Another "asset" mortgaged off

[Zappa 0]

NO, I don't think you are (misunderstanding the situation).

 

As I see it, Whyte is on a no lose. If we win the tax case (unlikely in my view) he writes off the debt but owns the Club which is then worth two or three times his investment. If we lose then as you say, the "investments" become debts and he can sell the Club debt free and make a quick turn on his money, simples.

 

Or am I missing the point?

 

I'd rather not speculate on what his plans are, but yes, it does look as though things are set up in such a way that he can't lose serious money, certainly not tens of millions.

[Zappa 0]

Maybe it is me missing the point but I see no harm in Whyte protecting himself going into this.

 

He bought the club and accepted a contingent liability which is potentially lethal to the club. Why should he NOT protect himself ? SDM would, IMHO, have let the club go under - it did NOT look like SDM was making any attempt to protect the club at all.

 

Now some will say Whyte is only trying to protect himself, fair enough. But at least he is doing SOMETHING other than burying his head in the sand.

 

The big question is though Craig: What's more important to our new owner; protecting himself or protecting the club?

[forlanssister 3,105]

What difference does it make so long as the club are removed from the dark cloud hovering over them ?

 

It matters if those who can remove the "dark cloud" will not invest in the club if Whyte is at the helm.

[forlanssister 3,105]

The big question is though Craig: What's more important to our new owner; protecting himself or protecting the club?

 

Indeed it is, too many seem to assume that both are one and the same when they are patently not.

 

The crux may come in the shape of a partial victory in the tax case, if judgement goes against to the tune of £15-20m does he waive the 'loan and "invest" further monies to cover that or does he think "f*&K that I want 'my' £18m back"?

[GovanAllan 0]

It matters if those who can remove the "dark cloud" will not invest in the club if Whyte is at the helm.

 

If your talking about the same old faces you will find up in the hospitality suites on a match day, don't hold your breath they never have or ever will put their hand in their pocket.

 

They all talk a good game until it comes to the crunch then they all mumble under their breath about this or that and take a step back.

 

It will have to be new money from outside Ibrox.

[craig 5,199]

It matters if those who can remove the "dark cloud" will not invest in the club if Whyte is at the helm.

 

My point was that if they are investing it doesnt really matter whether Whyte is there or not because the club would be saved.

 

It appears you werent saying they would invest but that they would only invest under either A) OR B). Which is fair enough.

 

At this point I think it is moot because these same investors had the opportunity to buy the club when Whyte did and their liability would have been no worse than it is today. Not sure why we would think that they would invest should the tax case go against us. We were under that cloud anyway so why not show their hand then ?

[craig 5,199]

The big question is though Craig: What's more important to our new owner; protecting himself or protecting the club?

 

Protecting himself I would suspect. You may have a problem with that, I dont.

 

We were in an appalling siituation when he came in - we had recently went two years without ONE signing, the bank were running us (depending on who you believe), we were seeing tax bills popping out all over the place.

 

In short, we were lurching from disaster to disaster.

 

Now, I am not for one second saying we are not in a precarious position, we ARE.

 

But where I may differ from you is that if I look at this as if I was the one investing in Rangers I would be doing the exact same as Whyte in that I would be protecting myself first and foremost. And I would challenge anyone that suggested that I cared less about Rangers than them. We ALL love the club. But this is a business transaction too.

 

Given that we all know that unless you are Man City or Chelsea with multi-billionaire benefactors that owning a football club is not likely to be a profitable business on an operational basis (certainly so in the SPL and given all the deals that SDM cut to front-load income). Then you have to consider that Craig Whyte knows that making money from operations is unlikely. Any profit for him would be on the subsequent sale of the club, which is not guaranteed either.

 

So given that there is no guarantee of profit he is acting, as he should be, like a businessman. It may pain us to see him acting like a businessman rather than a fan but I think he is RIGHT to do that.

 

One other thing, what we cant forget too is that protecting himself and protecting Rangers, to an extent, are inter-linked. It is in his best interests too that he protects Rangers. Yes, I know, he is unlikely to lose out in an administration event due to being a secured creditor. But if he can avoid administration, and if he can push the club forward commercially, then he stands to make far more money in the longer term.

 

It could be that Whyte sees protecting himself as also protecting Rangers. The more that he can get funds out of the tax man's hands or the more that he can add to what the club owe him as a secured creditor then that also is protecting Rangers.

 

Personally, and this may be tin hat time, I think that if ANY of us were in Craig Whyte's position we SHOULD be protecting ourselves first and the club second (a close second). We are obligated to ourselves first and foremost IMO, to protect our wealth. The club would come second but it doesnt mean you dont care for it, or that you care less.

 

I have another question, perhaps BD can answer this, even though we dont have full details on the tax case. I am not sure if this has been discussed or not. But given HMRC are attempting to challenge these EBT's and effectively call them Schedule E (salary payments) this means the club would get a deduction from Corporation Tax for any liability (cant remember my tax too well but I dont think the penalty and interest are deductible). Given that the liability surely wouldnt be the full 49 million. I would have thought that the liability would be reduced to the extent of the credit we get on corporation tax liability being lower due to the profits being lower. This obviously assumes that we have been producing taxable profits, which may be a stretch too far, even for me, to believe.

[Bluedell 5,599]

I have another question, perhaps BD can answer this, even though we dont have full details on the tax case. I am not sure if this has been discussed or not. But given HMRC are attempting to challenge these EBT's and effectively call them Schedule E (salary payments) this means the club would get a deduction from Corporation Tax for any liability (cant remember my tax too well but I dont think the penalty and interest are deductible). Given that the liability surely wouldnt be the full 49 million. I would have thought that the liability would be reduced to the extent of the credit we get on corporation tax liability being lower due to the profits being lower. This obviously assumes that we have been producing taxable profits, which may be a stretch too far, even for me, to believe.

 

I don't believe we paid any corporation tax during the period in question, so there's nothing to set the deduction against.

[BrahimHemdani 1]

Not to be questioning you BH but on what grounds do you believe it is unlikely we win the tax case ? do you have any insight into EBT's and the taxation of them ?

 

It's a fair question, Craig, and all I can say is it's JMHO based on what I know of the facts and also talking to some accountants who have experience of tax avoidance schemes. As a mere financial adviser you will appreciate that I have no experience of such matters!

[craig 5,199]

It's a fair question, Craig, and all I can say is it's JMHO based on what I know of the facts and also talking to some accountants who have experience of tax avoidance schemes. As a mere financial adviser you will appreciate that I have no experience of such matters!

 

Again, not to give you a hard time BH but I would be interested in what experience these accountants have. I am by no means a tax expert but there are so many tax avoidance schemes that, frankly, stating they have "experience of tax avoidance schemes" is almost irrelevant unless they have a knowledge of EBT's.

 

You can avoid tax in so many different ways (and, indeed, with so many differing types of income and expenditure) that having experience in one tax avoidance scheme doesnt mean you are an expert in other tax avoidance schemes.

 

Dont get me wrong, accountants generally have a solid grounding in tax (we have to pass a few tax exams to become qualified - I very sadly wanted to tax the ATII (tax "expert" exams) after I qualified but never got round to it) but unless you specialise in tax then your knowledge is nothing more than rudimentary. And even if you do specialise in tax then you may never come across EBT's.

 

Again, the accountants you have spoken to may in fact be "experts" even in EBT's but unless they know the basis on which HMRC is making its case and how RFC structured their EBT's then even they may not know for sure what the situation is.

 

Maybe I am being naive, and maybe I am simply in denial that we might lose the case - but we have an eminent tax law QC working on our behalf who seems to be very confident we will win the case, so for now I will live in hope he is correct. And, yes, I do understand that he has an obligation to say that. But if he felt we couldnt win the case he would (or should) be pushing Craig Whyte to be settling with HMRC.

 

Fingers crosse I am right and your accountant acquaintances are wrong.... for ALL our sakes.