From the Herald , after Murray's briefing

[rbr 1,247]

Whyte told to take on Rangers tax risk

Published on 2 Apr 2011

 

 

BUSINESSMAN Craig Whyte will have to take on any responsibility arising from a multi-million-pound dispute between Rangers and the taxman if he wants to buy the club, The Herald understands.

 

Mr Whyte faces the crucial decision on whether he is willing to buy the club on this basis as make-or-break takeover talks enter their final stages.

 

The case between Rangers and HM Revenue & Customs is due to come before a tribunal within weeks. Amid reports that the liability could run into tens of millions of pounds if Rangers were to lose, the tax question appears to be a potentially major obstacle to a deal.

 

The issue, which concerns using an employee benefits trust to remunerate players, will almost certainly have been one of the biggest areas of Mr Whyte’s due diligence work on Rangers’ books. The crux of the deal emerged on a day when the club released interim financial figures showing a retained profit of Ã?£9 million but a decrease in turnover and season-ticket sales.

 

In an interview after presenting the results, Alastair Johnston, the Rangers chairman, was reported to have suggested the club could go out of business if it were to lose the tax ruling.

 

But in an unusual move last night the club released a statement via the Plus Stock Exchange to “clarify that our chairman did not state that the club could go out of business”.

 

Earlier, Mr Johnston had revealed the club’s prospective new owner had held another positive meeting yesterday before takeover talks were put on hold for the weekend. Johnston had earlier claimed a Whyte buy-out would be “good” for Rangers and it could be that an offer worth around Ã?£27m for Sir David Murray’s 85% shareholding is made in mid week.

 

But the Ibrox chairman also admitted the dispute with HMRC over a major tax case remained “the gorilla in the room”: the cost could be Ã?£30m.

 

Despite suggestions that Sir David Murray’s Murray International Holdings, which owns 85% of Rangers, might provide some indemnity or warranty to Mr Whyte on the tax issue, this appears highly unlikely.

 

The club’s shares are traded on the PLUS stock market, with small shareholders, including fans, owning about 9%.

 

Rangers declared that it continued to “vigorously contest” HMRC’s challenge and “in doing so continue to receive reassuring opinion from tax, accounting, and legal specialists”.

 

The latest accounts of Murray International, meanwhile, reveal no provision for any potential liability.

 

In the accounts, seen by The Herald, Murray International states: “On the basis of expert tax advice, the group continues to defend a tax query raised by HMRC into the operation of an employee benefit trust.

 

This is scheduled for resolution by a tax tribunal in 2011.

 

“The directors, having considered professional advice, are of the view that it is reasonable not to provide for amounts in respect of this matter.”

 

Rangers believe there is legal precedent in favour of the club from a case involving a company called Dextra which came before the House of Lords.

[craig 5,199]

1. If we were to lose this case (heaven forbid) why the f... should Whyte have to foot the bill for SDM's management. Whilst I continue to argue that this is a position which would have been taken after taking professional advice, only the most churlish would suggest that Whyte should take on an obligation which was, effectively, incurred LONG before his takeover.

 

2. If we DO lose the case (again, heaven forbid) will it actually put to bed the notion that SDM has actually been GOOD for Rangers ? He came in and the company had ZERO debt, was winning domestic trophies and attracting some of the world's finest players.... he will, shoudl we lose this case, go OUT with the club having only 13 first teasm squad players (including some youths in that), with about 40-50 million pounds worth of debt too. Anyone still going to suggest SDM was GOOD for Rangers should that be the case ?

[chilledbear 16]

If Rangers/Whyte were going to be landed with a �£30m tax bill, I find it hard to believe Whyte would continue with this.

[maineflyer 0]

I honestly don't see Whyte taking on this tax liability, which almost certainly means the deal collapsing if he is asked to do so. After that, only administration awaits us and ultimately the destruction of 139 years of proud heritage. Some custodian you turned out to be Mr Murray.