Tax officials blamed for the downfall of Rangers

[Uilleam 5,410]

From today's Scottish Edition of the Times of London:

 

https://www.thetimes.co.uk/edition/scotland/rangers-tax-case-telling-my-staff-that-they-had-lost-their-jobs-was-horrendous-says-ally-mccoist-xq9xwh96q    (Paywall)

 

 

Rangers tax case: Telling my staff that they had lost their jobs was horrendous, says Ally McCoist

Mark McLaughlin

November 15 2019, 12:01am, The Times

Economics

 

Ally McCoist has said the tax authorities must be held to account for job losses caused by a multimillion-pound blunder that he argues forced Rangers Football Club into liquidation.

The former Rangers manager, who began rebuilding the club under new ownership after it was plunged to the bottom of Scotland’s professional football ladder, said his club would have survived if HM Revenue & Customs had not made an error.

McCoist, 57, said the revelation in The Times that up to £50 million is set to be wiped off the Ibrox club’s tax bill was “absolutely massive”.

Accountancy sources now believe that the bill for using an offshore trust to pay Rangers players and staff is likely to end up close to £20 million, equivalent to £2 million annually for the 2001 to 2010 period the tax avoidance scheme was in place.

McCoist told talkSPORT: “That is a debt in my opinion Rangers could have handled at the time. If this is true, we wouldn’t have gone into administration. We wouldn’t have gone into liquidation.”

Asked about having to tell staff that they no longer had a job at the club, McCoist added: “It was horrendous . . . that was the worst part about the whole thing, that people lost their jobs.

“If people lost their jobs needlessly, it’s completely and utterly unacceptable. If the debt was £20 million the outcome would have been completely different. We could have handled that quite easily.”

 

An expert in employee benefit trusts (EBTs) such as that used to pay players and staff, said an HMRC error could not be viewed as the cause of Rangers’ collapse.

Thomas Wallace, head of tax at the London firm WTT, has been working for companies in EBT disputes. He told The Scottish Sun that although HMRC may have “overplayed its hand” in its pursuit of the club, “I suspect there are sound commercial benefits of not pursuing the penalty where no funds are available to pay it”.

 

Mark Dingwall, editor of the Follow Follow online fanzine, said the latest twist in the tax case could result in the “oldco” Rangers being rescued from liquidation to resume the corporate management of the club. Such a gesture would lay to rest taunts that the present incarnation is the zombie of a dead club.

“I suspect that the old company, which is in the process of liquidation, may in the end not be liquidated and there will be a substantial pool of money available to the creditors,” he said. “At the end of the process, the title for that company will be available for sale.”

Mr Dingwall said the Times report had confirmed “the deep unease that Rangers fans felt all the way through the last seven or so years about various authorities and statutory bodies that there was unfairness”.

“There was a tinge of the witchhunt about it, and assumptions were made that have turned out not to be true in terms of both legal and accountancy terms,” he said. “I believe that the club, with a sensible attitude taken by HMRC, would have been able to trade its way out of any problems that it had if it was under sensible management.”

 

I highlight a section, where Mr McLaughlin of The Times quotes an expert on EBTs, suggesting the actions of HMRC could not have been the cause of Rangers' problems. At first, indeed second, reading the expert says nothing of the sort.  If I am correct, he suggests, quite obviously, that there are no benefits where there are no funds. This, to me, calls into question the whole rationale and modus operandi of HMRC in dealing with Rangers. 

 

[ian1964 10,411]

Handwringers Reunited

(Article first published in July 2017, now contains an update from 14 November 2019).

https://respect524.wordpress.com/2017/07/09/handwringers-reunited/amp/?__twitter_impression=true

[Uilleam 5,410]

More from The Times

 

Perhaps HMRC's alleged hopes (pious) of using Rangers as a 'test case' will be sunk withnoput trace. 

 

https://www.thetimes.co.uk/article/rangers-tax-case-claims-give-workers-hope-jvvd97djs    (Paywall)

 

Rangers tax case claims give workers hope

Greig Cameron Scottish Business Editor

November 15 2019, 12:01am, The Times

Economics

Football

The Times revealed yesterday that Rangers’ former operating company could have £50 million removed from its liability

 

Thousands of self-employed workers battling with the tax authorities hope to see their bills cut after it emerged that millions of pounds in penalties attributed to Rangers had been dropped.

About 50,000 employee benefit trusts (EBTs) were used across the UK as a way for individuals and companies to avoid paying income tax and national insurance. The schemes were first thought to be legal but were later ruled to be disguised remuneration. That gave MR Revenue & Customs the opportunity to pursue cases running back to 1999.

The Times reported yesterday that the former Rangers operating company could have up to £50 million wiped off its liability. Some £26 million in charges has already been dropped and appeals over other elements have started.

 

EBTs were not only used in football or to help highly paid executives minimise tax on bonuses. Agency nurses and other health professionals as well as oil and gas workers, people in IT and consultants have been affected. Some of them had been ordered to sign up to the schemes by the companies that employed them, or were advised to do so by accountancy firms.

Andy Chamberlain, deputy director at IPSE, the trade association representing independent professionals and the self-employed, said: “This revelation about Rangers will raise further concern about HMRC’s ability to fairly implement what is already a highly controversial and, to some, devastating policy.

“People are already extremely concerned and are being hit by life-changing fines. There will now be questions over whether those fines have been correctly calculated and can we trust HMRC to get those calculations correct.”

HMRC began pursuing repayments in 2016 with estimates suggesting it was looking to claw back more than £3 billion from freelance workers.

 

Anyone who had not responded to settle their arrangements by April this year faced an additional penalty called a loan charge that effectively required them to pay up to 20 years of back tax in one financial year. A review into that has been ordered by the UK government led by Sir Amyas Morse, the former auditor-general, but the results will not be published until after the general election.

However, a deadline of January 31 next year is in place for declarations under the loan charge. Politicians, trade bodies and campaign groups want that to be extended.

Colin Borland, head of devolved nations at the Federation of Small Businesses, said: “The loan charge debacle has caused real problems for thousands of moderately paid individuals, many of whom had been encouraged to sign up to schemes by trusted financial advisers.

“The Morse review will hopefully lead to some concrete recommendations to prevent a similarly unsatisfactory situation arising again, though we were disappointed this important report was delayed by the general election.

“Intuitively, retrospective rule changes don’t seem fair. And if there was a risk of this outcome, you would have hoped that action could have been taken to prevent these schemes being promoted to those without specialist financial knowledge.”

Mr Chamberlain said: “We have called for the deadline to be pushed back further for the new government coming in after the election to consider the review, respond to it and explain to the people affected what the outcomes are. I don’t think there is going to be sufficient time to do that.”

 

Sir David Murray, the former Rangers owner, has in the past said that the unknown size of the tax liability relating to EBTs had made it extremely difficult to sell the club.

The scheme was introduced under his tenure in 2001 and ran through to 2010. Rangers was eventually bought for a token £1 by the businessman Craig Whyte in 2011.

Mr Whyte paid off £18 million of bank debt although it later emerged that he had done that by using loans based on future season ticket sales. Mr Whyte was declared bankrupt in 2015 and has been banned from being a company director.

The Rangers Football Club PLC was put into administration in February 2012 as a result of failure to pay PAYE and VAT while Mr Whyte was the majority shareholder.

A senior taxation industry source said: “You would imagine something like this Rangers story will have an impact as people try to negotiate and settle their tax bills with HMRC.”

An HMRC spokesman said: “Our policy towards penalties on disguised remuneration schemes is unchanged. Each case is treated on the facts.”

 

 

 

[ian1964 10,411]

Rangers consider taking legal action after HMRC says £50m penalty was ‘too high’

https://www.telegraph.co.uk/football/2019/11/14/rangers-consider-taking-legal-actionafter-hmrcadmits50m-penalty/

 

[Walterbear 557]

On 14/11/2019 at 09:08, Frankie said:

Clearly last night's exclusive from The Times is a very big story, even if there's not much meat to the bones at this stage.

 

Because of the figures HMRC claimed (and disputed at the creditor's meeting), they were able to force the oldco into liquidation as the biggest creditor.  All along, credible people involved have questioned the whole process and what was claimed by HMRC but what is fairly clear is that:

 

Murray was arguably forced into selling by LBG due to the fear of any potential bill.

Whyte arguably stopped paying PAYE because of same and likelihood of admin.

HMRC refused a CVA because of their claim.

HMRC have spent millions pursuing this claim.

Scores of people lost their jobs.

Since admin Rangers has lost potentially hundreds of millions of pounds as Celtic had free rein to reign.

 

I'd like to ask for some sort of enquiry but the evidence would be lost anyway.

 

 

Will the SFA and SPFL act in behalf of a member club, for example make representations to HMRC about their conduct and what should be expected going forward?

 

if not then that’s all we need to know about Rangers’ status in these organisations. 

[Walterbear 557]

3 hours ago, ian1964 said:

 

That’s standard press / media release from a govt dept under scrutiny. Not to be taken seriously. Been involved personally in similar many times. 

[Walterbear 557]

2 hours ago, Uilleam said:

From today's Scottish Edition of the Times of London:

 

https://www.thetimes.co.uk/edition/scotland/rangers-tax-case-telling-my-staff-that-they-had-lost-their-jobs-was-horrendous-says-ally-mccoist-xq9xwh96q    (Paywall)

 

 

Rangers tax case: Telling my staff that they had lost their jobs was horrendous, says Ally McCoist

Mark McLaughlin

November 15 2019, 12:01am, The Times

Economics

 

Ally McCoist has said the tax authorities must be held to account for job losses caused by a multimillion-pound blunder that he argues forced Rangers Football Club into liquidation.

The former Rangers manager, who began rebuilding the club under new ownership after it was plunged to the bottom of Scotland’s professional football ladder, said his club would have survived if HM Revenue & Customs had not made an error.

McCoist, 57, said the revelation in The Times that up to £50 million is set to be wiped off the Ibrox club’s tax bill was “absolutely massive”.

Accountancy sources now believe that the bill for using an offshore trust to pay Rangers players and staff is likely to end up close to £20 million, equivalent to £2 million annually for the 2001 to 2010 period the tax avoidance scheme was in place.

McCoist told talkSPORT: “That is a debt in my opinion Rangers could have handled at the time. If this is true, we wouldn’t have gone into administration. We wouldn’t have gone into liquidation.”

Asked about having to tell staff that they no longer had a job at the club, McCoist added: “It was horrendous . . . that was the worst part about the whole thing, that people lost their jobs.

“If people lost their jobs needlessly, it’s completely and utterly unacceptable. If the debt was £20 million the outcome would have been completely different. We could have handled that quite easily.”

 

An expert in employee benefit trusts (EBTs) such as that used to pay players and staff, said an HMRC error could not be viewed as the cause of Rangers’ collapse.

Thomas Wallace, head of tax at the London firm WTT, has been working for companies in EBT disputes. He told The Scottish Sun that although HMRC may have “overplayed its hand” in its pursuit of the club, “I suspect there are sound commercial benefits of not pursuing the penalty where no funds are available to pay it”.

 

Mark Dingwall, editor of the Follow Follow online fanzine, said the latest twist in the tax case could result in the “oldco” Rangers being rescued from liquidation to resume the corporate management of the club. Such a gesture would lay to rest taunts that the present incarnation is the zombie of a dead club.

“I suspect that the old company, which is in the process of liquidation, may in the end not be liquidated and there will be a substantial pool of money available to the creditors,” he said. “At the end of the process, the title for that company will be available for sale.”

Mr Dingwall said the Times report had confirmed “the deep unease that Rangers fans felt all the way through the last seven or so years about various authorities and statutory bodies that there was unfairness”.

“There was a tinge of the witchhunt about it, and assumptions were made that have turned out not to be true in terms of both legal and accountancy terms,” he said. “I believe that the club, with a sensible attitude taken by HMRC, would have been able to trade its way out of any problems that it had if it was under sensible management.”

 

I highlight a section, where Mr McLaughlin of The Times quotes an expert on EBTs, suggesting the actions of HMRC could not have been the cause of Rangers' problems. At first, indeed second, reading the expert says nothing of the sort.  If I am correct, he suggests, quite obviously, that there are no benefits where there are no funds. This, to me, calls into question the whole rationale and modus operandi of HMRC in dealing with Rangers. 

 

Good spot. He’s saying that penalties cannot be retrieved therefore no point pursuing them. He’s not commenting on the validity of the penalties in the first place. 
 

HMRC have been holding off on agreeing a position to date and BDO cannot convince a Court yet that all avenues have been exhausted with respect to sale of assets of Oldco. They have to do that before the oldco is struck off. HMRC movement to settle can be seen as a step towards closure in terms of claims against assets under control of BDO (ie oldco assets). The issue may then be whether or not a Whyte or similar crawls out the woodwork and lays claim to ownership of any of these assets post liquidation. I imagine a Whyte or Whyte company for example may have held back because those assets would fall to BDO pre liquidation. Once liquidation is approved in court BDO disappear. I’m still not clear who owns the actual stadium or the solum/ground it is built on. Can anyone clarify, reassure?
 

I see no benefit in spending money buying back the original company btw. It’s been clearly established in statements in courts by judges even at UKSC level that a club is divisible from a company and can be transferred to a new company with goodwill and the football assets. The SFA have accepted this transfer as have UEFA. Taunts from other ignorant fans are of no consequence. 

[Bluedell 5,329]

5 minutes ago, Walterbear said:

The issue may then be whether or not a Whyte or similar crawls out the woodwork and lays claim to ownership of any of these assets post liquidation. I imagine a Whyte or Whyte company for example may have held back because those assets would fall to BDO pre liquidation. Once liquidation is approved in court BDO disappear. I’m still not clear who owns the actual stadium or the solum/ground it is built on. Can anyone clarify, reassure?

RIFC own the stadium and surrounds. It's got nothing to do with oldco any more.

 

However, Whyte's old company, Wavetower (now known as The Rangers FC Group Limited) is still floating around, although now controlled by Worthington Group. They claim they are owed £18m and have a floating charge. I don't see that they are owed anything and the liquidators agree but there are still negotiations going on for some reason. I'm not sure why their claim hasn't just been dismissed by the courts.

 

6 minutes ago, Walterbear said:

I see no benefit in spending money buying back the original company btw. It’s been clearly established in statements in courts by judges even at UKSC level that a club is divisible from a company and can be transferred to a new company with goodwill and the football assets. The SFA have accepted this transfer as have UEFA. Taunts from other ignorant fans are of no consequence. 

Tradition, for one. It would be nice to have. I'm not suggesting spending a million on it but if it could be purchased relatively cheaply then why not?

[Frankie 8,149]

1 minute ago, Bluedell said:

Tradition, for one. It would be nice to have. I'm not suggesting spending a million on it but if it could be purchased relatively cheaply then why not?

Wouldn't we be buying any agreed tax liability? 

[Bluedell 5,329]

1 minute ago, Frankie said:

Wouldn't we be buying any agreed tax liability? 

We'd only be buying it, and the courts would only allow it to come out of the liquidation process, if all debts were settled, or about to be settled. If it ends up that there's not enough in the pot then it'll go under.

 

I's say that there's very little chance that we'd get it back.