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The 22-year-old winger, who was signed by former manager Dennis Wise in the summer of 2004 along with fellow international Adrian Serioux, has been out of action since the beginning of the year with a knee injury and with his contract up next month the club took the decision to let him go.
Simpson, who has been capped 13 times by Canada, was a first-team regular under Wise but has struggled with fitness and form this season, failing to gain the necessary number of appearances required to renew his work permit.
"Josh gave us his best shot" said Ray Wilkins. "Unfortunately things have not worked out for him. We appreciate very much everything he has done for us. But, given the number of games he played, it was going to be extremely difficult to get a work permit for him."