Tax fight â??is red herringâ??

[rbr 1,247]

Everyone thinks that Rangers are some how shafting Ticketus , the fact that they were dealing with CW and concluded a deal a full 5 weeks prior to buying Rangers , and at that time of concluding their deal in full knowledge of the fact that he didnt own Rangers, Feck them its CW's problem not Rangers.

 

Also for those that are stating why did Duff and Phelps go after the other £3.6 million , perhaps its because the money that was being frozen by the courts was used by HMRC to pay the VAT on the Ticketus deal

[chilledbear 16]

If the deal was done before Whyte bought Rangers, why should Rangers be held responsible.

[pete 2,499]

If the deal was done before Whyte bought Rangers, why should Rangers be held responsible.

 

Hey glad you woke up.:smile: That is why people are worrying about Ticketus.

[der Berliner 3,350]

Taken from FF, a little discussion by an FFer with an unaffiliated tax expert:

 

Perhaps not too much new stuff in here, but I thought I'd post details of a conversation I've had via LinkedIn with a Senior Tax Partner at a leading legal firm. He doesn't seem to sway in favour of Rangers or otherwise, so I found it quite interesting to hear from a neutral perspective.

 

+++

 

It started from a comment from him hence the initial blog-like post. If anyone sees this discussion on LinkedIn, I'd appreciate anonymity for the expert at all costs.

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EBT = Evil Bad Taxpayer ??

 

Aggressive tax â??planningâ? or â??avoidanceâ? is headline news right now. The line between tax evasion â?? illegally not paying the tax due - and tax avoidance â?? quite legitimately interpreting the law to reach an appropriate conclusion - is increasingly blurred. The use of employee benefit trusts is part of that debate and some of the comment on this has been .... well frankly, a load of rubbish.

 

One thing Iâ??ve heard on several occasions is that those involved, for example Rangers FC, "are guilty of tax evasionâ? â?? no, theyâ??re not. What Rangers and many other taxpayers did was tax planning = arranging your affairs in a way that allows you to pay the least possible tax within the confines of the law. Last time I checked, that precedent established by historic case law still applied. Rangers paid some of their players and senior employees in a way which meant their earnings werenâ??t subject to UK tax and they did this in a way that at the time was relatively common and not viewed with particular disdain. The Government has fought a â??hearts and mindsâ? campaign over the last 10 years to try to convince us that there is no difference between evasion and avoidance and everyone should pay the full amount of tax possible. Somewhere on that road they decided that they didnâ??t like EBTs. Hundreds if not thousands of taxpayers want to see the outcome of the recent Tribunal as there are millions of pounds of tax at stake.

 

However that may not be the end of the story. The Tax Tribunal is the first level at which a contentious tax point is debated. Whoever loses has the right to appeal to a higher level, although there is the question of whether Rangers can afford to do this given the legal costs involved. There are further rights of appeal which eventually end at our Supreme Court, and also the European Court of Justice. In the meantime in 2011 HMRC brought in targeted rules to stop the â??offensiveâ? use of EBTs. But clearing up the historic position could take years.

 

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*****,

 

Excellent article. However, my understanding of the situation at Rangers is that EBT's were used to pay salaries of staff rather than additional payments/bonuses. This is what HMRC is disputing and are classing as potential tax evasion?

 

The case itself isn't as much of a landmark case as people think due to the way EBT's were used by Rangers, not the use of them in general.

 

There are a few examples of companies using them to pay additional bonuses (which is slightly more acceptable to HMRC), and these have been settled out of court already (see Vodafone, Arsenal).

 

Correct me if I'm wrong as I may be way off (and hope that I am), and you are the tax expert!!

 

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Rory: Thanks, glad you enjoyed it. Businesses have used EBTs in many different ways and the underlying substance has varied with some using profits earned over many years to fund the EBT and others using exceptional profits. You mention whether it is salaries, bonuses or other and my view on this is that it shouldn't actually matter. In the view of HMRC, any remuneration for employees should be subject to income tax and it is noticeable that they chose to name their anti-avoidance rules aimed at EBTs and similar as "disguised remuneration". So they contend that once funds have left a company and gone "offshore", if the money finds its way back to an employee or director, for example by way of a long-term loan, then they should be taxed as income. A counter-argument is that it is not remuneration paid by the company and the trustees administering the EBT can at their discretion decide where the money goes. This is why the documentation surrounding the EBT is so important - and there have been suggestions that the Rangers documentation isn't helpful (am guessing here but maybe there is something in writing - as part of player signing negotiations ? - which says that overseas players will be paid with no UK tax ??) which is maybe why HMRC have litigated, viewing it as a weaker case.

 

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Thanks for your response *****.

 

My reply was based purely on my interpretation of the ongoing situation with Rangers/HMRC, so is most likely wholly incorrect!

 

Your comment regarding documentation surrounding the EBT seems particularly pertinent, as there has been talk of "unofficial" letters given to players promising payment through EBT's. I'm guessing that the unofficial nature of these (no letterheads, separate from contracts) forms much of Rangers' argument - these were letters of intent and not contractually binding.

 

Regardless, it will be an interesting few weeks ahead for sure - and not just for Rangers Football Club.

 

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Thanks Rory, your interpretation is pretty good actually. I could write pages on the documentation issue but your comment is spot on - if HMRC can present tangible evidence that the funds going into the EBT were always intended to find their way to players and staff, I struggle to see how Rangers can win unless the court ignores the substance and upholds some technical argument regarding the relevant tax law. Most tax case decisions these days tend to find in favour of the substance of what happened rather than its legal form. In the eyes of HMRC, any documentation is fair game whether a letter, internal memo, email or even a handwritten note, and so the existence of anything which points towards "disguised salary" will not help their case.

[ian1964 10,500]

Rangers Accounts

 

http://www.rangerspedia.org/index.php/Rangers_Accounts