11 July 2014

HMRC - guilty?


by Alan Clark | Deputy Editor

One day, the Rangers supporters will have answers for what has happened to their football club. One day, the individuals responsible will be brought to task and heads will roll.

The timescale for when that day will arrive is unknown.

In a week where it was re-confirmed that Rangers' old company, RFCplc, had administered Employee Benefit Trusts within the confines of tax law, questions are being asked by fans yet again about what has unfolded in the past few years.

It is quite simply one of football's 'greatest' tragedy stories what has happened at Ibrox. To a club so huge in Scotland, in Britain even. To a club that boasts 50,000 fans at home games and has won more domestic honours than any ever team in the world.

That footballing giant was banished to the very lowest rung of the Scottish football ladder – the fourth tier, then known as the Third Division of course. One of the biggest contributing factors in the decision by SPL clubs to kick Rangers out of the league (after the switch to the new company) was the up and coming Big Tax Case – and the assumed guilt Rangers held.

Public opinion outside of Rangers fans was, and still is, that the club cheated the taxman (and ergo, other Scottish clubs) by using EBTs to pay players they (apparently) couldn't afford otherwise. That HMRC were going to have a field day with the club in court – there was no way anything other than a mammoth tax bill was going to be delivered to Edmiston Drive.

Rangers were guilty until proven innocent according to nearly all Scottish football fans and many journalists, bloggers and tax 'experts'.

This opinion no doubt was shared by chairmen and owners of SPL clubs, the likes of Stephen Thompson at Dundee United and Vladimir Romanov of Hearts. Rangers simply had to be sent to the very bottom because they had cheated everyone for years and won trophies they shouldn't have.

The decisions by these clubs were understandable in the sense that they had the opportunity to put the boot into Scotland's most successful team – a team they had watched for years sweep all before them.

But really, the actions of the British tax authorities are perhaps the most peculiar. Look, I for one do not think HMRC were wrong to look into the use of EBTs at Rangers. They have a duty to collect as much tax as possible and any so-called loopholes will be investigated.

The Scottish tabloid media did their thing in reporting the potential liability of the Big Tax Case, figures ranging from £10 million to £75 million that Rangers would have to stump up to the taxman.

David Murray was looking to sell the club for years of course, but potential new owners were being put off by the scenario of having to pay a heavy sum to HMRC, if the case had went against the club.

As noted by the BBC's Richard Wilson here, some tried to negotiate that Murray International Holdings would foot any bill that came their way – but no agreement was found.

This led to the conman we all know as Craig Whyte to come in, buying the club for £1, selling off future season ticket money by borrowing from Ticketus to pay off the bank debt – and then arguably his biggest crime of all – withholding all PAYE contributions from HMRC.

HMRC were quite right to prompt Rangers into administration in order to attempt to recover the funds rightfully due to them – but not as late as they did. Whyte had control from May 2011 to February 2012, yet HMRC did nothing till February.

Any normal person refusing to pay tax would not be given this length of time to rack up a substantial bill – never mind the double digit millions that Whyte withheld. Why didn't HMRC act sooner? Go public with the information to try and recover the cash then?

By the time a CVA was proposed after a few months of the administration process, HMRC were the largest creditor on the list due to the actual debt (aforementioned PAYE) and what we know now to be the phantom debt of the Big Tax Case (listed as £75 million).

HMRC rejected the CVA and it all fell apart. Liquidation proceedings began on RFCplc and new company - TRFCltd - was formed to run the club.

However, that is not all. For months, the RangersTaxCase blog posted articles with pretty specific information and details of certain contracts at Rangers. There is no doubt the person(s) behind this blog were no supporters of Rangers with the tone of the pieces and commentary on Twitter.

This blog thought the information they obtained meant it was cast in stone that the club was guilty of not paying the tax they should have whilst paying via the trust schemes. Tom English, writing in the Scotsman in November 2012, noted:

“If you wanted to know the latest news on their tax travails, rangerstaxcase was a place you went because, unlike newspapers or radio stations, rangerstaxcase was connected to the heart of the FTT and everybody knew it.

“It had documents and detail that were beyond dispute. When illustrating one point it was making it would summon up information that could only have come from somebody within, or very close to, the tribunal”


Added to that, Mark Daly produced a documentary (winning an award in the process) for BBC Scotland which uncovered many details in regards to the EBTs in play at Ibrox over a decade – and revealed astonishing information regarding to Craig Whyte, Gary Withey, Duff & Phelps etc.

That documentary’s tone was also heavily leaning towards a presumption of Rangers' guilt, despite it naturally being presented more professionally that the RTC blog. Lord Nimmo Smith wrote, in his SPL independent inquiry, that;

“BBC Scotland came, by unknown means, into possession of what they described as “dozens of secret emails, letters and documents”, which we understand were the productions before the Tax Tribunal. These formed the basis of a programme entitled “Rangers – The Men Who Sold the Jerseys”

What links this blog and the documentary? Quite simply, the detailed information they obtained.

Many commentators have noted that there had to be a leak within HMRC, handing out documents and contacts related to the case that should not have left HMRC's headquarters.

The Big Tax Case verdict was not announced until November 2012, where lo and behold the panel ruled that the EBTs were not taxable therefore RFCplc did not owe the taxman millions.

The Revenue appealed the decision, which led to this week's news that they had lost again - outside of a small number of cases being referred back to the original tribunal.

Observers will note how crucial HMRC have been in this whole saga to Rangers' fate. This information and line of thinking is not new to Rangers supporters – but this week's news will have reinforced those feelings of anger towards HMRC.

Plenty have attempted contacting them regarding the alleged leaks of confidential information, yet nothing has come of it.

After two defeats at the First Tier Tax Tribunal and then the Upper Tier Tax Tribunal and years and years of uncertainty through chasing Rangers regarding EBTs, it is astounding that HMRC are considering appealing the verdict again.

Which would waste more taxpayers money for something they cannot win, given the old company is in liquidation (HMRC's nail, remember) and has limited funds in the creditor pot as it is.

What happens next? A government inquiry into HMRC's conduct? More police investigations? We shall see.

Perhaps one day Rangers fans will see those responsible for bringing the near-death of their club, and the millions of pounds thrown down the drain, brought to justice.

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