BDO lose BTC appeal

[Yorkie Bear 508]

I agree that the ramifications are horrendous but that won't stop our detractors from stoking the flames. The anti-Rangers brigade will be on the march. This is going to get very messy.

[scotjo 19]

I agree that the ramifications are horrendous but that won't stop our detractors from stoking the flames. The anti-Rangers brigade will be on the march. This is going to get very messy.

 

Don't see anything changing the decision.

[ian1964 10,416]

Galaxy of Rangers stars facing huge tax bills after EBT saga ends.

 

The Supreme Court ruled unanimously that massive Employee Benefit Trust payments made under the David Murray regime were not loans and earnings should have been taxed.

 

A galaxy of former Rangers stars were facing huge bills from the taxman last night after the seven-year saga of the Big Tax Case ended in total victory for HMRC.

 

Five Supreme Court judges in London ruled unanimously that massive Employee Benefit Trust payments made under the David Murray regime were not loans, but earnings that should have been taxed.

 

Murray’s Rangers splashed out nearly £48million in EBT payments to directors, managers, players and staff. Experts say the taxman could now demand around £24million back.

 

The judges’ decision is final. After two tax tribunals, a Court of Session case and an appeal to the Supreme Court, the liquidators of oldco Rangers have nowhere else to go.

 

And that could mean crippling financial pain for a whole squad of Ibrox old boys – from captain Barry Ferguson and legendary goalie Stefan Klos to far less heralded signings such as Nuno Capucho and Julien Rodriguez.

 

Ferguson faces a possible £1.25million bill and Klos could be hit with a demand for £1million.

 

But Murray himself, with an estimated liability of more than £3million, is by far the biggest potential loser.He said he was “hugely disappointed” by the verdict.

 

The shockwaves from the judgment extend far beyond oldco Rangers – thousands of other companies used EBTs.

 

And HMRC now hope tax avoiders will cough up the cash that could and should have gone to our hospitals, schools and emergency services.

 

A spokesman said: “This decision has wide-ranging implications for other avoidance cases.“We encourage anyone who has tried to avoid tax on their earnings to now agree with us the tax owed.“HMRC will always challenge contrived arrangements that try to deliver tax advantages never intended by Parliament.”

 

Tax lawyer turned porn star Paul Baxendale-Walker devised the EBT scheme. Rangers used it between 2001 and 2009, paying out £47.6million.

 

Critics say it gave them a massive advantage over rival clubs by enabling them to sign players they wouldn't otherwise have been able to afford.

 

The taxman started looking into Rangers’ EBTs in 2010.

 

In 2012, new owner Craig Whyte took Rangers into administration after failing to pay a separate £9million in tax. And nine months later, a tax tribunal ruled against HMRC.

They said no tax was owed because the payments were loans.

 

Oldco Rangers were in liquidation by then, but liquidators BDO carried on the case because victory for the taxman would mean far less money for the oldco’s many other unpaid creditors.

 

The taxman lost an appeal to a higher tribunal, then the tide turned in 2015.

 

Three appeal judges at the Court of Session bluntly ruled that it was “common sense” and “self-evident” that the EBT cash received by Rangers stars was taxable payment for work. BDO got permission to appeal to the Supreme Court, but yesterday they came to the end of the road.

 

Lord Hodge delivered the ruling, which was approved by his four fellow judges, Lords Neuberger, Reed and Carnwath and Lady Hale.

 

He noted that the EBT deals were arranged by club bosses on one side and the players and their agents on the other.

 

And he added: “The focus was on the net remuneration which would be made available to the footballer. The footballer was able to gain access to the cash when he wanted it.”

 

Lord Hodge added that neither side expected the player to have to pay the money back while he was alive.

 

He was clear that the EBT payments were earnings, and should have been taxed under PAYE.

 

Murray said later: “I am hugely disappointed that the Supreme Court has upheld the decision of the Court of Session, reversing the decisions of the specialist tax First Tier Tribunal and the Upper Tribunal.

 

“The decision runs counter to the legal advice which was consistently provided to Rangers Football Club, that contributions made to the trust were not earnings and should not be taxed as such.

 

“The decision will be greeted with dismay by ordinary creditors, many of which are small businesses.“They will now receive a much lower distribution in the liquidation of the club, which occurred during the ownership of Craig Whyte.”

 

Murray said he had not had the chance to discuss the judgment in detail with his tax lawyers, and would issue another statement “once the impact has been assessed”.

He stressed that it had never been suggested Rangers were involved in illegal tax evasion.

 

A spokesman for BDO said: “Given the significance of the matter, we believe taking the case to the Supreme Court has been the correct course of action.

 

“We will now engage with HMRC on adjudicating its claim. Further advice and guidance will be provided to creditors in due course.”

 

Celtic called on SPFL bosses to review a 2013 decision that Rangers did not gain “competitive advantage” from EBTs.

 

They said: “In 2013, we expressed surprise – shared by many observers and supporters of the game – over the findings of the SPL Commission that no competitive or sporting advantage had resulted. Today’s decision only reaffirms that view.

 

“We are sure now that the footballing authorities in Scotland will wish to review this matter. Celtic awaits the outcome of their review.”

 

The tax case does not affect the current owners of Rangers.

 

Big names on the hook

 

Alex McLeish, EBT value: £1.7million, Tax owed: £850,000

Managed Rangers from 2001-06.

 

Alex Rae, EBT value: £569,000, Tax owed: £284,500

Midfielder arrived at Ibrox in 2004 and spent two years there. Played 34 games.

 

Arthur Numan, EBT value: £510,000, Tax owed: £255,000

Dutch full-back arrived at Rangers from PSV Eindhoven in 1998 for £4.5million. Played 118 times.

 

Barry Ferguson, EBT value: £2.5million, Tax owed : £1.25million

Former youth player who became Rangers captain. Played at Ibrox from 1996-2003 and 2005-09.

 

Christian Nerlinger, EBT value: £1.8million, Tax owed: £900,000

German midfielder signed from Borrusia Dortmund in 2001 and left in 2004.

 

Claudio Caniggia, EBT value: £1million, Tax owed: £500,000

Argentinian signed from Dundee for £1million in 2001.

 

Craig Moore, EBT value: £1.1million, Tax owed: £550,000

Australian centre-half played more than 90 games from 1994-98. Returned in 1999 and stayed until 2005.

 

Dado Prso, EBT value: £1.9million, Tax owed: £950,000

Croatian striker was free transfer in 2004. Left for Dinamo Zagreb in 2007.

 

Sir David Murray, EBT value: £6.3million, Tax owed: £3.15million

Owned club from 1988-2011, during which Rangers lifted 15 titles and 26 cups. Sold shares to Craig Whyte for £1.

 

Dick Advocaat, EBT value: £1.5million, Tax owed: £750,000

Rangers manager from 1998-2002. Spent almost £74million to win five trophies, including two titles.

 

Fernando Ricksen, EBT value: £684,225, Tax owed: £342,000

Dutch right-back signed in 2000 from AZ Alkmaar for £3.75million.

 

Jean-Alain Boumsong, EBT value: £630,000, Tax owed: £315,000

French centre-half joined in 2004 on free transfer. Moved to for Newcastle for £8million.

 

Julien Rodriguez, EBT value: £638,000, Tax owed: £319,000

French centre-half signed from Monaco in 2005 for £1million. Left for Marseille in 2007.

 

Kevin Muscat, EBT value: £1million, Tax owed: £500,000

Australian defender joined from Wolves in 2002 on free transfer. Joined Millwall in 2003.

 

Lorenzo Amoruso, EBT value: £639,000, Tax owed: £319,500

Italian defender signed from Fiorentina for £4million in 1997. Moved to Blackburn Rovers for £1.4million in 2003.

 

Michael Ball, EBT value: £1.4million, Tax owed: £700,000

Left-back signed from Everton in 2001 for £6.5million. Moved to PSV Eindhoven in 2005.

 

Mikel Arteta, EBT value: £674,603, Tax owed: £337,500

Spanish midfielder joined in 2002 and played 50 matches, scoring 12 goals. Moved to Everton.

 

Nacho Novo, EBT value: £1.2million, Tax owed: £600,000

Spanish striker joined in 2004 from Dundee for £450,000.

 

Neil McCann, EBT value: £500,000, Tax owed: £250,000

Winger joined from Hearts in 1998 for £2million.

 

Nuno Capucho, EBT value: £970,000, Tax owed: £485,000

Portuguese winger who arrived in 2003 for £700,000.

[ian1964 10,416]

Paolo Vanoli, EBT value: £592,000, Tax owed: £284,500

Italian left-back joined from Bologna in 2003 and played in 28 matches.

 

Pedro Mendes, EBT value: £1million, Tax owed: £500,000

Portuguese midfielder joined in 2008 for £3million. Joined Vitoria Guimares in 2010.

 

Peter Lovenkrands, EBT value: £902,000, Tax owed: £451,000

Danish winger arrived in 2000 from Akademisk Boldklub for £1.3million.

 

Ronald De Boer, EBT value: £1.2million, Tax owed: £600,000

Dutch midfielder joined in 2000 under Advocaat.

 

Ronald Waterreus, EBT value: £510,000, Tax owed: £255,000

Dutch goalkeeper joined Rangers in 2004 from Manchester City.

 

Sotirios Kyrgiakos, EBT value: £532,200, Tax owed: £266,000

Greek centre-half signed from Panathinaikos in 2005.

 

Stefan Klos, EBT value : £2million, Tax owed: £1million

German international keeper signed in 1999 for £800,000. Joined Bayer Leverkusen in 2007.

 

Steven Davis, EBT value: £600,000, Tax owed: £300,000

Northern Ireland midfielder. Left for Southampton in the summer.

 

Thomas Buffel, EBT value: £1.2million, Tax owed: £600,000

Belgian midfielder joined in 2005 for £2.3million from Feyenoord.

 

Tore Andre Flo, EBT value: £1.3million, Tax owed: £650,000

Norwegian striker joined from Chelsea in 2000 for £12million. Sold for £6.75million to Sunderland in 2002.

 

http://www.dailyrecord.co.uk/news/scottish-news/galaxy-rangers-stars-facing-huge-10745982

[ian1964 10,416]

The ramifications extend beyond Scotland and beyond football with HMRC set to target firms which used similar schemes.

 

The liquidators of oldco Rangers, BDO, will open discussions with HMRC over the liability but the situation with the beneficiaries of the EBT payments, many of whom live abroad, remains uncertain.

 

Andrew Watters, specialist tax, trusts and estates partner at Irwin Mitchell Private Wealth, said: "As the old Rangers company is now in liquidation, HMRC may try to switch tax liability to the players. If that is successful, some may struggle to pay large tax bills coming years after their high-paying playing days are over."

 

Andy Wood, technical director of Enterprise Tax Consultants, was involved in a six-figure settlement between HMRC and a club in the English leagues in relation to one senior official, and was aware of "five or six" other deals being struck.

 

Wood added: "Those clubs which used EBTs and did not similarly engage with HMRC may well now be ruing their failure to do so."Some of those organisations which used EBTs to reward star players and directors may well not still be in the Premier League and, therefore, discomfited by being asked to come up with substantial sums of money at short notice without still having access to the sort of income associated with being in English football's top flight.

 

"In addition, I have no doubt that HMRC will feel emboldened by this judgement as it expands its ongoing enquiries into football's use of image rights payments."

 

http://www.eveningtimes.co.uk/news/15392119.Celtic_call_for_EBT_review_after_HMRC_wins_Rangers_Big_Tax_case/

[Darthter 542]

According to that list, tax owed on PLAYERS comes to £13.75m (taking out Murray & Advocaat).

Given that the amount of cash that was being paid for players at the time, the fact that the club had already paid approx £27m into the EBT scheme, and they had enough cash to shell out £12m on Flo....I would assume that paying the Tax would not have been a problem.

 

In order to ascertain the level of advantage, the SPFL would need to work out what effect those players had on games (IMHO). If RFC won a game 4-0, with one of the goals or an assist coming from a player with an EBT, how does that one player effect the outcome of the match - what advantage does he give???

 

Also, good luck convincing anyone that Kevin Muscat, Nuno Capucho, Julien Rodrigez or Michael Ball gave us ANY advantage.

Would love to see the media scandal (no laughing at the back) if anyone tried to pursue Fernando Ricksen for his tax money.

[pete 2,499]

I would love to see the SPFL's plan for title stripping....

 

You simply can't just change the record books to say that Ceptic won the league in season xx/yy. There's knock on effects.

In the seasons that they perceive us to have gained an unfair advantage, that advantaged applied to ALL games, therefore, points awarded throughout the season would need to be re-adjusted. The end result being that the entire league could look different, What if Rangers beat the team that was ultimately relegated, but with a re-distribution of points turns out that they would have stayed up - who's gonna calculate the difference in earnings for that team.

 

Giving Titles to Ceptic has MANY, MANY more ramifications than scoring out a name in the record books.

 

On the plus side, if the SFA have said there's no further actions.....and Scottish Cups won during the period are safe.

 

Also, who was running the league at the time in questions??? The SFL are no longer in existence!!!!

 

Personally I don't think that is an argument. When someone takes something over it does not change the history. We are shouting about that ourselves. When you take something over you buy the whole package. If that were the case how many companies that are being sued would just change their names and say "oh we have nothing to do with that it was oldco"

[Darthter 542]

Personally I don't think that is an argument. When someone takes something over it does not change the history. We are shouting about that ourselves. When you take something over you buy the whole package. If that were the case how many companies that are being sued would just change their names and say "oh we have nothing to do with that it was oldco"

 

but was the SFL taken over or completely disbanded with it's previous members joining the SPFL???

[der Berliner 3,247]

Would the 5-way agreement not protect against such ?

 

Either way, their own rule book wouldn't allow them to dock points, that is only for an administration event

 

Was a topic over on FF last night (haven't got the link to the 5WAright now) but various people scanned it and there is nothing to suggest that the agreement would prevent title stripping.

 

That said, either Scrote got someting mixed up back then, or ...

 

Rangers: SPL Commission will not strip club of SPL titles

 

By Chris McLaughlin, Senior Football Reporter, BBC Scotland, 28 February 2013

 

The commission appointed by the Scottish Premier League to investigate alleged undisclosed payments by Rangers will not strip the club of any titles.

 

But the company that formerly ran the club have been fined £250,000 by the Lord Nimmo Smith-chaired commission.

 

It found that 'oldco' did not disclose payments to the football authorities.

 

The investigation relates to the period between 2000-11 when Rangers operated employee benefits trusts (EBT), the subject of a long-running tax tribunal.

 

The commission found that the 'oldco' management did not take professional advice on disclosing the payments.

 

"Oldco through its senior management decided that such side-letter arrangements should not be disclosed to the football authorities," it stated.

 

"The board of directors sanctioned the making of payments under the side-letter arrangements without taking any legal or accountancy advice to justify the non-disclosure."

 

The commission also iterated that: "The scale and extent of the proven contraventions of the disclosure rules require a substantial penalty to be imposed."

 

However, the findings rule out any sporting penalty, as the non-disclosure did not affect the eligibility of players.

 

"Rangers FC did not gain any unfair competitive advantage from the contraventions of the SPL Rules in failing to make proper disclosure of the side-letter arrangements," it states.

 

"Nor did the non-disclosure have the effect that any of the registered players were ineligible to play, and for this and other reasons no sporting sanction or penalty should be imposed upon Rangers FC."

 

The findings also stated that Rangers' current owners should not be held responsible for any breaches made by the previous company.

 

Rangers manager Ally McCoist spoke of his delight at the removal of any threat of titles being removed, but criticised the SPL investigation.

 

"I am delighted in many ways by the decision today," he said.

 

"As a former player, I know how hard it is to achieve success on the pitch and the suggestion that somehow Rangers sought to gain unfair advantage was deeply insulting to me and others who had worn the Rangers jersey with immense pride.

 

"I found the whole approach to this matter by the SPL utterly bizarre and misguided."

 

HM Revenue and Customs had claimed the EBT scheme, which was used to make £47.65m in payments to players and staff in the form of tax-free loans, was illegal.

 

Rangers disputed this and a First Tier Tax Tribunal ruled the scheme did not breach tax law.

 

Rangers won the SPL five times after initiating EBTs for players.

 

http://www.bbc.com/sport/football/21604986

 

And then they went on:

 

Q&A: SPL EBT commission explained

 

It was a decision that had not only been long been awaited by fans of Rangers but by supporters of rivals clubs and administrators of the game.

 

A landmark decision that will only lead to further debate about the behaviour of those who once ran the Ibrox club, now playing in Division Three of Scottish football.

 

BBC Scotland looks at the process that led the commission appointed by the Scottish Premier League to investigate undisclosed payments by Rangers to impose a fine but not strip the Glasgow outfit of any league titles.

 

Why was the commission set up?

 

Rangers Football Club plc (known as oldco) went into administration in February 2012 over non-payment of £9m in PAYE and VAT taxes to HM Revenue and Customs. It finally went into liquidation in October, the business and assets having already been sold to Sevco Scotland Limited, which subsequently became The Rangers Football Club Limited (known as newco), in June.

 

The newco's application to inherit the oldco's membership of the Scottish Premier League was rejected by the other 11 clubs and instead it was voted into the Scottish Football League's Third Division. Meanwhile, the SPL vowed to investigate whether the way Rangers used employee benefit trust payments (EBTs) for players, which were the subject of a separate HM Revenue and Customs probe, breached its own rules.

 

The SPL set up a commission in August to investigate all financial, contractual and other arrangements between Rangers and its players between November 2000 and May 2011 with a view to possible sanctions should any breaches of the rules have taken place. It considered allegations that Rangers had breached SPL and Scottish Football Association rules by failing to record EBT payments and arrangements - and had therefore fielded ineligible players - and that the oldco had failed to assist the SPL in its investigations between March and August.

 

Who was on the commission?

 

Lord Nimmo Smith is a former senator of the College of Justice who has served as an insolvency judge and was one of five judges who heard the appeal of Abdelbaset al-Megrahi, the man convicted of the 1988 Lockerbie bombing, at the Scottish Court in the Netherlands.

 

Charles Flint QC is a commercial barrister, arbitrator and mediator specialising in banking and financial services who has wide experience in sports law. He has worked for European football's governing body, Uefa, as well as rugby unions, Grand Prix teams, the International Tennis Federation, the British Athletics Federation and the Football League.

 

Nicholas Stewart QC has sat as deputy High Court judge since 1992, is an appeal board chairman and specialist member of the Football Association judicial panel.

 

Lord Nimmo Smith had chaired an earlier SFA investigation into rule breaches at the Ibrox club, ruling that Rangers had brought the game into disrepute and that former owner Craig Whyte was not a fit and proper person to hold a position within association football. The findings from his report led to a £160,000 fine and a year-long signing ban being imposed on the Ibrox club.

What is an Employee Benefit Trust?

 

A trust enables an individual to own an asset on behalf of someone else. The first person is the "trustee" and the second is the "beneficiary". Company pension schemes are a common example of a trust.

 

With EBTs, the employer deposits money into the trust, which pays out to the beneficiaries in the form of tax-free loans.

 

Trusts are often postponed and are sometimes refused by the trustee, who is, in theory, acting independently of the employer.

 

In many cases, the loans are never repaid.

 

Have any other Scottish clubs been involved with EBT schemes?

 

BBC Scotland wrote to all of the Scottish Premier League's member clubs and asked whether they had ever operated an EBT scheme.

 

Celtic confirmed that it established one EBT scheme in April 2005, which BBC Scotland understands was for the benefit of the Brazilian midfielder, Juninho Paulista. The scheme was worth £765,000, but the club did not declare the trust payment to the Scottish Football Association or the Scottish Premier League.

 

The payments made to the trust were declared in Celtic's annual report for 2004/2005, but in 2008 the club became aware of an event giving rise to a potential tax liability that was subsequently paid after agreement with HMRC.

 

The remaining 10 SPL clubs replied and confirmed they had never set up an EBT scheme for any of their employees.

 

Why was Rangers' EBT scheme under investigation?

 

The SFA said in March it would investigate claims made by former Rangers director Hugh Adam that payments made to players were not disclosed to the governing body and it was announced a couple of days later that this would be carried out by the SPL.

 

A BBC Scotland documentary team revealed in May that a total of 53 Rangers players and staff received side contracts giving undertakings to fund their sub-trusts with cash. A total of 111 sub-trusts were set up between 2001-2010 for Rangers directors, players and other staff - along with employees of Murray International Holdings and its subsidiary companies.

 

Between 2001 and 2010, Rangers paid a total of £47.65m in to their Employee Benefit Trust. Details of the amounts paid in to the trust were declared in the club's annual accounts.

 

What was the process?

 

Both the oldco and newco, citing legal advice, refused to attend a preliminary hearing held in September, but the commission decided to proceed by setting a date for a formal, three-day hearing in November.

 

It had concluded that, because the oldco had been a member of the SPL during the period under investigation, it was bound by the rules of the league - and liable to its sanctions - despite being no longer a member. The commission also pointed out that there were sanctions that could affect the newco.

 

The November hearing was postponed.

 

The commission finally began its hearing on 29 January and noted in its findings that both oldco and newco Rangers made a late decision to be represented during the process.

 

Evidence came from witnesses, "contemporaneous documents" and from the First-tier Tribunal investigation into Rangers while under the control of Sir David Murray. Oldco Rangers won an appeal in principle against a tax bill - the so-called 'big tax case' - for use of EBTs in November, although HMRC has since lodged its own appeal against that decision.

 

Among those giving evidence to the SPL commission were Campbell Ogilvie, formerly Rangers company secretary and current SFA president, while the BBC Scotland investigation into the EBT payments also formed part of the evidence.

 

What were the sanctions available to the commission?

 

The commission pointed out that it had "the power to impose a wide range of sanctions" but that none in particular had been recommended by the SPL. That would be completely at the commission's discretion.

 

Charles Green, chief executive of newco Rangers, had vowed to challenge any sanction that stripped Rangers of any titles won during the period under investigation.

 

What were its findings?

 

Between the years 2000 and 2011, Rangers entered into side-letter arrangements with a large number of its professional players under which Oldco Rangers undertook to make very substantial payments to an offshore employee benefit remuneration trust, with the intent that they should be used to fund payments to be made to such players in the form of loans.

 

Those arrangements were required to be disclosed under SPL and SFA rules as forming part of the players' financial entitlement and as agreements providing for payments to be received by the players.

 

Oldco, through its senior management, decided that such side-letter arrangements should not be disclosed to the football authorities and the board of directors sanctioned the making of payments under the side-letter arrangements without taking any legal or accountancy advice to justify the non-disclosure.

What was its decision?

 

The commissioners decided unanimously that, although the payments in this case were not themselves irregular and were not in breach of SPL or SFA rules, the scale and extent of the proven contraventions of the disclosure rules required a substantial penalty - £250,000 - to be imposed.

 

The commissioners ruled that Rangers did not gain any unfair competitive advantage from the contraventions of the SPL rules, nor did the non-disclosure have the effect that any of the registered players were ineligible to play, and for this and other reasons no sporting sanction or penalty should be imposed upon Rangers.

 

Rangers administrator's failure to respond "timeously" to requests for information was also considered a breach of the rules. However, it was decided that no separate financial would be imposed on the oldco.

 

http://www.bbc.com/news/uk-scotland-glasgow-west-21617950

[pete 2,499]

but was the SFL taken over or completely disbanded with it's previous members joining the SPFL???

 

It's history was kept there was just a change of owner. We have no chance with that excuse, in my opinion.