“The tax default and reporting rules are an integral part of maintaining a fair league competition”.
Neil Doncaster, SPFL chief executive, November 2014.
“A fair league competition”. Strong words. I wonder if Mr Doncaster is keen to apply his ethics as evenly when it comes to a team with more than a couple of thousand fans. Don’t bet on it.
I suggested last week you ignore the comments coming out of Hampden about there being little appetite to look into the enormous levels of cheating which we now know went on is our game for over a decade. There is very little appetite from those occupying executive positions at Hampden, but they will not decide what happens.
Ultimate authority at the SFA and SPFL lies with the clubs, and more than just Celtic are alarmed by what went on, and the apparent flippancy show towards it in recent days by those paid to protect the honesty and reputation of our game.
Instincts exist within any organisation to protect itself. We’ve seen this play out in the Church (against their own), the police (against their own), Fifa (against their own), so it should be no surprise that those who worked, and became friends with, some of the architects of Rangers EBT scandal had little appetite to open an investigation.
An SFA or SPFL commission could lead to the disciplining of two-term SFA president, Campbell Ogilvies, or Sir David Murray, men who have made friends in the game for decades.
It would inevitably lead to the examination of the Resolution 12 issue (how Rangers were granted a licence to compete in the Champions League in 2011 when they didn’t meet the criteria). And this one is current enough to involve many still active in their roles.
And then there is the weighty matter of dealing with the consequences of what went on in our sport for all those years.
The demand of an investigation into what went on sounds reasonable but you cannot look into something corrupt without consequences, and that’s where corrupt systems work against fair competition.
Rangers rigged the system, their practises are as clear-cut a case of Financial Doping as you will find. They were playing by different rules, different tax rules and different player registration rules.
They failed to disclose information which should have been disclosed, but could have incriminated them. Unlike Craig Whyte, who was banned from the game for his duplicities, the directors who embarked on this great subversion have never been called to account.
Nor will they unless voices are heard across Scottish football. Don’t lose focus on getting angry (not yet, anyway), right now, we need fans of other clubs to share our concerns and let their voices be heard. Winning allies is the first part of winning this debate, and that’s easier done by calmly making our point.
11 clubs suffered financial consequences of Rangers Financial Doping. Motherwell lost a minimum of £2.1m from not gaining access to European competition. How would they feel if they were a cyclist half a mile behind Lance Armstrong in every race? Would if be OK, as he didn’t get caught?
There’s a Christmas toy collection for Maryhill Foodbank at Wild Cabaret, THIS Saturday, 14 November, from midday to 4:30. Families who don’t have money for food don’t have money for Christmas toys. If you have something you can donate, drop it in. There’s mulled wine and mince pies on the go.
You’ll find Wild Cabaret at 18 Candleriggs (0141 552 6165).
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Hipe=hope
In spite of the efforts of the MSSM, I share the view of the earlier poster that titles will be stripped. That, unfortunately from my point of view, will not be enough to rid us of the pretence that they are the same Club. Some form of ` Rangers` will remain with us and the Authorities in general will pretend that they are the original mob.
I often hear that there are many good Rangers supporters. If , indeed, that is the case, then their crowds should dwindle accordingly. Good guys would not support known cheats.
JJ
Junglejim
If someone was “good”, they’d have had a dilemma supporting that sham.
When all is said and done, regardless of what happens next, the cat is out of the bag. They cheated – they know it, we know it and the law courts have decreed it.
They have achieved a level of shame and infamy that is unsurpassed – that will always be their legacy.
dbbia
You’ve made me feel very guilty Sir but surely he should be able to see that he shouldn’t be taking part in it all when he doesn’t have to.
BCW
That has always been my view but football loyalty (!) is a strange attachment. For me, God and Country were easily discarded but Celtic have great staying power!
JJ
Jungle jim..,,
Yeh I know some but not ‘ many’ as they are either thick as s*** /mince and/or arrogant
Tim maloney
No enough mate…..they have largely expunged the sack of Manchester.
Something tangible is required.
I dont know bhoys. We might just be moving on from 1984 to Animalf Farm. Lets,wait snd see. Stop getting me excited. Ok ?
GeorgeOrwellCSC
I can’t quite get my head round Darren O’Dea’s position.
On one hand he in my opinion quite rightly says that the titles should be stripped and that sporting advantage or not plays no part, but he also maintains that the individual players are blameless and should keep their medals.
As for Paul Lambert, I’ll be charitable and say he’s just a bit of a thickie.
Strip the titles
Do not re- award.
RANGERS LOSE THE BIG TAX CASE – WHAT NOW?
Today, the Court of Session in Scotland ruled in favour of Her Majesty’s Revenue and Customs in the Big Tax Case. The Big Tax Case was a challenge to Rangers’ use of an offshore tax avoidance scheme to pay its players.
This is the first victory for HMRC in what has become a very long running court battle, over what was seen as a test case by HMRC. For that reason the ruling is likely to have widespread repercussions for the offshore tax avoidance industry.
For Rangers (or rather for creditors of the company, now in liquidation), the ruling is likely to bring some finality to the matter. But for some of the individuals involved, including in the governance of Scottish football, the result could also be very serious.
At Offshore Game Towers we’ve been combing though the judgement. Here’s our analysis.
BACKGROUND
First a quick recap on what the Big Tax Case was about. The case looked at a particular tax avoidance scheme used by Rangers to pay its players between 2001 and 2009. The scheme was set up by Rangers’ owners, the Murray Group, on the advice of Paul Baxendale Walker, who since leaving the tax advisory profession has become a pornographer.
The scheme was complex, but in broad terms worked like this: Players would receive a small amount of their payment though a normal contract with the club. This contract would be registered with the SFA in the normal way and income tax paid on it. However the player then would sign a separate agreement with the club to receive money though an offshore trust. Payments made to the trust were not part of the contract and not declared to the SFA or HMRC. In Rangers’ case that trust was based in Jersey.
The club would make payments into a primary trust which had a set of sub trusts attached to it. On paying the money it would ask the trust to make a payment into a sub-trust set up in the name of a player. The player would then write a letter to the sub trust expressing who he wanted to benefit from the trust. That was normally members of his family. However, the beneficiaries did not need to be paid immediately, the benefits could come many years in the future. In the interim, the trust loaned the money to the player. In total there were 108 sub trusts, each for the benefit of a named player or employee.
Trusts work by inserting a layer of control in between people that can be useful for tax (and sometimes other) purposes. In this case the layer was between the club and player. In theory the club was not paying money to the player but to the the trust. The trustees, the people controlling the trust, controlled the money. They did not have to obey the wishes of the player, they did not have to make loans to him and they could also have recalled those loans. What that means is that the players could make the argument that the money that they had was not guaranteed to come to them and was given to them at the discretion of the trustees of the trust (whoever they may have been) and not the club as part of their employment.
HMRC disagreed and counted the money as payment for employment, and cited in evidence the side agreements signed between the club and player over payments to the trust. They demanded £50m in back taxes for the scheme. Rangers challenged the decision and went to a tribunal. The tribunal ruled in Rangers’ favour. HMRC appealed, the second tribunal also found in favour of Rangers so HMRC appealed a second time to the Court of Session, the Scottish equivalent of the Court of Appeal.
THE DECISION
The Court of Session ruled today that both the lower and the upper tax tribunal were wrong. The payments to the players were payments that came as a result of their work as players and as such they should have been taxed. The fact that the money was paid to a third party was irrelevant. Once the payment had been made for work it was income and it was the players choice to redirect their income somewhere else. The club should have withheld the tax when the payments were made under PAYE rules.
Reading the judgement there is an elegant clarity of thought from the court. The judges stress that in essence this is a simple case in paragraph 56 of their judgement:
The fundamental principle that emerges from these cases appears to us to be clear: if income is derived from an employee’s services qua employee, it is an emolument or earnings, and is thus assessable to income tax, even if the employee requests or agrees that it be redirected to a third party. That accords with common sense.
And the court is really quite scathing of the conclusions of the tax tribunals. The court says it has had at times difficulty in understanding the reasoning of the tribunals. The court goes onto say that any realistic view of the transactions can only come to one conclusion. Given that the conclusion differed from that of the tax tribunals, that is a fairly damning statement. The relevant passages from paragraphs 57 to 60 of the judgement are below:
“This principle is ultimately simple and straightforward – indeed, so straightforward that in cases where elaborate trust or analogous relationships are set up it can easily be overlooked. That, it seems to us, is what happened before the First-tier and Upper Tribunals in this case….
It must be determined whether the payments by the relevant employer into the Principal Trust, and in due course the payments from the Principal Trust to the various sub-trusts, were derived from the employment of the employees in question. If they were, they amounted to the employees’ emoluments or earnings….
It is very obvious that they [the payments] were derived from and based on the work done by the particular employee. On any realistic view of the transactions under consideration, that conclusion is inevitable. The First-tier Tribunal considered that the benefit was “a mere discharge of an employer’s obligation to an employee”, but that ignores the manner in which any such obligation arose….
The First-tier Tribunal expressed the view that the obligation in the side-letter was not an emolument, as it was a discharge of an employer’s obligation to an employee. We have difficulty in understanding this statement. 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.
The court has ordered that the original tax assessments by HMRC stand.
TAKEAWAYS
1. Rangers unlikely to appeal
This latest ruling now brings finality to this matter. Strictly speaking Rangers could appeal to the United Kingdom Supreme Court, but this seems unlikely to happen. The Supreme Court exists to clarify difficult and contentious points of law. It can choose which cases it hears and only does so if the case has a real chance of success or if there is an important national issue that needs to be addressed. Where a lower court has made a ruling that is clear cut and expresses no doubt about their conclusions it is difficult (but not impossible) for the case to be taken up by the Supreme Court.
As can be seen from the passages quoted above, the Court of Session’s judgement today is very clear cut. The judges have done a thorough and comprehensive job in analysing all of the relevant case law and legal issues going back to the 1930s and how they might apply to this case. They even have taken the time to consider arguments that it appears were not advanced by HMRC. At the end of this process they have come to a very clear and unambiguous decision. It was written like a judgement that that will be extremely difficult if not impossible to appeal.
That said, there are many live cases involving EBTs – with a great deal of money at stake, if the current case is taken as setting precedent. So watch this space…
2. A case with wide implications
A key point that was made by the Court of Session was the simplicity of the underlying principles in this case, and the attempt by Rangers to confuse the issue with complexity. Was it ever any other way? So much of the tax avoidance industry relies not on the cleaver use of tax rules, tax breaks and loopholes, but by creating complex structures that are so difficult to penetrate that tax authorities can’t see what is really going on, even if they try. Today’s ruling cuts though all of that that, and separates the source of the payment, from the way in which it was paid.
There was little discussion of whether the trusts really were discretionary, or the relative powers of the trustees, there was no analysis of whether the arrangements set up were real with real legal effect or whether they were a sham (the complicated issue that tribunals tried to grapple with). As far as the court was concerned there were payments arising out of the players work, whatever complex, convoluted offshore scheme you use to launder those payments through is irrelevant.
Employee benefits trust schemes like that in the Big Tax Case were used by a number of Premiership football clubs (although apparently a number of them settled rather than go to court) and were marketed by tax advisers to a wide range of people. The Big Tax Case was seen by HMRC as a test case which it would use to establish the law and pursue others. Expect more people to start settling with the HMRC over the coming months. (Although per the above, watch this space…)
3. Rangers could lose titles
Perhaps the biggest and most serious consequences could come for Rangers.
In order to support the tax avoidance scheme, Rangers did not declare the payments they made into the trusts to the SFA. A subsequent inquiry established by the Scottish Premier League and led by Lord Nimmo Smithfound that the payments were in contravention of SFA rules.
However the inquiry did not recommend a sporting penalty but only a financial penalty. In other words the SPL fined Rangers pounds not points.
Key to this decision was the finding that Rangers were not doing anything unlawful. At the time of the inquiry the tax tribunal had ruled in favour of Rangers. After the way that the courts so comprehensively trashed the decision of the tribunal today, it is difficult to see how there isn’t an argument for looking at the issue again.
But there is more. The Nimmo-Smith inquiry rested their decision not to award a sporting penalty on the idea that Rangers had not received any indirect competitive advantage from the scheme. Of course it is obvious that as they didn’t pay taxes (at 40%) the club had more power in the market to buy better players. But Nimmo-Smith concluded that as the scheme was legal, it was open to any other club to arrange their affairs in the same way.
The fact that Rangers had believed that they needed to break SFA rules by not declaring the payments was irrelevant. The tax tribunal had said that they would have found the scheme to be legal even if Rangers had declared the payments to the scheme. Other clubs could have set up the same tax avoidance scheme and kept within the SFA rules and so were not disadvantaged by Rangers breaking the rules.
It is difficult to understate how big a call this was. The tax scheme that the court ruled on today was in action for 9 years, during which Rangers won the Scottish Premiership 3 times. They came in the top three the other 6 years, giving them a place in European competition. Had Rangers been docked points it could have lost these titles and other clubs could have said they had been excluded unfairly from European competition.
The judgement today directly addresses the issue of competitive advantage in paragraph 62:
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 realize that the fifth respondent [Rangers 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.
In other words Rangers won titles based on operating a scheme that was unlawful in its tax implications, and therefore not open to other clubs with which it was competing.
Where did that leave Scotland’s game? Was the competition during 2001-2009 a fair one? Was there a subsequent failure to address the sporting consequences?
Fans of Rangers saw the club go into liquidation following the tax risks taken by their board (and financial secrecy remains a major issue, with a major court case facing many of those involved in the new company’s establishment).
Fans of other clubs have seen the outcome of their major competitions distorted, at best, by tax manipulation over the best part of a decade – and the apparent failure of Scottish football authorities to respond appropriately.
This is, in our view, the real problem with clubs playing the offshore game: football ends up being the loser, and with it the fans.
Love the outrage regarding Lambert comments.
I remember on here just as Celtic were about to appoint Tony Mowbray as manager.
My take was he was a spineless cheat who laid down to rangers on the last day of the season as Hibs manager (which he did) and he should get to fuck.
Cue hunners of responses along the lines of … ra huddle… mogga…. true celt … knows what it means …. walked the walk…. blah de fucking blah …
The point being that if a flagrant cheat can get away with being Celtic manager in the eyes of the CQN faithful just ’cause he is Dermot’s chosen one, then I await with no surprise the back flips and hypocrisy if Lambo ever gets the call.
Neil Lennons left arse cheek is smarter thsn Lsmbo
HH
Over recent years there have been several lists of EBT recipients. These have included employees of Rangers either during the offending period, or people who had been employed. E.g. Souness.
Does anyone know if there has ever been a definitive list published and if so has anyone who was never an employee of RFC receive an EBT?
BIG-CUP-WINNERS on 9TH NOVEMBER 2015 7:48 PM
Nail head hit …… The whole thing is so pathetically sickening ….
All the little masons covering up the shoite
without a fekin’ clue of what it’s all about
Hahahahahahaha
Paul67,
If I see that LG TV one more time, I’m going to have a flakey …… Hahahahahahaha
Bob lob Law
Pretty sure I read a statime a while back that a lot of the ebts paid were not to football employees of the club
The insinuation was they may have been to journalists and officials
Every argument/discussion about EBT is pointless until after the appeal timeline is over. BFDJ has it on good authority that BDO will appeal and he is a fountain of inside knowledge.
Skyislandfill
Think O’Dea is playing it right
Players didnt know if it was wrong ( which in the majority I believe) and the Club are to blame.
The thing I dont agree with is they peddle out scottish hun players to say they would have signed with the club anyway ( really ? Thats why we would fear players like Alec Rae ) BUT its the foreign players who are actually the ones who would/did make a difference and ‘Mr Black’ ( not the painter & decorator) confirming that.
This is going to get more messy ( not Lionel ) & players/commentators are wary how their safety could be compromised.
Dont blame them as some are capable of anything
After tonight’s radio, it’s definitely worth re-posting…….
NATKNOW on 9TH NOVEMBER 2015 11:09 AM
Andrew Kerins Green and White Army on 9th November 2015 9:56 am
Mint sauce award goes to jingle jangle for services to sevconess and let’s face it the competition is fierce
—————————————————————-
Can I suggest we establish The Mint Sauce Award for Succulent Lamb Sports Journalism (known hereafter as “The Minty”) – awarded to the lickspittle journo who has published the most execrable copy from the previous football season?
I’d happily contribute cash to pay for the plastic trophy every year – which should of course be in the shape of a gravy/sauce boat.
“The Minty” will be awarded on an annual basis and this year the field is vast with contributions right across printed and broadcast journalism. All we need is a way to allow bloggers to vote, and a compere (BRTH??) to take to the stage and present the highlights.
Who’s up for it??
Bob LobLaw , 8:26 pm
I think that Daly was unable to publish the full list
Given that the media in Scotland went seven decades without managing to challenge institutionalised sectarianism, it really isn’t much of a surprise that they are turning a blind eye to a mere 50million quid’s worth of tax avoidance.
I have to say though, Paul67, I am very, very disappointed that Celtic have said nothing – nothing – about this.
It is absolutely NOT up to fans to lead the campaign for sanity. People like Peter Lawwell are paid an absolute fortune to protect Celtic’s interests, and also nurture the wider game in this country.
If Celtic sit back and do nothing (and I see absolutely no sign of any action at all), it will be one of the saddest episodes in our club’s history.
Frankly, for a million a year, I expect more.
Hypothetically speaking. What if some of the EBT payments were made to the benefit of referees…… I think I would spontaneously combust.
If you want to let the Scottish Government know your feelings may I suggest you do it through you MSP, try they work for us.
Adi dasler
Thanks for the reply.
I completely agree with you about the players not knowing the fine detail of their contracts but say for instance a rowing team or cycling team won a medal at the Olympics and it later turned out that their equipment did not conform to the standards and that the award was rescinded, would the individual oarsmen or cyclists be left with their medals?
An imperfect analogy right enough but surely the players medals would be worthless without the corresponding league titles to go with them.
NATNOW
Great idea.
LENNON’S PASSION on 9TH NOVEMBER 2015 8:32 PM
Every argument/discussion about EBT is pointless until after the appeal timeline is over. BFDJ has it on good authority that BDO will appeal and he is a fountain of inside knowledge.
As I understand it, it is almost certain that as liquidators BDO will appeal decision.
– See more at: http://www.celticquicknews.co.uk/doncaster-on-maintaining-a-fair-league-competition/comment-page-9/#comments
The decade of cheating and resultant cover up by key SFA individuals needs to result in the following :
– Titles and cups stripped
– SFA President and administrators dealt with
– Murray loses his knighthood
– HMRC go after tax evaders to pay back money due for hospitals, schools etc Ogilvie, Murray, Smith, McCoist et al
– This sham of the same club put to bed. The new club can keep its 2 titles. The old club loses all trophies in that decade of cheating.
We are talking about systemic cheating for approx 10 years. The punishment must match the crime, just as it was with Armstrong, Juventus etc
Is it not the case that rather than an automatic right of appeal the Murray Group (or whoever tends their carcass) have to apply for leave to appeal? The grounds for appeal are scrutinised and the appeal will go no further unless it presents a substantial and compelling argument, something that is pretty unlikely given the words that the Law Lords used last week in damning rangers and the minty group’s use of EBTs.
If my understanding is right I can’t see there being an appeal.
At the start of the Shortbread Daly expose on the ebts the introduction did mention referees . But then there was nothing in the following programme about refs. Were some ebt recipetents protected?
latchford on 9th November 2015 8:42 pm
Could be wrong. But I don’t thing Walter had EBT.
Apparently we’ve to wait until appeals are exhausted before jumping to speedy conclusions.
Surprisingly this narrative wasn’t in force with LNS?
Quonno
Would BDO not have to weigh up the advantage to creditors against the considerable cost of taking the appeal forward?
Part of me wants the matter settled now but part of me thinks that an appeal would be a good thing in that should HMRC win out then there would be a cast iron precedence issued.
This would allow no wriggle room at all.
Plus it would keep things going longer and hep ensure that the zombies go west as well!
HH
Celtic can’t say a word officially until the appeal deadline has passed. That will be the official party line at the AGM I would imagine. If BDO appeal it will kick it at least another year down the line.
Quonno
Where are you getting your information?
I’m proud of daren 0’dea for saying what he said- which was ‘they had a sporting advantage’
I’m glad and thank God that nfl isn’t here anymore – can you imagine the vitriol he’d get let alone the death threats and assaults as they get more and more desperate and angry.
THE GLORIOUS BALANCE SHEET, 8:47 PM
That’s right
Skyilsland..
Agree totally but I would strip the titles but dont award them to anyone else.
Players keep their medals. ( useless) , warranty officers avoid threats if they go after them :) & Scottish football is seen to be doing the correct thing
“It’s like someone smoking a cigarette in a restaurant 20 years ago and being held to account – See more at: http://www.celticquicknews.co.uk/doncaster-on-maintaining-a-fair-league-competition/comment-page-4/#comments
Hahaha,,,
Big big difference is that the law on EBT’s hasn’t changed.
Oh and Murray gets it big time