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HMRC wins second appeal over Rangers 'Big Tax Case'


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May 9, 2013
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Liquidated club found guilty of cheating

HMRC wins second appeal over Rangers 'Big Tax Case'
Last Updated: 04/11/15 11:17am

HMRC has won its second appeal over the so-called "big tax case" involving payments to former Rangers employees

Her Majesty's Revenue and Customs has won its second appeal over the so-called "big tax case" involving payments to former Rangers employees.

Judges in the Inner House of the Court of Session allowed an appeal by the Advocate General for Scotland, acting on behalf of HMRC, over the use of the now-outlawed Employee Benefit Trusts between 2001 and 2010 by companies run by Sir David Murray, including the now-liquidated Rangers.

The court ruling, summarised on the Judiciary of Scotland website, agreed with HMRC's contention that the scheme amounted to "a mere redirection of earnings which did not remove the liability of employees to income tax".

The decision is in relation to Murray Group companies and does not affect the current regime at Ibrox.

The Murray argument was that the payments were loans made with the discretion of the trustee of the sub-trust but that was dismissed by the Lord Justice Clerk, Lord Carloway, sitting with Lord Menzies and Lord Drummond Young.

The judges decided that any income derived from employees' services is classed as earnings and subject to income tax.

Lord Drummond Young said: "That accords with common sense. If the law were otherwise, an employee could readily avoid tax by redirecting income to members of his family to meet outgoings that he would normally pay: for example to a trust for his wife... or to trustees to pay for his children's education or the outgoings on the family home."

The judges ruled that the "true nature" of the payments to Rangers players were bonuses, which were typically negotiated by their agent and formalised in a "side-letter" separate to their official contract.

Lord Drummond Young added: "It seems to us to be self-evident that the obligations in the side-letter were part of the employee's employment package, and provided him with additional remuneration. They were negotiated as part of the total employment package.

"Furthermore, so far as the footballers are concerned, at least, it seems to us that if bonuses had not been paid they might well have taken their services elsewhere.

"We realise that the fifth respondent (RFC 2012) was in, potentially, a difficult financial position, competing for good players in an international market where other countries may not have the same rigorous approach to taxation as the United Kingdom.

"Nevertheless, the law is clear: the payments made in respect of footballers were in our view derived from their employment and thus the payments were emoluments or earnings."

The judges confirmed that the responsibility for the payment of tax fell on the employer in each case.

The news of the appeal came on the day Rangers posted a loss of £7.5m for the financial year ending June 30, 2015.
Key words

1. Now-liquidated.

The Rangers involved no longer exists. Therefore it hasn't been found guilty of anything.

2. Does not affect the current regime at Ibrox

Key words

1. Now-liquidated.

The Rangers involved no longer exists. Therefore it hasn't been found guilty of anything.

2. Does not affect the current regime at Ibrox


As a Celtic fan we finished 2nd behind a team that was openingly cheating. We wont be award those titles, but dead Rangers should have them removed from their history.
... maybe this could be merged with the Rangers thread we already have?
Cheating HMRC in a case that has been ruled one way and then t'over is not quite the same as cheating the league.

Should any club that ends up in administration (as they are cheating somebody in one way or another) have any titles gained wiped from history. Portsmouth's FA Cup win or our League Cup victory in 1980? If I was a Celtic fan I'd be more interested in renewing rivalries in the future rather than dancing on the grave of the past.
Tom English ✔ @BBCTomEnglish
The three Lords have dynamited David Murray and his EBT culture at Rangers. They cheated. Same club, same debt?
11:39 AM - 4 Nov 2015
139 139 Retweets 89 89 likes
ANY club that cheats deserves to be stripped of anything they won during that time, its as simple as that.
Tom English ✔ @BBCTomEnglish
The three Lords have dynamited David Murray and his EBT culture at Rangers. They cheated. Same club, same debt?
11:39 AM - 4 Nov 2015
139 139 Retweets 89 89 likes

That is just completely legally wrong
Celtic sailed close to the wind in 1994.

Ultimately, it was neither supporters nor shareholders who brought matters to a head but Roland Mitchell, general manager of the Bank of Scotland in Glasgow.

The brief managerial tenure of Liam Brady had been disastrous and spending on players had taken Celtic to the limits of their £5million overdraft.

Mitchell decided to call time and, if necessary, force the historic club to the wall.

On February 25, 1994, an increasingly desperate Celtic board announced plans for Celtic PLC, promising “a glittering new future in the 21st century” based on a move to Cambuslang.

It was too little, too late.

On March 3, Mitchell told club chairman Kevin Kelly that cheques would only continue to be honoured if “by 12 noon tomorrow a cash collateralised or otherwise acceptably supported guarantee for the sum of £1million is put in place to support the bank’s overdraft”.

The other condition was that McCann “superseded” this with “a £5million cash collateralised guarantee” the following week. McCann flew in from Canada to meet that

But he remains bitter about his treatment by BoS who, he believes, did not wish him to succeed in buying the club.

He recalls: “I had taken them completely off the hook. They were never going to collect the £5.2million they were owed otherwise.
It was nice to see Rangers suffer for a while due to dodgy accountants and owners.

But to honest nobody gives a fuck anymore.

Cheats get punished in sport. You commit a foul: free kick. Bad foul: yellow card. Dangerous foul: it’s a red. You foul to gain unfair sporting advantages. It is cheating. It is punished.

Let’s widen it a bit. If you cheat off the field of competition you get punished. Lance Armstrong…Ben Johnson…you can add into the familiar rogues’ gallery. Again, the cheating is done to gain an unfair sorting advantage. Again, it is punished.

Let’s widen again a little to group cheating by a team. If you field an ineligible player to gain sporting advantage, you are punished.

So it is that the game is now up for Rangers FC and only a successful Supreme Court appeal can now save them from what must now ensue.

After the biggest organised cheating scandal in the history of Scottish football – probably British football and possibly in British sport for all I know, the former Rangers owners now face at last paying the British state the tax and NI they dodged for all those years.

But that is only one side of the cheating. Because as we know, as Rangers people testified , the club cheated because they want to get an advantage on the football field.

Eh? How do we all know this to be factually true? Why, because of “Mr Black” of course.

The Rangers Tax Tribunal was held in secret because many of those under HMRC scrutiny wanted it that way. So witnesses in the Rangers case testified under codenames of colours: Mr Red, Mr Yellow and so forth – all a bit Reservoir Dogs meets Extreme Cluedo for Suits.

Step forward “Mr Black”.

Here is how the Tax Tribunal describes him: “While Mr Black had been involved in ‘signing and selling’ 350-400 players in 20 years of involvement at Rangers, he had not, and could not, because of all his commitments, devote any real time to detailed contractual negotiations. At the start of each football season he would meet with his manager to decide on which players might be possible recruits.”

Who on earth could that possibly be, we wonder? What role for instance did Sir David Murray himself play? We need to know. We have, of course, approached Sir David, but we’ve yet to hear back from him.

Why did this powerful but busy character introduce a scheme of wholesale – and now proven to be unlawful – avoidance of NI and income tax?

Why – so the club could gain advantage on the pitch, of course: sporting advantage. By attracting and keeping players they otherwise could not afford. How do we know?

Because the powerful but talkative “Mr Black” was good enough to spill the beans to the Tax Tribunal: “Mr Black did not consider the Trust as a means of tax avoidance, but rather as a means of retaining and rewarding loyal employees. So far as Rangers was concerned it enabled the Club to attract players who would not otherwise have been obtainable.”

Sporting advantage.

“Mr Black” didn’t see it as a tax wheeze at all, he said, but a football wheeze. Sadly for him if you’re now found to have been cheating the taxman you’re also cheating football – so now his unfortunate admission is a smoking gun

There is more: “As for Mr Black, he denied that the scheme was for tax avoidance in cross-examination, though he went on to describe the scheme as ‘a method of us acquiring, especially football wise, better players in a more cost effective manner than we would be able to do so’; that the club had been ‘very ambitious at that time’; and ‘it was seen as a correct and proper way for us to proceed’; that Rangers ‘have been very successful, because we’ve been able to attract players of a certain standard that, perhaps, we may not have been able to otherwise’.”

One more time: “especially football wise better players in a more cost effective manner”. Sporting. Advantage.

Of course when he said this “Mr Black” thought it was all legal. Sadly for him three Law Lords have now unanimously disagreed in uncharacteristically pungent language.

Rangers – obstructive, unhelpful and evasive, according to the Tax Tribunals – are now found to be tax cheats on an industrial scale by the Law Lords.

Which is why “Mr Black’s” candid admission – Rangers did it to again sporting advantage – now matters so much. His evidence could not be clearer.

When Lord Nimmo Smith’s commission found no such sporting advantage they did so:

1) on the basis that the tax avoidance was legal

2) on the basis of the information they had, though this turned out so much had been withheld from them

The Appeal Court judges have now changed all of that. “Mr Black” now needs to come out and be held to account for cheating at football and income tax. He is far from alone.

It is time Campbell Ogilvie explained his conduct – the man who played a part in the tax avoidance and personally benefited before going on to be SFA President.

It is time Sir David Murray – the conductor of this disastrous orchestration, by overseeing EBTs at Rangers – is similarly held to account for what he did and now, why Rangers did it for advantage on the field: cheating.

Above all, it is time the SPFL members came out from Glasgow, Edinburgh, Dundee, Aberdeen and beyond to denounce cheating as cheating and take action as fans from Kelso to Thurso are begging them to do.

All the titles and silverware from all the years Rangers cheated at football, as they cheated at tax, must be null and void and wiped from the record.

Let nobody try and tell me it isn’t the same club – I have always said it is and now Rangers have to take the consequence of that reality right on the chin.

Turnbull Hutton RIP – how your godforsaken Scottish game needs you now.
I say again. The Rangers involved no longer exists. The only possible sporting sanction would be to take their titles away a la Lance Armstrong in cycling, but won't that feel rather empty for Celtic?

And I will tell you it isn't the same club. That is the simple fact of liquidation. End of legal argument.