The Upper Tier Tribunal (UTT) sitting on HMRC v Murray International Holdings (MIH) has ordered HMRC’s demand for unpaid tax to be reduced substantially. Claims Sir David Murray Employee Benefit Trust should be taxed were dismissed, but the UTT was not prepared to endorse that guaranteed bonus payments paid to Rangers players should not be taxed.
During the First Tier Tribunal MIH acknowledged tax should have been paid on EBTs given to a further five players, who were removed from the judgement (although the tax was never paid). Lord Nimmo Smith’s SPL Inquiry found Rangers guilty of not disclosing side-letters given to players which contractually bound EBT payments and arrangements. The Inquiry issued Oldco Rangers with a fine of £250,000. Newco Rangers agreed to pay all of Oldco’s football debts as a price to gain entry to the SFA and league structure. It is anticipated this fine will be collected in the event the club reaches top flight football.
Rangers did not dispute they operated an illegal Discount Options Scheme, which was uncovered by Craig Whyte’s investigators, when he carried out due diligence before buying the club from Sir David Murray. Tax due on this scheme was never paid.
Once in control, Whyte continued to operate the club’s tax arrangements in similar ethical standards. He failed to pay VAT, PAYE or National Insurance. Several hundred other creditors were left in the lurch as the club was liquidated.
At its heart, this is a morality tale. The first lesson which should be drawn is that it is far better to disclose your tax arrangements to the authorities than to hide them. When Celtic employed Juninho, who had an earlier EBT, they disclosed this fact and subsequent transactions to HMRC (Celtic never issued rule-breaking side-letters either).
Perhaps the most important lesson is not to allow debt to get out of control. Armed with the Discount Options Scheme and tax not paid on contractually guaranteed bonuses, HMRC were legally bound to pursue the club for money the tax payer was due – and will almost certainly never be paid.
Once that train was in motion, the club was at the mercy of its bank. MIH held substantial commercial property assets at this time, when the UK commercial property market took an average 45% nosedive. Then the bank itself (HBOS) was sold, exposing legacy arrangements to full commercial scrutiny.
Even then, even then, Rangers could have used the bonus of Champions League income to either rapidly pay-down their bank debt, or retain as a hedge against the consequences of the on-going tax dispute. Instead Walter Smith returned to the transfer market, spending what he could to keep his nose in front of Celtic.
This was an arrogant and fatal mistake.
When Whyte put his £1 on the table there was nothing the Independent Board Committee could do to dissuade Sir David from selling, but by then all the cards had been played, an insolvency event was on the horizon unless someone coughed up £18m to repay the overdraft, and no one was prepared to do this.
In the unedifying final days the club was reduced to turning, cap in hand, to lifelong adversaries to ask for rule changes which never arrived.
Despite all of this, humility among this lot is scarcer than a fully paid up tax receipt.
It took dozens of people working to promote Rangers on-field activities to kill the club. Those who failed to disclose side-letters, those who allowed debt to get out of control, those who sat on boards which endorsed Smith’s spending knowing the potential consequences, those who campaigned against the people who disclosed Whyte’s background, were all necessary for this outcome. Their reputations are now co-dependent
Celtic fans, HMRC nor the SFA killed Rangers. None of them* knew about the Discount Options Scheme, the undisclosed side-letters, the unpaid VAT, PAYE or NI bills. None of them decided to spend more than was prudently possible.
Killing Rangers was an inside job. The biggest rivalry in football is gone; we won, by an avalanche of own goals.
*apart from SFA president Campbell Ogilvie, who knew exactly what was going on.
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A very happy Friday to all rebel Celts and a very belated happy Birthday to Robert De Bruce.
If killing Rangers was an an inside job, then keeping them on life support was what?
Years from now folks will ask, and what did Celtic say about this and what did Celtic say about that? the answer will be:
“nothing, we said nothing, we knew our place, only the bampots spoke up, the Media, the Club and the fitba authorities all said nothing”
Viva the bampots!
Auldheid
19:49 on 10 July, 2014
Kevjungle
If you do not understand the difference between the answer at a Q&A session and a shareholders resolution then that would explain why you made your point.
____________________________________________________________
Eh?
I’ll try to get on later to, head you off oot at the pass as you attempt to peddle all yer, convenient straws to clutch at, paper moons r us.com
I’ll continue to bang my ‘consistent’ drum that goes sumthin like…What part of the ‘bored’ only connect with the support when it comes roon to taking SB money – don’t you understand?
As I pointed out a few pages back – when the dugs on the streets knew that the ‘fix’ was in to ensure that, the huns got the CL money during WGS’s last season and, the BTM season on the back of a series of ‘honest mistakes’…don’t, even you, think it a bit strange that, a Celtic ‘bored’ containing a former cabinet minister and, former chairman of the Bank of England, didny know what was going on?
How many £ Tens of millions did the huns ‘snaffle’ from Celtic under the watch of the ‘bored’ at that time?
Don’t you think that, no action from the ‘bored’….apart from a letter sent to the BBC sports dept, complaining about – ‘honest mistakes’ – and signed by – a source?!?! – was grounds for wholesale sackings?
The ‘bored’ and, CEO will not find any difficulty in taking their – executive salaries and expenses – paid for by, Joe Mug but, when it comes to making an executive decison, they head for the hills?
IMHO – Off oot.
Only a fool couldny see that.
neil canamalar lennon hunskelper extrordinaire
23:29 on 10 July, 2014
67…,
I’m no impressed with the latest on res 12, the long and short is nothing has happened, except for a lot of hot air and blah blah blah, we are no further on than two hours after the resolution.
I’m home soon and am calling the first serious formal minuted meeting, shame really but all you can do is work in good faith. We are now eight months on from the AGM and we’ve drank coffee, ate biscuits, babbled, led to believe serious deliberations are taking place at board level, without any proof the deliberations actually support the resolution beyond lip service.
Nothing has happened and that is sticking in the craw. Really, who wants the naysayers to be right, I dont even believe they want to be right on this, it will mean they want the support copulated.
This should have probably been said before the season ticket renewal period but we dont want to be portrayed as holding the club to ransom or the baddies in any way, all we want is representation from our responsible representatives to do their duty. Now I’m thinking we need to force that, again a shame, really why should we need to ? They are meant to be Celtic supporters FFS
___________________________
All this from the guy with the big cowboy hat and no cattle, you had your chance 10 months ago and you bottled it, don’t tell me your going to try the same stunt again? I doubt very much if any share holder would let you near there shares, I know I wouldent, remember I told YOU and Morrissy, wear long trousers when you go into the big Bhoys playground, remember I told you what would happen to you? And now your back bumping your gums AGAIN.
GROUNDHOG DAY.
kitalba
06:00 on
11 July, 2014
He`s back,he`s back.
As a matter of fact he`s back.
I was going to youtube you a welcome from Gary Glitter.
Thought better of it.:-)
Wee Angela tells it like it is
https://m.youtube.com/watch?v=DkfQB62ANRQ&feature=youtu.be
Appols. If already posted.
Morning guys. What time is kick off against Dukla Prague tonight.
eddieinkirkmichael @ 06:52
5:30pm
Good morning friends and, as always may I wish all of you a Big Happy Friday. This morning in East Kilbride we start the day with a heat haze and the sky is visibly changing from grey to blue before my very eyes. Dry and calm too. Could be a messy Friday evening in the garden if this keeps up.
He who laughs last…
That isn’t heat haze, Jobo. That’s smoke from the tyre dump fire.
Good Morning.
THE WAY IT WORKS
Many years ago, I read an article in some legal magazine or other which, to my mind, pointed out something that I had always presumed was obvious.
Namely, that unlike his English Counterpart, the Scottish solicitor is not just a drafter and processor of legal documents, he ( or she ) is a man of business who furnishes advice, and as often as not, will recommend a course of action – possibly involving many different steps or procedures- in any given situation.
Without going into an academic analysis of what this means, may I suggest that a simple definition is that the Scottish solicitor does not always simply do what they are told but will furnish the client with advice for, or against, a certain course of action.
The same applies to accountants and other professionals in my experience. When discussing any business situation, the client should always be aware of the pros and the cons. From there he or she makes a decision based on the advice given – which advice may be taken or rejected.
That is how things work.
If you think about what I have said above, then it follows that one of the principal things an adviser should do for any client, is to suggest a course of action that keeps the client out of court.
Court is a place of last resort. Litigation of any kind is expensive, brings uncertainty, is time consuming and acts as a barrier to unfettered and uninterrupted business planning, strategy and progress because no one can ever be sure of the outcome or the consequences of a court case.
In olden days, court meant choosing your champion to fight against your adversary’s champion. If your guy knocked the other guy of the horse and killed him outright with the lance then you won. It didn’t matter if your guy was also hit with your opponents lance and died a week later as a result – you were still the winner because the other guy died first.
Eventually, society did away with such courts and replaced them with courts of law and the men and women with wigs and gowns as opposed to the lance.
However, you can still win a court battle and suffer a fatal defeat as a consequence.
That is why a court of law should always be regarded as a place of last resort. No one should ever set out on a course of action which runs a high risk of ending up being disputed in court.
Sometimes, of course, a court action is inevitable. On other occasions, people adopt a course of action where the risk of things ending up in court is seen an as an acceptable risk.
This morning’s Daily Record ( and indeed yesterday’s edition ) is spouting David Murray’s mantra that HMRC knifed Rangers but adds there are no winners here. How very MSM. How very lacking in business understanding or searching for the truth.
So, let me explain something.
When you sit down with a firm of accountants who specialise in aggressive tax avoidance schemes such as an EBT scheme or a DOS scheme, one of the things that are spelt out to you is that the scheme you are about to embark upon may well be, indeed is likely to be, challenged in a court of law. Especially if you do not administer it to the letter.
Often as not, the client will be asked to sign up to a contract which specifies that the client will pay hefty fees to lawyers and accountants for setting up the scheme and that fee will include a contribution towards legal fees arising in the event of a legal challenge to the scheme.
That is stipulated at the very outset. You pay £x in advance because you know you are likely to be sued. You also get the benefit of advice which is designed to ensure that your scheme is absolutely watertight in terms of the law, but crucially, there is a rider which states that in the event that the court rules against you then the accountants or lawyers will not be held accountable as you are entering into the whole process knowing that there is a big risk of litigation – and you are told in writing that while you shouldn’t lose, you might lose.
This too is the way it works.
The business advisers will not want litigation, but from the outset they will cover their backs and make it plain to the client that if you sign on the dotted line for an aggressive tax avoidance scheme then you can expect HMRC to take you to court.
Accordingly, the protestations screaming out from the Daily Record this morning about how HMRC killed Rangers are balderdash and bunkum of the highest order.
HMRC did not knife Rangers, they did exactly what was expected of them in the circumstances and the people at MIH knew that the day they started off on any one of their tax avoidance schemes.
Taking the risk in the first place killed Rangers or Rangers PLC if you prefer.
However, the events of yesterday and the day before throw up some other matters worth considering and remembering.
The first is the woeful state of the Rangers accounts by 2005 when there had been yet another share issue underwritten by David Murray. Those accounts showed Rangers PLC to be in a shocking financial state, despite all the rhetoric and dressing from the Directors and the Accountants.
More or less immediately Murray chose to put the club up for sale as it was obvious that the financial traincrash could simply not continue.
However, despite years of searching no buyer could be found.
Further, it should also be remembered that Rangers PLC knew all about the small tax case long before Craig Whyte came along. Those liabilities stemmed from around 2001 but at no time during the Murray era at Ibrox did Sir David put aside the money to pay a bill which no one at Rangers disputed as being due at any time.
Whyte stressed the need for this to be paid long before he ever got the keys to the Marble Staircase, but it wasn’t and there can be only one of two reasons for that.
Either Sir David just didn’t pay the bill concerned ….. or he couldn’t!
The fact is that long before Craig Whyte appeared David Murray could have paid that bill or reached an agreement to pay that bill. However he didn’t and for a period of several years he simply decided he wanted out …. Needed out ….. at any cost!
There is no doubt that he gambled hard and fast with Rangers Football Club, and their finances and their supporters loyalties. He knew , or ought to have known, well in advance that a prolonged and regularly used aggressive tax avoidance scheme, legal or not, was bound to attract the adverse interest and attention of HMRC.
Sir David Murray has been lauded up and down the country for his so called business acumen and business knowledge. He was knighted for the same and received all sorts of unprecedented backing from banks and other institutions.
Does anyone reading this really believe that such a man did not have the foresight, or the advisers around him who had the foresight, to see and know that a large and prolonged dispute with the revenue authorities may well have an adverse effect on the viability and sellability of his business?
Such a suggestion is simply not credible.
Further when the HMRC interest came, Murray’s men, if not Murray himself, did their very best to try and hide the existence of the scheme, the documents surrounding the scheme, the details of the scheme and the intention of the scheme.
They hid all this away from HMRC, The SFA, The SPL and anyone else in authority, with the result that those authorities and bodies had no option but to run to the courts, set up tribunals and convene formal hearings.
When someone does not tell you the truth, starts hiding documents and obfuscating that is the way it works.
However, that is not all that yesterday brought.
The news that Collier Bristow have apparently agreed ( through their insurers no doubt ) to pay the liquidator of Rangers some £20M shows that taking into account the litigation risk, someone somewhere thought it worth making a payment to make a bad situation go away.
Imagine that? What bad situation could that be?
Would it be that somehow or other, creditors, officials and all sorts of other people were misled by a leading firm of solicitors in relation to the affairs of Rangers PLC? Could it really be the case that things were so bad financially at Ibrox, that the only way for even Whyte to be able to get the sale to go through at the princely sum of £1 plus the official bank debt was to have his people mislead funders and eventual creditors?
What does that say about David Murray’s stewardship and the absolute urgent need to get Lloyds TSB out of the picture? Was there really no one else or no other way to take on the debts of Rangers PLC? Apparently not — and that can only be because someone chose to gamble with the finances of the club and leave it in a precarious state.
I am told that when Lloyds took over that account they expressed amazement at how MIH and Rangers PLC were allowed to run up the debts they had with HBOS. Apparently there was incredulity at some of the figures and covenants.
So , when we read in the Record this morning that the HMRC Big Tax case inadvertently brought down Rangers it is very easy to overlook the debt due to the bank, how it arose, the sums due to the same bank through MIH, the extent of the sums due, the banks attitude and the possible attitude and course of action had Whyte not taken them away.
Remember that the same bank stepped straight into MIH and began selling off its assets, and that low and behold the same management team who engineered the EBT scheme have openly admitted that there is an unexplained shortfall in the employees’ pension scheme of over £20 Million.
Do you think the employees who have lost out on pension provision are the slightest concerned about whether the tax avoidance scheme funds and their use are legal or not ? – or do you think they might argue that the money used for these so called “discretionary payments” should have been used to fund a proper legally constituted pension scheme which the company and its directors undertook to pay into under contract?
There is still substantial debt due to Lloyds by MIH and part of that debt is the amount by which David Murray and MIH underwrote and guaranteed that last share issue of Rangers PLC in 2004/2005. The principal sum due under that guarantee ( excluding interest and charges ) was greater than the principal sum claimed by HMRC in the big tax case.
Go figure.
However, this saga is far from over especially with regard to “contractually due” severance payments which look as if they will come back to the FTT in the event of the parties concerned not reaching agreement on the tax allegedly due.
Now, this is interesting because apparently there are a number of documents in existence which show that certain players received a payment of £x at the end of their contract as part of a severance deal.
At the time these were made, my recollection is that under normal severance agreement legislation the first £30,000 would be tax free but after that any sums were taxable.
The FTT has never been asked to rule on these payments, and has never heard any evidence about the legality or otherwise of paying these sums gross of tax into an offshore trust. All of that may yet be to come.
However, the most interesting part of this for me is that further court action may be taken in relation to these matters failing agreement between HMRC… and whom?
Rangers PLC ( the employer ) is in Liquidation so perhaps HMRC might claim some of the money from the Liquidator who has just received the £20M from Collier Bristow – then again it could well be that Ticketus have something to say about that.
In his last statement about MIH, David Murray openly proclaimed that the company was all but finished and revealed the pension shortfall and so on – so I doubt if any agreement of any meaning will be reached there.
That then leaves those who supposedly benefited from the contractually due severance payments – namely the players.
Maybe, in the absence of a now defunct employer, they will be asked to cough up the tax.
No doubt they will all go and consult their lawyers and accountants – the men and woman of business – who will give them their best advice – but you can bet your bottom dollar that any such advice will include a paragraph or ten which starts something along the lines of “ However, here is the potential risk in the event of you deciding to …………. “
That is the way it works……. And always has done.
The tanks in reverse as the SDM1 Jaguar slides back up to the marble staircase and hobbling makes his return.
Almost Job done. Albeit not as easy a ride as expected thanks to Scottish football fans a certain Raith Rovers chairman and an outspoken Dundee Utd chairman. Where were you Celtic PLC while all this was going on?
Can’t wait for the Celtic View Old Firm souvenir issue that awaits their return to Celtic Park!
Never trust a money man because all they see is the money!
MWD says AYE
Keith Jackson is one hurting Hun this morning, deary meeeeee.
Anyone else seeing strange posts at 06.30 and 07.37?
Do we need to inform paul67?
HH
BRTH
Lord Doherty……no RFC bias there
Maybe the HMRC case wasn’t that good
HAPPY HOOPY BIRTHDAY TO
MISS GEORDIE MUNRO!!!!!!!!!!!!
MWD
Exactly
You’ll need to get me that program for the ” next”… “Old Firm ” ….match …I’ll not be there
Keith JacksHUN bringing up the old chestnut ” judge lord Doherty. Is a season ticket holder at Celtic Park” and your point Keith?
BRTH
Coincidence you mention Rangers debt. A 10 year history can be found from this article I did for CQN magazine in Sept 2011 or thereabouts.
https://docs.google.com/document/d/10Gn-PSSzueSyzcFbOzTypbNXxdTQHSeleFdiS8zBdWk/edit . It tells
That and another that I will link to next gives a deeper explanation of why Celtic suffered at Rangers under Murray.
This wee daft women hopes for Independence for some silly reason!
http://www.youtube.com/watch?v=esV6pGo8UTI&sns=em
MWD says AYE
Here is the other article from 2010 when we were first trying to understand the role of ebts.
https://drive.google.com/file/d/0B62m3ggkEX2RMDlHLUlmTU1uWG8/edit?usp=sharing
Some things will have changed over the three years but it is more fact based than anything you will find in our current red tops.
Reading back to posts last night. Firstly I have no desire to be the last king of scotland(or indeed the first).
Tonydonnely you have no right to attack Canamalar who got off his butt when he introduced res 12. You would cheer anything the board did anyway even if they started eating babies.
But it’s now clear that Canamalar has lost patience and believes the board are procrastinating.
If the board are proven to have buried res 12 then it confirms all our worst fears. It will be terminal in terms of my buying season tickets etc and I know that to be the case for many.
PF Ayr
Paul, a quick reading of Raymond Doherty’s decision does not make for good reading for HMRC if he has adopted the right approach.
He seems to have leaned significantly on the question ” Were the FTT entitled to adopt the approach they did or reach the conclusions they did?” which is very different to ” Would I have adopted the approach they did or reach the conclusions they did?”
I said at the time that I thought HMRC had erred in that they did not emphasise certain things enough and allowed the whole closing argument to be dominated by the question were the trusts and loans a sham or not?
As soon as they conceded, and indeed invited the tribunal to accept, that the loans and trusts were real and of legal effect ( this taking away the need for any consideration of any evidence which suggested that they were merely a device or convenient falsehood ) they boxed themselves in.
However, they could still have really hammered home the point that as soon as any money left a players account in connection with him playing football ( whether it be as salary, bonus, enhancement or whatever ) the presumption is that it should be tax unless someone proves that it falls under a class of transaction which is not taxable.
I think that was their strongest argument, and I don’t think that is the case they made out — but hey what do I know?
What i do know is that I sat with a client and a firm who sold these tax schemes and in return for the huge fees ( and I mean mega huge ) they stressed that you would be sued and the fees paid at the start covered you for all legal proceedings up to the inner house.
If you went to the Lords you had to pay more.
That is why Murray will have tried to negotiate to an extent and played hardball because his tribunal team at FTT and UTT were already bought and paid for as part of the scheme.
Sorry that should read ” as soon as any money left Rangers account in connection with a player playing football” it should be presumed as attracting tax unless………
tonydonnelly67
06:49 on 11 July, 2014
Wee Angela tells it like it is
https://m.youtube.com/watch?v=DkfQB62ANRQ&feature=youtu.be
Appols. If already posted.
——-
Many thanks TD
Impressive performance by AH
HH jamesgang
Had best dream ever last night.
Ireland won the World Cup!
Jason Scotland (yeah I know he’s a Trinni!?!) scored the 1st.
A 2nd soon after with a few mins to go allowed us to start partying early.
HH jamesgang
Brogan Rogan Trevino and Hogan supports Oscar Knox, MacKenzie Furniss and anyone else who fights Neuroblastoma
08:51 on 11 July, 2014
‘He seems to have leaned significantly on the question ” Were the FTT entitled to adopt the approach they did or reach the conclusions they did?” ‘
###
That’s his remit and I think it unlikely that a single (comparatively lowly) judge would depart from that.
The inner house might be more robust and take a more holistic, overarching view. The supreme court more so.
The rot set in though with the FTT who, in deciding the case would be heard in private, showed how they were inclined (well two of them at any rate).
BRTH.
Just up/in. Will read back over your stuff. Already see it makes pretty understandable for even the likes of me!
and for that I thank you!
HH jamesgang
NegAnon2
08:48 on
11 July, 2014
Res12 is not buried. In fact as a result of poring back over the documents it is pretty clear imo what took place between two of the parties, enough to pass the Resolution if SFA hide behind confidentiality.
If they do not and can explain what happened, Res12 will have done its job whatever that explanation is.
The latest delay was due to holidays, other stuff like learning Norwegian and Norwegian law got in the way before that.
Res12 is not top of the pile for Celtic if other priorities arise but it is not being ignored.
Morning CQN
Is the match on Celtic tv later?
bhoylo83
09:12 on 11 July, 2014
It is, sir …. !!!!
And welcome back,KITALBA.
Bit of a drive-by post,right enough!
Whither the cash strapped scrofulous hillbillies the day?
67Heaven
Happy days!
Start the long weekend as I mean to go on!!
B-)
Hmmmm, looks like the foxy huns have slithered their way round a £140 million bill.
How clever eh.
Even kidding-on that they died along the way.
ernie lynch
09:06 on 11 July, 2014
Brogan Rogan Trevino and Hogan supports Oscar Knox, MacKenzie Furniss and anyone else who fights Neuroblastoma
08:51 on 11 July, 2014
‘He seems to have leaned significantly on the question ” Were the FTT entitled to adopt the approach they did or reach the conclusions they did?” ‘
###
That’s his remit and I think it unlikely that a single (comparatively lowly) judge would depart from that.
The inner house might be more robust and take a more holistic, overarching view. The supreme court more so.
The rot set in though with the FTT who, in deciding the case would be heard in private, showed how they were inclined (well two of them at any rate).
……………………………………..
ernie watch what you say about the gruesome twosome as you may upset BRTH who holds them in the highest regard.
Morning all
Not been on in a while. Hope all good here.
Thanks to Tony Donnelly for posting last night’s Scotland 2014 extract. It was good of Angela Haggerty to try and dampen the mood round these parts regarding the HMRC ‘losing’ their appeal. Alas I feel she – and those on here- are on a loser here. Rangers have ‘won’ and their credulous/cretinous fans will rejoice in their self- righteous fury that they were the victims here. The media will go along with this. I said it two years ago when they ‘won’ the FTT and were ‘vindicated’ by LNS but they and those bar stewards in the media will clamour for the championships Celtic have won after they passed into Administration in February 2012 to be declared null and void and wiped from the records.
I don’t hate much these days and I like a lot of Rangers fans. But I hate ‘them’.
Jimbo67 praying to Oscar Knox and for Thomas Worth