The future of Leeds United has been thrown into doubt after the Inland Revenue confirmed they will be launching a legal challenge to Ken Bates' buy-back deal.

Despite the United chairman improving his offer to creditors from a penny in the pound to eight pence, the IR decided to appeal against the decision of the administrators to sell the club back to him.

A curt statement from Elland Road attempted to put a positive spin on events.

It read: "We have a number of options available to us and remain confident of a positive outcome, despite this disappointing news, and will carry on with business as usual in the meantime."

That is a very different tone from Monday, when Bates made his improved offer on condition there was no challenge and threatened that the new company would stop funding the day-to-day running of the club if anyone did appeal.

He said then that the consequences of an appeal "would be liquidation and Leeds United would cease to exist and the loss of the 500 jobs would be a further drain on government resources with unemployment and social services benefits."

The IR, who would get nothing if the club is liquidated, obviously feel there is more cash available either from Bates or from one of the other consortia that claimed to be interested in taking over the club at the time it was put into administration.

Whether this stand-off is shortlived or continues for some time, it is certain to hamper Dennis Wise's squad-building plans because a transfer embargo will continue until the club is out of administration.

  • Start or join a debate on this issue in our online forum - Click here