reason to spare Kelvin Thomas's blushes, and he will have been significantly responsible for not preventing the HMRC debt to build up in order to enable repayment of the above 2 major costs, rather than find funding from a traditional source. I rather suspect that this debt, together with the debt to Firoka, were the points at which the club came within a Rizla paper of going under. He will also have had a hand in agreeing new player contracts, albeit at much reduced rates, which maintained the overall high spend. It would have been better to have kept players under contract and forced them to sit on the sidelines to be used only when we needed them.

Finally for now, when I said the club is now running on break even, I certainly didn't mean to suggest that these accounts show that - far from it. I based this comment on Kelvin Thomas's public statements and comments via OxVox that the clubis now breaking even. I would be very surprised indeed he the club is breaking even this season without recourse to at least some of the Whitehead money. If so that would show an even more impressive job done by Kelvin Thomas.

[ty cobb]

http://oxvox.yourcrm.co.uk/PageContent.aspx?id=79

I'll answer my own question here.

Fair play to OxVox for asking about this and fair play to KT and CW for manging to spend £800,000 less than Patto/Smith and yet get us in the play offs - I can see why CW may be a little annoyed given the bigger picture here.

What's the source for believing that KT &amp CW have spent £800,000 less than Patto/Smith &amp Merry?

Losses under Merry and Patto were £800,000, if we're breaking even now then we're spending less and/or getting more money in...........aren't we?

[GodalmingYellow]

http://oxvox.yourcrm.co.uk/PageContent.aspx?id=79

I'll answer my own question here.

Fair play to OxVox for asking about this and fair play to KT and CW for manging to spend £800,000 less than Patto/Smith and yet get us in the play offs - I can see why CW may be a little annoyed given the bigger picture here.

What's the source for believing that KT &amp CW have spent £800,000 less than Patto/Smith &amp Merry?

Losses under Merry and Patto were £800,000, if we're breaking even now then we're spending less and/or getting more money in...........aren't we?

I think the point that Mally may have been making was that it is possible that the similar or eveng reater losses could have been this year funded by the Whitehead transfer money, resulting in break even, in which case there would have been no real improvement.

If we take Kelvin Thomas at his word, and assume that OxVox have reported what he said correctly, the implication is that we are now breaking even, and have received the Whitehead money as well. If that is the case it would be quite some achievement by Kelvin Thomas.

Personally I suspect some of the Whitehead money will have been used to subsidise this season's spending. How much is impossible to say without further information.

[slappy]

The Oxvox minutes say the Whitehead money will appear in the 2010/11 accounts. I thought the deal went through Jan 2010 so surely this should appear in the 2009/10 acs?

The large &quotaccruals and deferred income&quot I am guessing is largely season tickets bought in advance. Will try and figure out whether it might include some rolled up historic loan interest as well.

VAT will of course have been due on those season tickets, which might well be a reason for a part of the increase in &quotsocial security and other taxes&quot, but I suspect arrears of PAYE are the greater part.

[GodalmingYellow]

The Oxvox minutes say the Whitehead money will appear in the 2010/11 accounts. I thought the deal went through Jan 2010 so surely this should appear in the 2009/10 acs?

The large &quotaccruals and deferred income&quot I am guessing is largely season tickets bought in advance. Will try and figure out whether it might include some rolled up historic loan interest as well.

VAT will of course have been due on those season tickets, which might well be a reason for a part of the increase in &quotsocial security and other taxes&quot, but I suspect arrears of PAYE are the greater part.

VAT would not be payable at 30 June 3009 on advanced season ticket sales, as given the nature of the business, it would be very foolish indeed for the club to operate cash accounting for VAT – they would simply end up with a big VAT bill at the start, followed by regular re-claims for expenses as incurred, less fairly small ticket sales turnover. The club will almost certainly operate full accounting for VAT, so there would be no liability arising on the season ticket money until matches had been played.

With the club making huge losses in that year, albeit given that a significant element of the losses is from non-VATable payroll costs, the club’s VAT bills are likely to be (relatively) small (of the order of £6k - £12k per month). Therefore, it is reasonable to conclude that the largest element of the HMRC creditor, by a large margin, will be PAYE and NIC, and given the amount involved, probably a fairly hefty amount of interest and penalties. Also, as few of the club's employees will be higher rate tax payers, as I said earlier, that debt must have been allowed to build up over 6 to 9 months or more.

[slappy]

VAT would not be payable at 30 June 3009 on advanced season ticket sales, as given the nature of the business, it would be very foolish indeed for the club to operate cash accounting for VAT – they would simply end up with a big VAT bill at the start, followed by regular re-claims for expenses as incurred, less fairly small ticket sales turnover. The club will almost certainly operate full accounting for VAT, so there would be no liability arising on the season ticket money until matches had been played.

I appreciate you probably want to paint as bad a picture as possible of PAYE arrears, but your basic VAT knowledge is incorrect. It is a schoolboy error not to realise the tax point for season ticket sales would be the date payment is received (in the absence of an earlier tax invoice).

[GodalmingYellow]

VAT would not be payable at 30 June 3009 on advanced season ticket sales, as given the nature of the business, it would be very foolish indeed for the club to operate cash accounting for VAT – they would simply end up with a big VAT bill at the start, followed by regular re-claims for expenses as incurred, less fairly small ticket sales turnover. The club will almost certainly operate full accounting for VAT, so there would be no liability arising on the season ticket money until matches had been played.

I appreciate you probably want to paint as bad a picture as possible of PAYE arrears, but your basic VAT knowledge is incorrect. It is a schoolboy error not to realise the tax point for season ticket sales would be the date payment is received (in the absence of an earlier tax invoice).

I don't want to paint anything.

I'm happy to be corrected, especially being a schoolboy, but I would have thought that a season ticket is a voucher for future services. Thus the VAT becomes payable when the service is provided, not when payment is made.

Care to provide a legislative reference to disprove that?

[slappy]

Come on Sloppy, this is basic stuff.

VAT Act 1994, Chapter 23, Part 1, section 6, sub-section (4).

[tomoufc]

If, before the time applicable under subsection (2) or (3) above, the person making the supply issues a VAT invoice in respect of it or if, before the time applicable under subsection (2)(a) or (b) or (3) above, he receives a payment in respect of it, the supply shall, to the extent covered by the invoice or payment, be treated as taking place at the time the invoice is issued or the payment is received.

[GodalmingYellow]

Come on Sloppy, this is basic stuff.

VAT Act 1994, Chapter 23, Part 1, section 6, sub-section (4).

Yes, that applies to the same point you made earlier, but still completely ignores the legislation for vouchers per my reply.

Paragraph 4(3) of Schedule 10A of VAT Act 1994

Schoolboy report: Must try harder.

As it happens, having looked into it more over lunch, I suspect you maybe right, although it is an arguable case, which I believe Man Utd have been fighting.

[GodalmingYellow]

If, before the time applicable under subsection (2) or (3) above, the person making the supply issues a VAT invoice in respect of it or if, before the time applicable under subsection (2)(a) or (b) or (3) above, he receives a payment in respect of it, the supply shall, to the extent covered by the invoice or payment, be treated as taking place at the time the invoice is issued or the payment is received.

Well done, you've learned how to use Google. Your mother will be very proud.