Rangers run risk of three-year Euro exile if they lose tax case

[ian1964 10,370]

Ibrox club face UEFA ban if HMRC liability forces them to start again as new company, finds Andrew Smith

 

RANGERS face the prospect of three years without European football if forced to start a new company because of the HMRC tax case.

 

The licence required to contest UEFA competitions can only be obtained by clubs that have been members of their national association for three years. If Rangers enter administration then fail to strike a deal with their creditors, the prospect of starting up again as a new company becomes a realistic possibility, but one UEFA is alert to.

 

â??If a club sets up a new company simply to avoid paying its debts or obligations then they would almost certainly fail the three-year rule,â? a spokesperson for UEFA told Scotland On Sunday. â??This is to ensure clubs do not simply create a â??newcoâ?? and leave the previous entity in charge of dealing with debts.â?

 

Rangers owner Craig Whyte, below, admitted last week that the Ibrox club could go into administration if they lost their ongoing tax tribunal with HMRC over the use of Employment Benefit Trusts and were landed with a £49 million tax bill. One possible option in that scenario, he conceded, would be to form a â??New Rangersâ?, with the assets, but none of the debts, transferred from the old Rangers FC.

 

Financial fair play is a key plank of Michel Platiniâ??s UEFA administration and the strict licensing criteria were applied in the summer in the case of the Romanian club Timisoara. They finished second in their top league but were denied entry to the Champions League and demoted to the second tier of their domestic set-up because they failed to meet the licensing criteria.

 

Following a failed appeal by Timisoara to the Court of Arbitration for Sport, UEFA made the following statement: â??Clubs are not allowed to change their legal form or structure in order to obtain a licence, simply by â??cleaning upâ?? their balance sheet while offloading debts â?? thus harming creditors (including employees and social/tax authorities) as well as threatening the integrity of sporting competition. Any such alteration of a clubâ??s legal form or structure is deemed to be an interruption to its membership of a UEFA member association and consequently three years must pass before a club can apply again for a UEFA licence. In other words, the three-year rule is designed basically to avoid circumvention of the club licensing system.â?

 

It appears difficult to see how Whyte could avoid administration if Rangersâ?? tax case goes the way of HMRC. In these circumstances, to exit administration as the same entity they went into it, Rangers would need to obtain a Creditors Voluntary Agreement â?? wherein creditors accept a pence-in-the-pound fraction of the sums owed to them. Insolvent companies need to have agreement that covers 75 per cent of their debt. HMRC has a policy of not voting for CVAs. If HMRC wins the tax case with Rangers, it will be owed more than two-thirds of the Ibrox clubâ??s debt.

 

Rangers, then, would have to form a new company that would have to apply for membership of the Scottish Premier League. On entering administration, the club would be hit with the automatic ten-point penalty. If Rangers cannot exit administration via a CVA any further punishment would be at the discretion of the SPL board, whose role it would also be to decide on what basis Rangers would be allowed to transfer their SPL share to a new company.

 

The six-man SPL board comprises Ralph Topping (chairman), Neil Doncaster (chief executive), Eric Riley (Celtic), Stephen Thompson (Dundee United), Derek Weir (Motherwell) and Steven Brown (St Johnstone).

 

If it were to come to a vote for Rangersâ?? re-admission, it could mean Celticâ??s Riley deciding on the fate of his clubâ??s arch-rivals.

 

But the reality is that SPL clubs are likely to allow a reconstituted Rangers back into the fold because without them the championship and its television and sponsorship deals would be devalued, with serious financial implications for the member clubs. Like the very bank that allowed the Ibrox club to rack up huge debts across the past decade, in terms of Scottish football, Rangers are simply too big to be allowed to fail.

 

http://www.scotsman.com/scotland-on-sunday/sport/rangers_run_risk_of_three_year_euro_exile_if_they_lose_tax_case_1_1938625

[stewarty 1,876]

Yet more speculation. Ifs and maybes. I'll wait to see the outcome of the tax case before I start worrying about this stuff. Ta!

[der Berliner 3,207]

On a sidenote, this would only hold true if we go int pre-pack (or whatever it is called), right? If we simply go into administration to clear the debts, face the 10-point penalty and have the assets split between the creditors ... i.e. the only real creditor that is Craig Whyte ... nothing of the above will hold true. Unless I am mistaken.

[Guest Dutchy]

Same old, same old if's and but's. There never seems to be as many 'If Rangers win the tax case as Rangers losing the case.

 

Great jounalism, not!!!

[craig 5,195]

On a sidenote, this would only hold true if we go int pre-pack (or whatever it is called), right? If we simply go into administration to clear the debts, face the 10-point penalty and have the assets split between the creditors ... i.e. the only real creditor that is Craig Whyte ... nothing of the above will hold true. Unless I am mistaken.

 

If we go into administration it will be because of the HMRC case. So HMRC will also be a creditor, and a larger one (probably) than Craig Whyte.

[rbr 1,247]

4 A licence may be withdrawn by the licensor’s decision-making bodies if:

a) for any reason a licensee becomes insolvent and enters liquidation, as

determined by the applicable national law (where a licensee becomes

insolvent but enters administration during the season, for so long as the

purpose of the administration is to rescue the club and its business, the

licence should not be withdrawn);

 

 

 

This is taken directly from article 14 . see attatched link http://www.uefa.com/MultimediaFiles/Download/uefaorg/Clublicensing/01/50/09/12/1500912_DOWNLOAD.pdf

[Zappa 0]

The guy Andrew Smith who wrote this article is one of the Scotsman's Celtic-focussed football correspondants and clearly a Celtic fan.

 

He's been writing (mostly about Celtic) articles for their Scotland On Sunday publication for years, but this season he's written half a dozen Celtic articles for the Scotsman as well. He's written well over 200 articles about Celtic for Scotland On Sunday in the past 3 years or so.

 

He hardly ever writes about Rangers.

[GovanAllan 0]

4 A licence may be withdrawn by the licensor’s decision-making bodies if:

a) for any reason a licensee becomes insolvent and enters liquidation, as

determined by the applicable national law (where a licensee becomes

insolvent but enters administration during the season, for so long as the

purpose of the administration is to rescue the club and its business, the

licence should not be withdrawn);

 

 

 

This is taken directly from article 14 . see attatched link http://www.uefa.com/MultimediaFiles/Download/uefaorg/Clublicensing/01/50/09/12/1500912_DOWNLOAD.pdf

 

Well going by that we are in the clear as we would only enter administration to save the club and business. Same old shit from the Scottish media only write the bits that they want to, to paint Rangers in a bad light. Exactly the same with the 25 point deduction there is no mention in the SPL rules about 25 points but dont let the truth get in the way of a bad story about Rangers.

[craig 5,195]

Makes sense when you think about it though (the negative story thing)... we have cleaned up our act to a very large extent with regard to "naughty singing"... Celtic havent. Therefore the mhedia will stop printing stories about offensive singing, because to do so they would almost be duty bound to include Celtic in their musings.

 

Celtic dont have any HMRC issues (that we know of....) so the mhedia can again take aim at Rangers without having to include Celtic in their analysis.

 

From this Bear's perspective I am quite comfortable with the negative stuff they are currently publishing. Why you may ask ? Because the HMRC case will be decided on the facts (IMO) whilst all the "sectarian singing" nonsense was something which had us punished on conjecture. At least we are dealing in black and white with the HMRC case.

 

Another reason why I am happy enough with them publishing negative information about us ?? Because it means we are obviously being successfful on the pitch.

[Zappa 0]

In late December '07 Andrew Smith wrote an article for the Scotsman A black day for Scots football which is basically an article about racism in Scottish football and especially focussing on the racism towards Mark Walters. In the lengthy article he mentions various other incidents of racism towards black players playing for Scottish clubs and ends the article with a section titled "Incidents of racism still blight game", but completely (and conveniently) ignores the well known racism towards Jean-Claude Darcheville and DaMarcus Beasley. This is not a balanced, unbiased journalist.