HMRC & Rangers Tax Cases (1)

[D'Artagnan 173]

The following report has been sent in the form of a letter/complaint to the Public Accounts Committee.

 

It is also in the possession of a leading MSM outlet in Scotland.

 

It is the summary of 3 years research and investigation – its now up to others to do their duty.

 

SETTLEMENT

 

It is now a matter of record that Sir David Murray offered, unsuccessfully, to settle with HMRC in relation to Ranger’s use of EBT’s. HMRC themselves emphasise the importance of measures outside litigation.

 

http://www.publicati...acc/458/458.pdf

 

18.

We queried whether HMRC’s litigation strategy for avoidance cases is too cautious. We have heard in the past from the major accountancy firms that they would continue to promote avoidance schemes even when there was a 50% chance of these being successfully challenged.34 HMRC told us that last year it defeated 30 avoidance schemes and protected £2.7 billion through litigation. It said it is proud of its 80% success rate in avoidance cases, arguing that its high level of success is an important deterrent 35 HMRC emphasised the importance of measures outside of litigation. For example, it has not taken Employee Benefit Trusts to court, and sees reaching a settlement as the most effective way of resolving them. Unlike marketed avoidance schemes which often have a large number of followers , Employee Benefit Trusts tend to be bespoke, making individual case – by - case litigation costly.

 

Such alternatives are laid out in HMRC’s document:

 

How we resolve Tax Disputes,

The Tax Assurance Commissioner’s

Annual Report 2013-14

 

https://www.gov.uk/g...e_JULY14_V2.pdf

 

and include measures such as Resolution via Collaboration and Alternative Dispute Resolution which includes either mediation of facilitated discussion between the parties.

 

As a shareholder I would be interested to know if any of these alternatives to litigation were pursued by HMRC in the case of Rangers, and if not why not, given their written commitment to such processes.

 

DUTY OF CARE/EARLY INTERVENTION/INFORMATION SHARING

 

This section reflects on opportunities missed, perhaps due to absence of protocols, clear pro-active guidelines and policies on early intervention.

 

http://www.dailyreco...e-being-3992415

 

I have spoken personally to the journalist who wrote that article, Mr Keith Jackson of the Daily Record & Sunday Mail. He still has in his possession the relative documentation which substantiates the veracity of that article. These documents can be made available to the Public Accounts Committee should they be required.

 

I would also direct you to the summary of Craig Whyte’s Directorship Disqualification.

 

https://www.insolven...number=SC004276

 

and would highlight the following extract:

 

All of the foregoing liabilities had arisen in the period between 01 September 2011 (after the limited company acquired the majority shareholding in RFC and he was appointed as a director of RFC) and February 2012, a period of five and a half months. Tixway UK Limited (“Tixway”) 2. Mr Whyte failed to ensure that Tixway maintained and/or preserved adequate accounting records, or if such records were maintained, he failed to deliver them up to the Liquidator. As a consequence of his failure to comply with his statutory obligations, the Liquidator has been unable to establish what has happened to apparently substantial assets of Tixway or, more generally, to verify the business activities and trading history of Tixway. In particular, the Liquidator has been unable to: 2.1 account for the substantial change in position as between Tixway’s last audited accounts (for the period to 31 January 2010) which showed Tixway as having fixed assets of £1,103,190 represented by “investments” and total current assets of £1,403,658 (comprising debtors of £923,856 and cash at bank and in hand of £479,802), and its current position which, according to the Liquidator’s latest estimated statement of affairs, is a deficiency of £3,017,918; 2.2 identify the investments recorded as owned by Tixway as at 31 January 2010 such that he is unable to account for or realise those assets for the benefit of Tixway’s creditors; 2.3 identify the debtors recorded in the accounts to 31 January 2010 and establish whether such debts remained outstanding or seek to collect the debts for the benefit of Tixway’s creditors; 2.4 identify the location of any cash sums held on behalf of Tixway and collect such sums for the benefit of Tixway’s creditors, only one bank account in the name of Tixway having been identified by the Liquidator which account held a balance of only £51,340 as at 31 January 2010; 2.5 verify the nature and purpose of transactions recorded in the one known bank account or establish that such transactions were for the legitimate purposes of Tixway’s business, credits to the known bank account over the period 01 April 2008 to 27 June 2012 totalling £1,955,709 and debits over the same period totalling £2,072,994; 2.6 establish whether Tixway had any employees, (HMRC having informed the Liquidator that Tixway did not operate a PAYE scheme) and/or whether any remuneration was paid to you (the known bank account showing payments to Mr Whyte personally totalling £100,875 over the period from 20 July 2009 to 22 May 2012);

 

There appears to have been a considerable failure of due diligence by Sir David Murray with regard to Mr Craig Whyte. The latter’s failure to declare to the Scottish Football Association, a previous directorship disqualification (Vital UK Ltd for a period of 7 years) whilst his fraudulent scheme involving Ticketus came to fruition (for which he now faces criminal prosecution) saw him gain control of Rangers. His stewardship of Rangers was characterised by a course of conduct which had brought him previously to the attention of HMRC i.e. failure to contribute to PAYE and VAT payments.

 

Throughout this series of developments and perhaps worthy of future consideration and exploration, is that the fact that at this time HMRC were in possession of information which, had the Scottish Football Association been granted access to, or been made aware of, may have prevented much of the subsequent damage and carnage which unfolded. This is in no way an attempt to apportion blame onto HMRC but more an exploration of the mechanisms such as information sharing protocols which may provide both shareholders and potential creditors a measure of protection from unscrupulous characters such as Craig Whyte. At what point, if any, is a government investigative agency, holding information which may afford protection to a company, its shareholders and those with whom it trades, obliged to share such information to beneficial parties? If the answer is never then perhaps that failing needs to be explored.

 

The ramifications of Craig Whyte’s stewardship of Rangers have been calamitous for all of Scottish Football, resulting in reduced revenue, reduced sponsorship and job losses.

 

Sue Walton, head of HMRC's anti-avoidance group writing in the Tax Journal 21 April 2011:

 

http://www.taxjourna...ompliance-24781

 

“Realistically, though, we know that there will always be a need for targeted intervention to respond to the way that particular customers choose to behave.”

 

Later in the same article she states:

 

“To recap then, HMRC’s approach to compliance is, first and foremost, to minimise the need for enforcement – it is in everyone’s interests to do that. But where a risk of non-compliance is identified, we aim to detect that as early as possible and resolve it as quickly as we can.”

 

Given HMRC’s knowledge of Craig Whyte and the way he was likely to behave, why did it take them a full 9 months to intervene in the case of Rangers, by which time a huge bill had been allowed to accrue?

 

With HMRC’s failing to act in accordance with their own written commitments it is not hard to understand why many Rangers shareholders feel that quite simply HMRC were giving Craig Whyte “sufficient rope to hang himself” and both the club, the company, the shareholders and the subsequent creditors were all considered worthy collateral damage in bringing that to fruition.