Just to further confuse the issue

[rbr 1,247]

Rangers administration: Key witness says Rangers can still win £50m tax case

 

 

 

 

 

By ANDREW SMITH

Published on Sunday 19 February 2012 00:00

 

 

 

A KEY witness at Rangersâ?? tax tribunal over the use of Employee Benefit Trusts (EBTs) has told Scotland on Sunday he believes the club can still win the case that could otherwise land them a bill for more than £50 million from Her Majestyâ??s Revenue and Customs.

 

 

The source, who asked not to be named with a judgment still possibly two weeks away, called into question owner Craig Whyteâ??s implication of the so-called â??big tax caseâ? in the Ibrox clubâ??s plunge into administration last week. HMRC insisted that the reason was a further £9m in unpaid tax accrued since Whyte took over the club last May.

 

â??Until a fortnight ago, it was widely reported that Rangersâ?? chances of winning the tribunal were 50-50, now it is said they will lose,â? the source said. â??Yet nothing can have changed in that intervening period, with the tribunal ending last month [18 January]. It has been said Whyte must have got wind of the outcome ahead of the club being placed in administration, but he canâ??t have done so. The opinion of the judges must remain strictly confidential until they make public their decision. If Rangers won the EBT case, their future should have been secure. Now it wonâ??t be and, in that scenario, serious questions must be asked of Whyte.â?

 

The source says there are â??mythsâ? about how EBTs were administered when Sir David Murray owned Rangers, and that HMRC made â??no headwayâ? in convincing the three judges who will decide if these were operated in a manner that changed them from a legal tax avoidance loophole to a tax evasion scheme.

 

EBTs are believed to have been run by around 5,000 businesses in the UK, including football clubs south of the Border. They became illegal in December 2010 but, until then, firms had been able to exploit the tax laws to provide sums to employees without PAYE or National Insurance as long as these were in the form of discretionary, repayable loans. At the tax tribunal, HMRC argued Rangersâ?? use of them for nine years was, in fact, a way to help mostly foreign players evade tax on salaries and bonuses. The source, who is not connected to Rangers but had clients who benefited from EBTs, claims that this entirely misrepresents the scheme in operation at Ibrox. â??It was totally and absolutely correctly administered, and the club met all their legal responsibilities and complied with all tax laws,â? said the source. â??They took advice from top-notch lawyers and a whole battalion of the best accountants on a global level.

 

â??I have read a lot that isnâ??t true about how Rangers were supposed to have misused them. They werenâ??t written into the playersâ?? contracts of employment. They were totally separate. Money in any EBTs was not a salary sacrifice. The EBTs were independently administered offshore in Guernsey. I have heard it said that players had letters stating they did not have to pay these loans back. The tax commission hammered away at that but made no headway because these letters categorically do not exist.â?

The Rangers Tax Case blog, which has covered the situation exhaustively for almost two years, claimed the â??smoking gunâ? for HMRC was a number of letters indemnifying players from any future tax liabilities on money placed in their EBTs.

 

The source insisted: â??There is nothing unusual in that as it is always employees who set the schedule basis for tax and there was no great gain for the players.â?

 

But the source also admitted: â??The very slight weakness is that the administrators in Guernsey werenâ??t always as diligent in their book-keeping as they should have been. Players buggered off back to Argentina, Italy and Australia and they didnâ??t keep track of these movements, as was incumbent on them. This was tightened up, though, over time.â?

[stewarty 1,877]

A small glimmer of hope but interesting that you highlight that rbr, because one of the pundits on Radio Clyde, Darrell King I think, who has long suggested that he has seen proof of the existence of these 'side letters' which allegedly supplemented the players contracts in respect of EBTs, was denying that he had actually seen any during the week. Basically he was asked further about it and backtracked rapdil

[Guest Dutchy]

As far as I'm concerned Whyte doesn't think we'll lose either so he purposely didn't pay Rangers PAYE and VAT tax bills in order to force HMRC to try the admin route. He's not likely to make any money any other way than his 'expetise' in these types of companies otherwise.

 

This way, he pockets a fair sum. How much that will be is yet to be discovered and he's very adament that he's not broken any tax laws.

 

How many SFA articles he's infringed is another matter however.

[way2go 0]

Several weeks back I thought I had a handle on how Whyte was playing it, now I am more than confused.When hmrc moved to admin us on Tuesday I thought they had lost the big case and wanted us for the 9mil.Now I am not sure about any of it

[stewarty 1,877]

Several weeks back I thought I had a handle on how Whyte was playing it, now I am more than confused.When hmrc moved to admin us on Tuesday I thought they had lost the big case and wanted us for the 9mil.Now I am not sure about any of it

 

I don't think HMRC or Rangers know for certain what the outcome of the tribunal is. No doubt it causes uncertainty until such time as it is resolved one way or the other but I think Whyte has tried to use it to his own advantage. When he announced his reasons on Monday for creating notice of his intention to go into administration, he said this was the reason. Then we actually find out that all Whyte was doing was trying to flank HMRC who were on their way on Monday to raise their own petition to have us go into administration. All HMRC did was revise their petition and submit it Monday night for the hearing we eventually had on Tuesday afternoon.

 

Knowing now that he hasn't paid substantial amounts of VAT, PAYE and NI which have fallen due since he took over, its clear that this was either his intention all along. I think some events have played a hand in this eventuality - e.g. our failure to achieve champions league or europa league football, has had a significant impact on our budget. But he has made a major error in thinking he can plug holes in our finance by failing to pay tax. The possibility of raising working capital by borrowing from ticketus was gone because he had already done that to secure the funds to buy the club.

 

And all the while he's tried to protect any liability to himself by not investing any of his own cash and securing debts to himself.

 

What a tawdry mess this has left us in.

[bluebear54 0]

As far as I'm concerned Whyte doesn't think we'll lose either so he purposely didn't pay Rangers PAYE and VAT tax bills in order to force HMRC to try the admin route. He's not likely to make any money any other way than his 'expetise' in these types of companies otherwise.

 

This way, he pockets a fair sum. How much that will be is yet to be discovered and he's very adament that he's not broken any tax laws.

 

How many SFA articles he's infringed is another matter however.

 

Don't think so Dutchy. My take is that CW certainly witheld the PAYE and VAT, but I don't think he was forcing the hand of HMRC. He may not have had any choice, financially It would seem that not all resources available to RFC were made available to them. This leads to the question of whether the Ticketus money was already eaten up by funding the takeover. Otherwise, there was £24m in the pot to certainly pay the PAYE and VAT and other outgoings.

 

The administrators were making noises yesterday that if HMRC had wanted us to fold, they would have issued a winding up order, or would have gone for administration already. There are also reports that HMRC are under pressure from the Scottish Government/Scottish Parliament not to put Rangers out of business.

 

As far as I understand it, HMRC only got involved in the administration thing last Monday when they became aware that CW had posted a Notice of Intent at the Sheriff Court in Edinburgh which would have allowed the Club to escape administration by putting together a CVA. HMRC then appealed for an independent administrator to be appointed, and Lord Menzies ruled that Rangers had until 3.30pm to appoint the company of their own choice. So I take it that this was a wee bun fight about who would be appointed as adminsitrators, and HMRC essentially forced CW's hand.

 

Nice to see that you mention "How many SFA articles he's infringed is another matter however." This, I think is key to a lot of things, and I think it's important to draw a line which distinguishes the actions of CW (if his takeover is proved to be illegal or if the SFA are proved to be negligent in their duty) and any actions by RFC.

[Guest Dutchy]

I don't see your point in mentioning the ticketus carry on. We've all just found out that he's not been paying the tax from the first day he walking through the doors at Ibrox. HMRC have also known that he's not been paying the tax due since last May.

 

You say that HMRC only became invloved after CW started the ball rolling, but stewarty's post above is what I've been hearing, but I'm sure you, or someone else can cut'n'paste all the scanned docs and post them on this site, I'd say CW is a chancer and is defended by other chancers who work in that environment.

 

What has any of the other tax cases got to do with those facts, or issues??? I think it was planned all along, you don't. That's the crux of the matter and we don't agree with each orther. So be it!