Leeds United and the offshore companies that own them will face an investigation by British Revenue and Customs after the club filed for administration last night. The former Champions League semi-finalists have been relegated as the Championship's bottom club after incurring the mandatory 10-point Football League penalty triggered by administration.

Statements from the chairman, Ken Bates, and administrators at KPMG explained that a £5-million debt to the British Revenue, which had to be settled before June 25th, had tipped the club into receivership.

"The financial burden of the past finally pushed the club into administration following the issuing of a winding-up petition by Revenue and Customs, who will be one of the company's major creditors," said Bates. "The other parties who will suffer the biggest financial loss are institutions from which the board arranged funding, Astor Investment Holdings, Krato Trust and Forward Sports Fund, who collectively will lose in excess of £22 million."

A newly incorporated company, Leeds United Football Club Limited - whose board will comprise Bates, the former chief executive, Shaun Harvey, and the director, Mark Taylor - has bought the business and its assets from the administrators.

According to government sources the tax authorities will now be "assertive" in their negotiations. They will seek to uncover the identity of the individuals behind the Switzerland-registered Forward Sports Fund that controlled Leeds, who have thus far remained anonymous.

Astor Investment Holdings, registered in the Virgin Islands, secured its loans to Leeds last month through a debenture mortgage. That development is expected to make it a preferential creditor in administration.

It is not known who is behind Astor and it is understood that the British Revenue will also seek to shed light on this matter. Patrick Murrin, a long-term associate of Bates, is the only other party known to have had an interest in Forward Sports Fund. There will also be inquiries into the identity of Teak Trading Corporation, the British Virgin Islands company that has taken on the freeholds of Elland Road and Leeds's Thorp Arch training ground.

The British sports minister, Richard Caborn, is said to be keeping a "tight watching brief".

There is concern among fans as to why administration should be necessary: the expensive player contracts from Peter Ridsdale's stewardship have all been paid off while income from transfers has been healthy.

The sales of Rob Hulse, Ian Bennett and Matthew Kilgallon to Sheffield United generated more than £4 million and there was £500,000 from Simon Walton's move to Charlton.

Leeds are also believed to have received close to £1 million from other transfers while an out-of-court settlement with Chelsea over the youth team players Michael Woods and Tom Taiwo was generally estimated at £5 million. There was some transfer expenditure on the likes of Dave Livermore and Kevin Nicholls.

Bates refused to shoulder any of the blame for Leeds's predicament, and in a statement criticised the club's previous regimes. He said: "The action taken brings to an end the financial legacy left by others that we have spent millions . . . trying to settle.

"But the important thing now is not to view this as the end, but the beginning of a new era. The financial burden of the past finally pushed the club into administration following the issuing of a winding up petition by HM Revenue & Customs, who will be one of the company's major creditors."

According to an expert in football finance, Bates has operated within the rules governing companies and insolvency. He said: "It may sound immoral to put a club into administration to wipe out the debts and then buy it back but it is entirely legal."

Bates said he was now looking for "serious investors" to come forward.

He added: "The shares in Leeds United Football Club Limited are owned by Forward Sports Fund who would welcome serious investors to help make this club financially strong again so that we can . . . ultimately arrive back in the FA Premiership."

Meanwhile, manager Roy Keane has a virtually full-strength squad as Sunderland prepare to take on Luton Town for their last game of the season tomorrow. Republic of Ireland midfielder Graham Kavanagh is the only absentee, with an ankle injury.

Keane is hoping to pip his former Manchester United team-mate and Birmingham manager Steve Bruce to the English Championship title after securing promotion back to the Premiership.

Should Sunderland win at Kenilworth Road and and Birmingham fail to win at Preston (both kick-offs 1pm), Keane's side will be champions.

Guardian Service