05 August 2014

HMRC: Questions to Answer

By Andy McKellar | Contributor

Today’s Daily Record revelations have once again dragged the conduct and behaviour of HM Revenue & Customs into question. As the newspaper revealed, the tax authorities were fully aware of Craig Whyte’s previous declared earnings, or lack thereof, and of the personal guarantees given to Ticketus which resulted in a personal tax liability of £3.74M, which of course went unpaid.

Taking the above information into account, one would be forgiven for thinking that HMRC would be keeping a very close eye on the tax affairs of Rangers Football Club under the stewardship of Whyte, an individual who was clearly on their radar for all the wrong reasons. Their actions however would suggest otherwise.

Outside of very hastily forcing Whyte into bankruptcy in May 2011, something which would have been almost impossible, HM Revenue & Customs could not have prevented the sale of the Club. As such Whyte would still have owned Rangers and administration would almost certainly have remained inevitable. But that’s not really the issue at hand.

 Rangers’ financial problems were well documented, largely due to the ominous Big Tax Case which hung menacingly over the club, and so it is reasonable to assume that a zero tolerance approach would be adopted a la Lloyd’s Banking Group. Instead however HMRC turned a blind eye to the obvious non-payment of PAYE and other taxes, resulting in the accumulation of a debt which they knew would never be repaid.

 The inaction witnessed is clearly not common practice for the UK tax authority, as many business owners will testify from experience. You need also look no further than Hearts for evidence of HMRC’s methods which resulted in numerous winding up orders being issued to the Gorgie club over a period of time where non-payments were regular.  

 Under Whyte’s control however, Rangers’ Oldco was very obviously able to avoid paying its tax liabilities while continuing to trade and therefore accumulate further debt. It stands to reason therefore that HM Revenue & Customs deliberately and willingly allowed such actions to continue under their nose, at significant cost to the taxpayers I might add.

 The decision makers for the above deserve to be held to account. What was the thinking behind allowing a company to trade while insolvent for several months under the stewardship of a man who himself could not pay his own tax liability? Was it simply a tactical ploy to ensure enough voting rights to block a CVA when administration inevitably followed? Rangers fans, and the taxpayers, deserve to know the truth.

 Alastair Johnston today said he would welcome a “full-scale, independent investigation into the actions of HMRC around the Rangers issue” and I’m sure those sentiments will be echoed by most supporters who want to see justice done and perhaps receive some closure on the events that unfolded during one of the darkest periods of our history. 

This is not to say that HM Revenue & Customs are to blame for the financial disaster at Rangers, for that would be absurd, even if it would please David Murray & Co to shift the attention and blame elsewhere. Their actions however should be questioned and indeed thoroughly investigated. That much should go without saying when the information above is taken into account.

 The reputational damage caused by Whyte, aided by HMRC’s inaction, has been monumental. The media of course fanned the flames and painted a picture which sold newspapers, and all aboard the bandwagon the rest of Scottish football jumped. The facts however are gradually beginning to emerge, demonstrating that Rangers were indeed the victims of fraud, for which we have been punished, something that most fans have stated for quite some time. 

While the story is complex, and there are many villains in the tale, it is difficult to ignore the role played by HM Revenue & Customs both in terms of the Big Tax Case, which again went our way at the Upper-Tier Tribunal, and the tax debt racked up following Craig Whyte’s takeover. 

The tax case of course was the catalyst which triggered the entire series of unfortunate events, culminating in our plunge into administration on 14th February 2012. It was the phantom debt which forced Lloyd's to chase their money and which therefore played a significant role in ensuring the sale of the club was completed regardless of the credentials of the buyer. Blame of course lies outwith HMRC but that doesn’t mean that a blind eye should be turned because one entity is less culpable than another.

The cost to the taxpayer for their relentless and unsuccessful pursuit of Rangers is more than significant, and that’s before you consider the deliberate decision to allow £14M of bad debts to mount under the watch of a man who declared no material UK income and who was unable to pay his own tax liability. It’s enough to make you wince. 

Knowing exactly what happened or why won’t change what has came to pass or solve our current problems. We’re not able to turn back the clock and change the various events that have since unfolded. 

There are however questions that need to be asked, and we certainly deserve answers.