What phil mcgobbler was allegedly told by Bain

[maineflyer 0]

It sounds to me that the HMRC is being either unfair or showing complete incompetence. Why did they not query these payments at the time or at least cast enough doubt on them for accountants to be wary of using them?

 

It sounds like a tax loop-hole to me, but while you can close the loop-hole, I don't see how you can make it a retrospective offence. It's like starting to charge VAT on Jaffa cakes and then doing you for not paying it for the last 20 years - but multiply that by a factor which means you lose your house.

 

Tax loop-holes need to be queried and resolved as soon as possible - it's not fair on anyone to think they are legally entitled to pay less tax, file the returns and then find out 20 years later it wasn't quite right, be charged the full amount plus 50% interest plus 75% penalty fee. It sounds like a joke.

 

There is a massive difference between tax avoidance and tax evasion and it's pretty obvious we were doing the former, and we're being punished due to customs being too stupid to cast light over it at the time.

 

Unfortunately a lot of legislation isn't exactly defined. It is intentionally open to interpretation and requires case law to establish precedent and to define the boundaries, which is what is happening here. just because you're investigated, doesn't mean you are guilty or even that you intentionally sailed close to the wind. Neither does intentionally adhering to the best professional tax advice mean that you casnnot later be prosecuted for following that same advice if interpretation of the law subsequently shifts the goalposts. Just the way it is.

[andrew_2010 0]

Tax loop-holes need to be queried and resolved as soon as possible - it's not fair on anyone to think they are legally entitled to pay less tax, file the returns and then find out 20 years later it wasn't quite right, be charged the full amount plus 50% interest plus 75% penalty fee. It sounds like a joke.

 

From what I can work out (sadly based on the numbers quoted on the original post) it's not actually 50%, it's just compound interest but as it's been so long, you get charged interest on the interest as that has beed added to the "debt" e.g. say the debt was 100 after 5% interest the debt would be 120 (100 debt + 20 interest). then you add 5% of that the next year so that would be 120 + 24 = 144, and so the following year it's even more!

 

the formula is debt *{ (1 + interest [as percentage e.g. 2.5 % is 0.025])^(number of years)}

 

The problem for me is how you can charge interest for that many years (15 or 20?!) so even at a low interest rate it is huge. Unfair in the sense that you weren't given the opportunity to pay off the interest or even reduce the debt and have been penalised for their delayed interest.

[calscot 0]

I understand compound interest and if it adds up to 50%, it's still 50% interest. I agree it's not 50% APR but I never said that.

 

Your second point is what I was getting at and I'm glad you agree...

[andrew_2010 0]

I'm sure there are some of our fan base that might struggle with comparing a 50% interest figure with the "normal" interest rates quoted eg 0 to 5%...

 

Apparently the IR do this often(?!) and it's an easy way to scare you into paying money? seems very corrupt to me!

[chilledbear 16]

Is there a date set for this to be heard, or is it continually being changed?

 

Also is it possible to find out the other Clubs who are under the same threat?

[plgsarmy 111]

I'm no tax expert but I think this so-called journalist has simply added all the contributions made over the years (just short of �£48m) and assumed tax liability of 50%, hence his �£24m figure. I believe some legislation was put in place in 2005 to plug this 'loophole' and again in 2007 when schemes were amended to take account of this legislation. Unless the legislation was watertight and we broke the law then we should fight this all the way. We should also be going after whoever advised us over this, does their professional indemnity insurance not cover this? So many questions and I don't think the club has been straight with us at all.

[Frankie 8,153]

I'm no tax expert but I think this so-called journalist has simply added all the contributions made over the years (just short of �£48m) and assumed tax liability of 50%, hence his �£24m figure. I believe some legislation was put in place in 2005 to plug this 'loophole' and again in 2007 when schemes were amended to take account of this legislation. Unless the legislation was watertight and we broke the law then we should fight this all the way. We should also be going after whoever advised us over this, does their professional indemnity insurance not cover this? So many questions and I don't think the club has been straight with us at all.

 

I think most of that is fair comment.

 

Do the Trust and/or Assembly intend raising this issue formally with the club and ask the kind of questions we've seen above?

[Frankie 8,153]

Is there a date set for this to be heard, or is it continually being changed?

 

Also is it possible to find out the other Clubs who are under the same threat?

 

I think I've heard every month mentioned from February to May.

 

These things can take years though as we seen with Dave King.

[chilledbear 16]

Why is it only Rangers who seem to be under these restraints? I have no quarrel about living within our means, but I have yet to hear of other Clubs being subject to such strict financial restrictions.

[craig 5,199]

It sounds to me that the HMRC is being either unfair or showing complete incompetence. Why did they not query these payments at the time or at least cast enough doubt on them for accountants to be wary of using them?

 

It sounds like a tax loop-hole to me, but while you can close the loop-hole, I don't see how you can make it a retrospective offence. It's like starting to charge VAT on Jaffa cakes and then doing you for not paying it for the last 20 years - but multiply that by a factor which means you lose your house.

 

Tax loop-holes need to be queried and resolved as soon as possible - it's not fair on anyone to think they are legally entitled to pay less tax, file the returns and then find out 20 years later it wasn't quite right, be charged the full amount plus 50% interest plus 75% penalty fee. It sounds like a joke.

 

There is a massive difference between tax avoidance and tax evasion and it's pretty obvious we were doing the former, and we're being punished due to customs being too stupid to cast light over it at the time.

 

HMRC would have been unaware of these payments at the time because the only thing RFC would have needed to do would be to make their regular payroll tax returns. HMRC wouldnt get involved as they didnt know we were contributing into EBT's. And RFC, rightly, would not have sought HMRC approval for them because the likelihood is that it would simply open HMRC eyes to what looks like it may have been a loophole.

 

I havent looked into it in detail but this is either a case of tax avoidance (which is legal and therefore HMRC would have no case against RFC) or tax evasion (which is illegal and will leave us with a massive tax bill). It is often difficult to determine between what is evasion and avoidance and this seems to be one of those cases. Whilst I hope for the same outcome as MF believes will happen my fear is that the country's coffers are low (massive deficit) and that may play a part in the outcome of the case as HMRC seek to fill the coffers wit as much money as they can. I can see this case going all the way to The Lords to be honest

 

The problem, Cal, is that although it seems it may be a loophole the Finance Act is always open to interpretation - Rangers will be arguing it is a loophole whilst HMRC will be arguing that it is an abuse of the Finance Act. So it wouldnt be a retrospective determination/closing of a loophole but rather an abuse of existing legislation (if HMRC get their way). Your Jaffa cakes analogy isnt what is happening here. HMRC are not applying new tax rules to existing products. What they are arguing is that the rules (VAT on Jaffa Cakes in your analogy) is already in place and that Rangers simply have not paid it.

 

Whilst it may sound like a joke every company in the UK SHOULD be aware of not just the tax legislation but also the consequences should they fall afoul of the legislation. Back in 1999 I had to accompany a client to a payroll investigation with HMRC. Now the guy owed more than 100k in payroll tax (he owned a small company) and was struggling to stay afloat. HMRC not only charged him the payroll tax (payable within 6 months) but they also levied interest and also charged him a 100% penalty - they KNEW that their actions would put his company out of business and, in fact, they knew that he would never be able to pay the interest, penalty and liability. HMRC are governed, mostly, by red-tape and "rules" - and sadly there is barely a modicum of common sense amongst them at times.

 

Sorry Cal but I have to disagree with your final paragraph. There most certainly is NOT a massive difference between avoidance and evasion (there IS in concept but there is NOT in application). I also disagree that it is "pretty obvious" that we were doing the former - if it were HMRC likely wouldnt have been pursuing this. Unless you know the tax legislation then you (not just you but all of us) cant know that we were practicing avoidance rather than evasion. However, what I take comfort in (to an extent) is that we didnt employ EBT's blindly but with the advice of tax professionals - so there must be good cause to think that we were indeed practicing avoidance. However, playing devils advocate, there have been plenty of instances where those tax professionals have been challenged by HMRC and lost.

 

We can but hope that the professionals and their advice are proven correct on this one.