SPL and the Mystery of the Insolvent Balance Sheet

[boss 0]

It sounds like the title of a Famous Five adventure. The only question being, which one out of Doncaster, Lawwell, Thompson, Milne and Petrie should play the part of Dick. There are certainly a few candidates for Timmy the dog.

 

As we all now know, since 1999 the SPL declared income of £231million, of which it paid about £188million to the clubs, but the SPL did not pay one penny in corporation tax. Many have been shocked by the immorality of such a set-up, and appalled by the hypocrisy of the SPLâ??s relentless hounding of Rangers.

 

Despite some rabid comments to the contrary, at no time was it stated that £100million was de facto due by the SPL. Instead, this is a question of morality, a concept with which many of our separated brethren are seemingly unfamiliar.

 

The most recently published balance sheet of the SPL to 31 May 2011 showed net liabilities of £196,000. In other words, its liabilities exceeded its assets by £196,000. Such a bust balance sheet can be described as being technically insolvent. Its accounts have declared net liabilities since at least 1999, and indeed its balance sheet has worsened every year (bar one).

 

Why is this?

 

Every year the SPL doesnâ??t just pay out its â??profitâ? to the clubs - it pays out even more than the â??profitâ? it makes. It pays out so much in fact that it makes a loss year after year. The SPL made a loss in 11 out of the last 12 years.

 

Here is what Margaret Hodge, chairman of the PAC, stated last week in relation to Starbucks: â??I just don't believe any corporate entity would sustain losses for 15 years and stay in UK.â? She went on to say it: â??just doesn't ring true" and could only be a tax dodge.

 

So why does the SPL deliberately make a loss each year?

 

Accounts profit and taxable profit are not the same thing. A company might spend money which reduces its accounts profit, but which is not tax deductible and so does not reduce its taxable profit. Common examples would be entertaining, capital expenditure, and some legal fees.

 

So the SPL could break even (i.e. pay out all its â??profitâ? to the clubs) but still have a tax charge because of, say, entertaining costs that it would not get a tax deduction for. Instead, what the SPL does is deliberately make a loss so that its taxable profit (after adjusting for non tax deductible expenses) is zero.

 

In order for any expense to be tax deductible it needs to be incurred â??wholly and exclusively for the purposes of the tradeâ?. The â??extraâ? amounts paid out to the clubs over and above the â??profitâ?, has nothing to do with the purposes of the trade, and everything to do with â??dodgingâ? tax. And they cannot be described as â??exclusivelyâ? for the trade when they are apparently just a way to eliminate tax.

 

There is a prima facie case that the only purpose is to create an artificial loss so that zero corporation tax is paid. This alone would give HMRC an opportunity to revisit all the payments to clubs in order to ascertain their true nature, and to see whether any rules have been breached. Remember that even a minor breach could have catastrophic consequences.

 

People can judge for themselves whether it is morally right that the SPL can deliberately incur losses year after year so that not one penny of corporation tax get paid to fund schools, hospitals, nurses and teachers.

 

As Margaret Hodge stated: â??I think one should boycott these companies. I do actually think that is the right thing to do.â?

 

I agree. The SPL clubs have allowed the Fatuous Five (Dick, Dick, Dick, Dick and Dick) to decimate their income streams for many years to come.

[the gunslinger 3,366]

I can't see anything wring with this personally. what does interest me is the 43 million gap between income and paid to clubs. what is that spent on and do we get value for it. it seems we don't.

[boss 0]

No worries, GS. I could cure cancer and find a solution to world poverty, all before breakfast, and you'd still find an angle agin it.

[the gunslinger 3,366]

not at all. I don't have a problem with Starbucks either the laws clearly wrong and needs fixed.

 

people rattle on about moraly wrong not to pay tax but why? I have a smart pension to minimise my tax. one day hmrc will change the law on that and I will pay more. I don't feel bad about paying less now and won't complain when I pay more.

 

good luck to the SPL and Starbucks. their employees both pay tax as do their customers. if the government want corporation tax then change the law.

 

your not telling me you've never done anything to reduce yours or someone else's tax and getting me to believe that in a million years. same for almost all the people moralizing about this. they either are or would minimise their own tax in a heartbeat.

 

I don't like the SPL but I like double standards even less so I can't pretend to be outraged about this.

[the gunslinger 3,366]

if on the other hand you have evidence of something illegal going on I'm all ears.

[Bluedell 5,366]

I don't like the SPL but I like double standards even less so I can't pretend to be outraged about this.

 

I think that you are missing the point of the article. It's about double standards.

[the gunslinger 3,366]

I think that you are missing the point of the article. It's about double standards.

 

i think your missing my point. i deliberately manage my money to reduce the tax i pay so i will not moralize to others who do the same. if you dont and wouldn't and want to moralize have at it.

 

if boss is suggesting this is illegal and i dont believe he is than thats different.

[the gunslinger 3,366]

on the point of their punishment of us. we have not been punished for using ebt's. rather for not paying tax and for going into admin.

 

even the spl investigation into ebt's is about getting the paperwork wrong at the sfa.

 

any punishment for tax avoidance would of course be ridiculous.

[forlanssister 3,062]

Good article but not sure that quoting the hypocritical child abuse coverer up Margaret Hodge (nee Oppenheimer) adds anything to it given the fact that her family's private company Stemcor pays tax at the whopping rate of 0.01%.

 

As much as the tax arrangements of Starbucks,Amazon and Google et al tend to stick in the throat being lectured on those arrangements by Margaret Hodge is akin to being lectured in the evils of child abuse by the Pope.

[Bluedell 5,366]

i think your missing my point. i deliberately manage my money to reduce the tax i pay so i will not moralize to others who do the same. if you dont and wouldn't and want to moralize have at it.

 

if boss is suggesting this is illegal and i dont believe he is than thats different.

 

Woosh.

 

I understand your point perfectly well.