The former Leeds United chairman Peter Ridsdale is to continue working as Preston North End's chairman of football, despite being disqualified from acting as a director of any company for seven and a half years. Ridsdale was disqualified after a company he owned while working for Cardiff City, WH Sports Group, went into liquidation in April 2009, owing £442,353 in unpaid tax and VAT.

The disqualification bars Ridsdale from being a director and managing or controlling a company.

Ridsdale joined Preston last December, appointed by the club's major shareholder, Trevor Hemmings, a substantial property and horseracing businessman, as the investigation into Ridsdale's affairs, by the Insolvency Service and HMRC, was continuing. Because there was the possibility he would be disqualified, Ridsdale did not become a director of Preston and both he and the club emphasised that he cannot sign any contracts or commit the club to financial liabilities.

Ridsdale said he acts as an adviser to Hemmings on the investment in Preston and that he informed the Football League of the pending disqualification proceedings before he took on his role.

The league is now expected to examine Ridsdale's responsibilities and authority at Preston in more detail, to be satisfied they are not, in practice, sufficiently senior as to breach the disqualification terms. Although he is not the chairman of the club itself, there is no chairman; there is a deputy chairman, David Taylor, one other executive director, Kevin Abbott, and three nonexecutive directors.

Responding to his disqualification, the league said only: "We are studying the judgment."

Ridsdale, who has previously been involved at Plymouth Argyle, Cardiff City where he saw the club into their new stadium, and Barnsley, is most remembered as the chairman of Leeds when they collapsed financially in 2002. With debts of more than £100m, Ridsdale famously said Leeds had "lived the dream", amassing a squad to reach the 2001 European Champions League semi-final, on borrowed money.

Leeds were subsequently taken into administration by the directors chaired by Ken Bates in 2007, with HMRC owed approximately £7m. However the subsequent investigations did not result in disqualification proceedings against Ridsdale or any other Leeds director.

WH Sports was Ridsdale's own company, through which he was paid for his work at Cardiff, where he worked from 2005 to 2010. When he became the club's chairman in 2007, he was paid as an employee, and ceased trading through WH Sports. He told the Guardian he was seeking a settlement with HMRC of the money owed, when the Insolvency Service launched its investigation.

"I have been a company director for 30 years and have always sought to pay properly all money due," Ridsdale said, adding he is still seeking to settle with HMRC.

The Insolvency Service, describing Ridsdale as "the former chairman of Leeds United, Barnsley and Cardiff City", said in a statement: "We will investigate unacceptable conduct and deal robustly with directors who harm creditors by using unacceptable financial practice."