The club say they are 'working with the authorities to pay their debts' [GALLO/GETTY]
Struggling English Premier League side Portsmouth could become the first Premier League club to be declared bankrupt after being given a deadline to clear its debts by the British government.

UK tax officials at the HM Revenue and Customs filed a winding-up petition against Portsmouth at London's High Court on December 23, and the club must show it can pay the tax it owes at a full hearing scheduled for February 10.

If HMRC hasn't recovered its money from Portsmouth by then, the club could
be declared bankrupt and a receiver appointed.

However, Portsmouth said that contrary to media reports, it had not been served with a winding-up petition, adding that it was working with the authorities to pay off their debts.

"Portsmouth Football Club has not been formally served with a winding up petition and is shocked and surprised this action has been taken in respect of VAT (Value Added Tax), PAYE (Pay as you Earn) and National Insurance Contributions which either have been, or are about to be paid, or are disputed," the club said in a statement on their website

"The club is disputing the VAT amount outstanding and has formally notified HMRC (Her Majesty's Revenue & Customs) of this. We expect HMRC to withdraw theirfdemands forthwith."

Money woes

Portsmouth have endured a miserable season on and off the pitch and are bottom of the table having won only four of 19 league matches

The club spent heavily on players before winning the 2008 FA Cup, and has had three owners since August and failed to pay itsf players on time twice this season.

"Extreme efforts have been made to reach payment arrangements with HMRC
to allow the owner time to deal with inherited debt,'' the south-coast club said.

Pompey said its owner, Saudi Arabian property magnate Ali Al-Faraj, has given $15.4 million to HMRC.

Portsmouth has been subject to a transfer ban since October from the Premier League, which was founded in 1992.

The indefinite sanction, which stops the club buying players in January's transfer window and beyond, was imposed to prevent the club's liabilities and wage bill increasing.

The Premier League said it was continuing to monitor the situation.

"We remain in frequent dialogue with the club," it said in a statement.

"Clearly, we hope they settle any issues they have with the HMRC before the court hearing."

Ahmed Al Faraj, brother of new owner Ali Al Faraj, must be wondering what crisis his brother inherited [GALLO/GETTY] 
Dire straits

Portsmouth was on the brink of administration before the season started in August with Sacha Gaydamak trying to sell the club. Premier League officials are understood to have been working with the club since the offseason to stop it going into administration.

The desperate financial situation looked to have been eased in late August when Sulaiman Al-Fahim completed his protracted takeover, but the Dubai businessman's ownership lasted less than six weeks as he failed to refinance the club and pay the players' wages on time.

Al-Faraj's subsequent takeover was portrayed as rescuing the club, but he has struggled since October to find investors to pay off the debts owed to other clubs and HMRC.

Portsmouth sacked manager Paul Hart last month and replaced him with former Chelsea boss Avram Grant.

Portsmouth said that since the takeover by Al Faraj in October great efforts had been made to reach payment arrangements with HMRC to allow the owner time to deal with the inherited debts.

Source: Agencies