Two sides of the same coin - THE taxman cometh.

[ian1964 10,419]

But does he advance in pragmatic peace or in purposeful anger? The role of the HMRC in the unfolding drama at Rangers has been subject to polarised views. Charles Green, the head of the latest consortium to seek control of the club, believes the taxman may have to be content with a reduced sum instead of debt repayment in full.

 

"If they turn down the cash that is in the pot, then they will get nothing," was his succinct view at a press conference on Sunday. Something is better than nothing was his summation of the situation.

 

However, a contrary view has been expressed by Dr John Beech, an expert on football insolvency. His study of the recent history of clubs going into debt in England shows that HMRC have been unrelenting in their pursuit of their money. He believes Rangers will be "pursued with maximum prejudice".

 

Dr Beech, senior research fellow and head of sport and tourism at Coventry University, has written a prestigious paper on insolvency of football clubs for the Centre for the International Business of Sport. He is keenly aware in a situation of insolvency that some matters differ in England and Scotland. For example, the "football creditors' rule" in England means that debts to other clubs or players are prioritised and must be paid in full before the club is eligible to compete again in the league. This does not apply in Scotland.

 

Dr Beech â?? visiting professor at both the University of Applied Sciences in Kufstein, Austria, and the IE Business School in Madrid â?? has studied the HMRC reaction to clubs in financial trouble closely over the years. He said of the Ibrox situation that the taxman was desperate "to get their pound of flesh for a whole bunch of reasons, nothing to do with Rangers."

 

Dr Beech said there had been a significant change in the attitude by HMRC around 2009 "when they started taking a very, very hard line". He added: "They do not hold back in issuing winding-up petitions." He believes the high profile of Rangers and the amount of money the club owes to the taxman â?? pitched at a dramatic £93m by the administrators, but already around the £13m mark â?? means that "literally HMRC can not afford to let them get away with it".

 

Dr Beech accepts a creditors' voluntary agreement is the preferred route out of the crisis at Rangers, but he added: "HMRC consistently opposes CVAs and the only flexibility it has is if it recognises that a delay in proceedings will help them get their money."

 

He said bluntly: "HMRC stick to a line rigidly. It is this: 'We want our money'. It is absolutely indifferent to what level the club is or what amount is owed. The taxman is relentless."

 

Dr Beech, author of the award-winning Football Management blog, said the size of Rangers could work against the club. "This is a most high-profile case against a famous football club. I think HMRC would be very reluctant to show any weakness whatsoever. They will pursue with maximum prejudice."

 

So why has the taxman been so patient? Why has he not waded in at Ibrox, demanding money? "My reading of the situation is that they will hold back in the interests of getting their money in the mid-term," said Dr Beech. "But they will not hold back if there is no hope whatsoever. They will go in boots flying. They have become very hardline."

 

He said the tax authorities were under pressure from the government to maximise tax revenues. "In the present economic and political climate, they can not afford to seem to be letting people off paying tax, particularly in the case of VAT."

 

This is at the heart of the political ramifications for HMRC.

 

Professor David Hillier of Strathclyde University last night tweeted his belief that HMRC would agree to a CVA. Green may be staking his future plans on this eventuality, though he did not rule out Rangers becoming a newco. "In some respects liquidation is the most likely prospect," said Dr Beech. He said Rangers could be "looking to shuffle the debt around", possibly into a newco.

 

HMRC could pursue that company but that would be "shutting the stable door after the horse has bolted". Such a move, though, could keep lawyers gainfully employed over both the validity and culpability of separate company structures.

 

The decision for the taxman is simple in that there are two options. But either route is fraught with danger politically. Does HMRC pursue Rangers until perdition and face the dangerous prospect of receiving no money. It would then be accused of destroying a club and turning down money. Or does it come to an agreement? Then HMRC would be in the line of fire for cutting a deal with a club that has wilfully avoided tax.

 

The tax bill may now stand at £13m: £9m in unpaid PAYE and just more than £4m for the 'little tax case". But if a deal of Xp in the pound was reached it would prompt a political storm, with opponents citing how many nurses, schools or health facilities could have been purchased by the unpaid tax.

 

So is the taxman the accommodating pragmatist hoped for by Mr Green? Or is he the relentless pursuer studied by Dr Beech. All may soon be revealed. And then the big tax case will come along.

 

http://www.heraldscotland.com/sport/football/two-sides-of-the-same-coin.17596205

[Guest Guardian]

They can greet about the unpaid tax, but there would be even more unpaid tax if they oppose a CVA and get nothing.

 

How is the tax man showing his muscles if he end up with zero.

 

As for chasing the Newco for it, best of luck with that. There is absolutely no way they can do that. Might as well chase Marks and Spencer for Vodafones debt.

 

If we go Newco, they can issue all the winding-up orders they like and fill their boots. There will ne nothing left there but debts.

[Juancornetto 1]

They can greet about the unpaid tax, but there would be even more unpaid tax if they oppose a CVA and get nothing.

 

How is the tax man showing his muscles if he end up with zero.

 

As for chasing the Newco for it, best of luck with that. There is absolutely no way they can do that. Might as well chase Marks and Spencer for Vodafones debt.

 

If we go Newco, they can issue all the winding-up orders they like and fill their boots. There will ne nothing left there but debts.

 

This is why I don't understand the hysteria about Newco and the fervent belief that any one set of bidders is better placed to achieve a CVA than another. HMRC are the main reason we are where we are, they are the reason Murray sold to Whyte and the BTC is why Whyte never paid the PAYE or VAT after all what would be the point if you could never pay what was coming down the pipe? They've held out to see what will happen and now they know only now will they have to make a decision...agree a CVA or not.

[andy steel 0]

I love how our unpaid tax is always for nurses or schools, which as we know are receieving unprecendented funding in their times of enormous public spending....it's never 'Rangers tax, which could have paid for the subsidised bar in the House of Commons', or 'Rangers tax, which could have kept bought some missiles to blow up an Aghan village.'

 

If nothing else, this whole farrago should finally end this 'establishment club' drivel the oppressed have been keeping themselves warm with. We're well and truly on our own, in the media, in the courts, in business. Not necessarily a bad thing: a) there's little to be gained by getting in to bed with these types anyway and b) an attitude of 'us against the world' may be immature but its invigorating.

[Tannochsidebear 2,315]

A good attempt by the Herald to create a scare story out of nothing. At £13M out of the £55M we owe, HMRC dont even have the 25% of our total debt to block the CVA.

 

Only if HMRC FTT comes out with a payment due by us to add to their total will they even be in a position to block the CVA.

 

As an accountant myself (although dealing with small businesses, not anything like this level) it is fair to say HMRC are being far more strict with businesses and with payment deadlines, but just yesterday I done a deal for a client with HMRC that will see my client pay a percentage of the debt due, so it still happens.

 

For Beech to say HMRC will pursue a high profile business "with maximum prejudice" is going totally against what is happening out there in real life where the bigger and more high profile company you are, the more lenient HMRC are being so as not to damage the economy. Perhaps he should stick to lecturing about how things used to be as he clearly is agnorant of how things are currently. Expert or not.

[Frankie 8,151]

Fair point TB but surely we want the FTT to be part of the CVA.

 

If not, and we don't go down the newco route, any belated negative FTT decision would surely only cripple us again?

[Darthter 542]

the BTC is why Whyte never paid the PAYE or VAT

 

The BTC has absolutely nothing to do with Whyte not paying PAYE or NI - The club currently owes £0 for the BTC!!!

 

The reason why whyte didn't pay the PAYE/NI, is because he underestimated the running costs & had no money of his own to invest. There was NO CASH FLOW at the club. Withholding the PAYE/NI contributions is a common way for businesses to allow themselves some extra cash flow in the short term. It is not illegal if the deductions are declared.

 

As for HMRC agreeing to a CVA....who knows. As Green has said, they are better to accept something as opposed to possibly nothing.

[caseyjones 0]

The BTC has absolutely nothing to do with Whyte not paying PAYE or NI - The club currently owes £0 for the BTC!!!

 

The reason why whyte didn't pay the PAYE/NI, is because he underestimated the running costs & had no money of his own to invest. There was NO CASH FLOW at the club. Withholding the PAYE/NI contributions is a common way for businesses to allow themselves some extra cash flow in the short term. It is not illegal if the deductions are declared.

 

As for HMRC agreeing to a CVA....who knows. As Green has said, they are better to accept something as opposed to possibly nothing.

 

Rangers already have a bill from HMRC - the FTT is an appeal against that.

[Frankie 8,151]

As an aside a HMRC employee and wife/partner were arrested this morning by police investigating alleged illegal payments by journalists.

[Frankie 8,151]

Rangers already have a bill from HMRC - the FTT is an appeal against that.

 

I'm sure I read D&P were going to go to court pre-CVA to have that set at nil because the decision has not been made yet.

 

That doesn't explain what should happen post-CVA.