The Inland Revenue have dropped their legal challenge to Leeds' administrators KPMG, ending the summer-long saga.

HM Revenue and Customs had challenged the way KPMG had guided Leeds out of administration on technical grounds and the case was due to be heard in the High Court on Monday.

Bates put Leeds in administration with debts of around £35million on May 4, with the Inland Revenue owed £7.7million.

KPMG immediately sold the club to a new company headed by Bates, but his original 1p-in-the pound offer to pay off creditors, announced at a stormy company voluntary arrangement (CVA) meeting, was legally challenged by the Inland Revenue.

The administrators responded by putting the club back on the market and agreeing to sell it back to Bates again outside the CVA, securing a better 11p-in-the-pound deal for creditors.