Hearts of Midlothian Football Club are today breathing a huge sigh of relief having negotiated a settlement agreement with HMRC over an outstanding tax bill.

The dispute, which at one point threatened the existence of Edinburgh's oldest club, concerned tax and national insurance liabilities deriving from players loaned to Hearts from Lithuanian club Kaunas FC.

The resolution will see the Scottish club pay a total of £1.5m to the taxman over a three-year period, beginning next May.

Hearts director Sergejus Fedotovas said: 'We are satisfied that this resolution provides the club with an opportunity to now move forward with certainty. We believe that the payment terms agreed with HMRC allow the club to manage repayments in a way that will not be detrimental to longer-term development of the club.'

The amount agreed is lower than the £1.75m - excluding interest and penalties - that HMRC had originally been seeking to reclaim through tax tribunal hearings, which began last month.

HMRC refused to comment, due to the department's stance of not speaking on individual tax cases.