Boost For Club In EBT Battle? ... from FF

[der Berliner 3,251]

An article to be linked later on today, typed by a fellow poster on FF:

 

By HUGH MacDONALD

 

Grey area which has become a lot darker . . .

 

When is a written agreement not a contract?

 

The answer may be: when it is an employee benefits trust.

 

The SPL last night announced it would investigate Rangers over its use of EBTs. It cited the following:

 

''SPL rules D9.3 and D1.13 impose a prohibition on players receiving payments for playing football or participating in an activity connected with football except where such payments are made in accordance with a form of contract approved by the SPL and require that all such contracts are submitted to the SPL within 14 days of being entered into.''

 

 

There is, according to experts, a valid case to be argued that EBTs do not constitute a contract. Richard Cramer, a lawyer with FrontRow Legal, a firm that specialises in sports business, believes the discretionary nature of payments under trust rules is the opposite of the normal understanding of a contract.

 

''Rangers could argue to any inquiry that the EBTs are a private matter between club and player because they involve a discretionary payment. They could say to the league: ''Why should we inform you of discretionary payments that do not fall under the umbrella of a normal contract?''

He added: ''For example, with EBTs there is no contractual enforcement right. You are relying on the goodwill of your employer and you could advance the argument that if there was no contractual obligation to pay money then there is no binding contract.''

 

Cramer said: ''EBTs have always been a little bit scary from a player's point of view precisely because it is a discretionary payment. What the player is relying on is the ability of the owner or company to honour the agreement. It is always a risk but it once may have been a risk worth taking.''He added, though, that this was not the case now. ''The taxman has put the frighteners on the clubs,'' he said.

 

However, he believed there was room for Rangers to manoeuvre with the SPL.

 

''There is an argument that the club could simply say that all EBTs fall outside the normal definition of contract,'' he said. Graeme Nuttall, recently appointed independent adviser on employee ownership to the government and an expert on EBTs, said payments made under the scheme were ''not a contractual right''.

 

''There is no obligation to pay the employee a certain amount of money,'' he said. ''Typically, there would be an expression that you were part of a bonus plan and that would be paid into an employee trust. So it is not a contractual right for the player to receive a sum of money.''He conceded, however, there would be documentation on both sides.

 

''The player would receive some documentation and there would also be a trust deed,'' he said. ''There could even be a document creating a sub-trust. You would expect letters of instruction from the club. The trustees would have issued guidance that is not strictly legally binding. It all works on a trust basis.''Nuttall, a partner for Field Fisher Waterhouse, a leading law firm, was keen to emphasise that employee trusts had useful benefits for the community,

 

''Employee trusts are essential to achieving employee ownership in many cases. There are a lot of good, genuine employee trusts out there,'' he said.

 

''It has been a constant frustration to me over the years that employee trusts have been used for tax-driven purposes rather for genuine purposes,'' he said. ''I do not know the details of the scheme at Rangers but I assume it was tax-driven.''

 

Nuttall, who was approached by Nick Clegg, the deputy prime minister, to advise on employee trusts, said of tax-driven schemes: ''Examples like this cause terrible problems to those trying to promote schemes to give employees more say in the running of their business.

 

''One businessman who I had been advising phoned me up saying: 'What are you trying to get me into? Look what has happened to Rangers'.''

 

He added: ''I had to explain to him that I was advising on trusts to be set up as part of a genuine ownership structure.''

 

Essentially it looks that EBTs do not count as part of contracts and if the latter had been registered with the SFA, they can do nothing about the EBTs, who were discretionary stuff between the player and the club, perhaps linked to winning the title, reaching the CL and whatnot.

You'd hope that if the government adviser in such things says this, the SFA / SPL has no room to target us about it ... even in this day and age.

 

Another poster of some standing over there reports that the admins and HMRC are discussing (!) a CVA as we write.

Edited March 6, 2012 by der Berliner

[Frankie 8,151]

Good to read some positive news.

 

I'm really worried at our lack of representation on the SPL and SFA committees though. As I've said before, in many ways, their attempts to cripple as are going to be our biggest battle ahead.

[Bluedell 5,344]

I thought that the whole issue about our EBTs was that they are a contractual right?

[der Berliner 3,251]

That happens when football people think they have suddenly developed a knack for business stuff and hare after a rumour from you-know-who ... maybe?

[chilledbear 16]

Agree Frankie

 

I'd like to know who is talking for us at all these enquiries.

[calscot 0]

I thought that the whole issue about our EBTs was that they are a contractual right?

 

I'm under the impression that the whole argument with HMRC is whether it's a contract or not... We're arguing that it's not a contract and not a right.

[Frankie 8,151]

This story is now online:

 

http://www.heraldscotland.com/sport/football/grey-area-which-has-become-a-lot-darker.16945029

[Bluedell 5,344]

I'm under the impression that the whole argument with HMRC is whether it's a contract or not... We're arguing that it's not a contract and not a right.

 

I think that we are saying the same thing.

[der Berliner 3,251]

I'm under the impression that the whole argument with HMRC is whether it's a contract or not... We're arguing that it's not a contract and not a right.

 

As posted in another thread, one rumour now goes that we actually won the big case, but HMRC is only willing to do a CVA with us when we pay up all the VAT et al stuff accumulated over the Whyte period in full. (And yes, I'm bulletproof!)

[Bluedell 5,344]

As posted in another thread, one rumour now goes that we actually won the big case, but HMRC is only willing to do a CVA with us when we pay up all the VAT et al stuff accumulated over the Whyte period in full. (And yes, I'm bulletproof!)

 

But if we have won the tax case and paid up the VAT and PAYE, why would we need a CVA?