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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Speirs article from herald.
There will some outrage bears refuting his allegation in the last line of ‘self-immolation’
;-)
HH jamesgang
There is a wearyingly familiar outrage doing the rounds at Rangers after the UTT ruling which upheld the club’s appeal against HMRC over its controversial use of EBTs.
This was an important judgement because it ruled that, despite the distaste many have for EBTs and their perceived manipulation for tax-avoidance, Rangers nonetheless had stayed on the right side of the law.
What the ruling shouldn’t do – and I know this only too well – is forbid anyone among us from decrying the use of EBTs, at Rangers or anywhere else, as a crude means of abusing the law and, in effect, avoiding paying tax.
Not for nothing were EBTs, when used in this way, widely referred to as “a tax loophole”. Everybody and their granny came to know what was going on.
My own view on EBTs hasn’t changed. There have been different outcomes at various HMRC pursuits -such as at Aberdeen Asset Management and at the pre-2012 Rangers FC – but I viewed EBTs, when used as a vehicle for disguised remuneration, as a form of cheating.
Evidently the British government felt likewise: they decided to put an end to the racket in 2010/11. At that point Rangers were force to write letters to various players saying they would no longer be able to compensate them in this manner.
The tragedy that engulfed Rangers, springing from Sir David Murray’s policies, to the wretched arrival of Craig Whyte, to HMRC’s rejection of the CVA in the summer of 2012, has now spawned an industry of blame and witchhunt-calling.
Some Rangers supporters remain upset – rightly – but phlegmatic about it all. Others, though, seek blame everywhere – at HMRC, at the SFA, at the (former) SPL, the media, at the BBC – everywhere except at the former Rangers itself.
The truth of the matter is that the now dissolved Rangers FC plc was done-in by the very people who were charged with safe-guarding the club. Murray, Whyte and many of the old club’s directors bore a very heavy responsibility.
In June 2012 it was also HMRC who, at the crucial CVA vote, drove the stake through the Ibrox heart. A combination of accrued, unpaid debts by Rangers to the tax authorities totalling £21 million – it excluded any projected EBT bills – meant that HMRC in effect dealt the fatal blow.
This was no witch-hunt. HMRC had the mere temerity of wanting its taxes paid. On the contrary, this was dire recklessness by those charged with safe-guarding Rangers. This was self-destruction.
When I look back now to April, 2012, the words of Paul Murray, a former director of the club who tried to beat Charles Green to the rescue act, seem particularly honest.
Murray and I crossed swords on a number of occasions over the Rangers saga but he always struck me as honest and conscientious in wanting to resolve a dire situation.
Just weeks prior to the Rangers CVA being rejected, Paul Murray said: “In my view we have got to try to save the club. The CVA is the only thing that the Rangers supporters want. Speaking as a supporter, I do not want a situation where the club’s history – the timeline – is broken. We are trying to save this club.
“I am very clear: the club has had a number of misdemeanours over the years, and these have to be faced up to. The club has to be punished: I am 100% in agreement on that. We have done things wrong. But any penalties we face must be fair and they must be transparent.”
These days you very rarely hear such openness and clarity about the Rangers case from a Rangers principal. On the contrary, cyber lynch-mobs set after you if you dare to address the Rangers collapse as Murray did in these words.
All this said, yes, there is absolutely redress that needs to be secured over the Rangers collapse. BDO, the liquidators, should ruthlessly investigate alleged fraud around the club over this period.
So should the police who, to the best of my knowledge, still have an open book on the case. Pursuit of criminality in the destruction of the former Rangers should be relentless.
But at some point, the re-writing of history will have to stop. No vendettas did for Rangers FC in 2012. On the contrary, this was a spectacular and tragic self-immolation.
This Spiers article?
http://www.heraldscotland.com/news/home-news/claims-of-a-witch-hunt-after-taxman-loses-rangers-case.24715050
Oops sorry someone posted it.
philmacgiollabhain.ie/quoad-ultra/#more-4838 …
Hence the term Quoad ultra should have jumped up at anyone manning a news or sports desk in Glasgow yesterday
OOOOOOPS
Till later all
http://www.philmacgiollabhain.ie/quoad-ultra/#more-4838
And so the end is near. Sevco will soon enter the top league and although the popular opinion is that they will be a weak side, I believe ‘assistance’ and overspending will lead to them getting what they most want….the CL money.
Nothing but nothing will be allowed to stand in their way. Oh, and those wilderness years? expunged from the record like everything else of course.
Traditionalist…………….
I could be wrong but I doubt there will be much resistance from other teams now.
I think protest will be muted at best.
The focus is now back on us, full square ( pardon the expression). The Club now has a choice and no longer has the outball prospect of an imminent guilty verdict ( appeals aside).
The Club has to deal with supporter emotions on this and the position of the SFA.
HH
Jamesgang- TD- Many thanks, you probably won’t read a better summary than that .
Have any of the creditors of the old Rangers ever contacted Watchdog about that mob? Get whatshisface on his motorcycle up there pronto!
Paul67
That narrative covers it which makes Ogilvie ‘ s survival all the more unacceptable.
He stayed silent when he should have spoken out in 1999, in 2005, in 2012 when he denied knowledge of how ebts worked and finally in his testimony to LNS when he failed to clarify the distinction between the illegal nature of DOS ebts from the now judged legal status of loan ebts causing LNS to erroneously treat all ebts as legal.
He was at the SFA in 2011 when they failed to pick up that Rangers had an overdue payable at 30th June and whilst Rangers and HMRC did a wee deal in July 2011 to try to get them over that little hurdle, that flew in the face of what FFP was trying to achieve for all clubs playing in UEFA competition, not just Scottish ones who finished second or third or fourth.
He attended a dinner in Dec 2011 to discuss strategy on handling the UEFA licence 2011 issue. ( bury it was the apparent conclusion)
The UTT changes none of that and Ogilvie still has an explanation to give to Celtic shareholders that will enable everyone to move on.
It’s as simple as that and if Ogilvie will not give it then Res12 should be voted for and UEFA can do the digging.
Shameless repost of Auldheid’s piece from previous thread.
Auldheid 09:49 on 10 July, 2014
Rangers began using ebts in 1999 with a payment to Craig Moore with an ebt using a Discounted Option Scheme. There was no side letter for Moore. That it was an ebt can be discerned by the term LNS later gave it ie “Rangers Employee Benefit Trust.”
In Aug 2000 Ronnie De Boer was paid using the same ebt scheme as part of his remuneration package with side letters.
Flo was next in Nov 2000.
This DOS was also used by Aberdeen Asset Management and HMRC decided it was an illegal scheme and pursued the company for payment of the tax due.
AAM appealed to an FTT and UTT against the payment but they both found for HMRC.
Following their FTT victory over AAM HMRC , armed with the fact that it was an illegal scheme pursued Rangers for payment in Nov 2010.
Then in Feb 2011 armed with the fact Rangers used side letters that were concealed from HMRC (and SFA/SPL) they pursued Rangers for payment of the tax due. On QC advice, where the concealment was the deciding factor, Rangers agreed to settle.
This is the genesis of the wee tax case that itself gave rise to Res12.
Sometime in 2002 ( I have to check the document) Rangers migrated from the unlawful ebt to the one the UTT found to be lawful because payments under it were deemed loans not pay. De Boer was moved from the DOS ebt to the loan ebt in 2002. Again from memory he was paid by DOS in first half of season 2002/03 and loan in the second half of that season in which Rangers narrowly won the title.
Lord Nimmo Smith was led to and allowed to conflate both lawful ( the loans) and unlawful (DOS) this rendering the DOS payments to De Boer and Flo lawful when they are not.
This is the story the documentation tells, documentation that was witheld from LNS.
The wee tax case story is being omitted because it simply does not fit the narrative that SDM is trying to spin. A narrative being widely reported in national media in spite of some of them having the story on the wee tax case.
It was the wee tax case that emboldened HMRC to pursue settlement on the BTC. They appear to have focused on the contractual element of the ebt ( ie the side letters which means it’s not an ebt) and not on the vehicle for putting the money in the players pocket.
Indeed Lord Doherty makes reference to the AAM case in his decision to spell out the difference.
HMRC ‘ S mission should they wish to pursue it is to have loans defined and see if the later ebts fall into that definition that stops the loan being pay.
Where does this take us?
De Boer and Flo were paid by unlawful means in a scheme that was without doubt tax evasion.
This is much more serious than misadministration. That and the migration to loan ebts where side letters continued to be concealed, is indicative of Rangers intent from the beginning and influenced HMRC to go after them.
There has been no football punishment for the use of unlawful ebts from 2000 to 2003.
Their 2003 title was unlawfully won.
The LNS Commission was misled by Rangers and paints a picture of only serious administrative error rather than the whole truth which is Rangers moved from illegal ebts to legal ones.
I doubt the latter will ever be corrected except on blogs but they are the only means of getting the truth out there.
Which is why I’ve blogged at length.
I just hope no one scrolls by.
PS Res12 is unaffected by the foregoing. The SFA ( as the SPL in the LNS case) still have questions to answer and those answers conveyed back to Celtic shareholders.
Killing Rangers was an Inside Job CSC
“Impeach Grimmond McCrummoch”.
“Scottish Football has changed from being a two horse race to being Showjumping”
copyright Kevin Bridges
In an Independent Scotland
The Huns will never die.
in a BritNat Scotland
The Huns will never die.
So I’m up for an Independent Scotland with Huns rather than a BritNat Scotland with the Huns. But at least I’ll not have anything in common with a Hun or an Orange marching self righteous sectarian bigot.
MWD says AYE.
Just back from my lunch
Thanks guys
‘Michael Douglas – £100’ always makes me chuckle though
B-)
bankiebhoy1
13:48 on
10 July, 2014
Traditionalist…………….
I could be wrong but I doubt there will be much resistance from other teams now.
I think protest will be muted at best.
The focus is now back on us, full square ( pardon the expression). The Club now has a choice and no longer has the outball prospect of an imminent guilty verdict ( appeals aside).
The Club has to deal with supporter emotions on this and the position of the SFA.
===========================
Newco were put into the bottom division and no rule(I know) was written to say they would never make it to the top tier.
Dundee United have already had to play them twice and Dundee Utd supporters stood with them.
On Rangers demise Celtic asked supporters to stand with them at a crucial time for the game in this country. Many didn’t. The club are stuck between a rock and a hard place. Rangers is the name of the club at Ibrox but still wording will be crucial when the game comes around because any ‘Old Firm’ talk will be treated with contempt by the support, as will joing sponsorship etc etc
Newco, however, will have to make do with their place in our shadow. They are not going to dominate the way the old club used to for a significant period of time.
HH
RWE
saddle up
https://www.youtube.com/watch?v=lLjRDlnbyOw
The only reason that CO has survived is cos
The Celtic ‘bored’ arent on the same page as all
of you bhoys & ghirls. imho
The Celtic ‘bored’ are tucked-up in the same bed as
the very folk who woud erase Celtic FC with, the stroke
of a pen. imho
The Game, The Game Is Over – The Rebels Have Gone.
Deal with it. Or, dream on…….
Bye.
Moonbeams WD. Wee Oscar’s our Bhoy and Kano’s our mhan.
14:14 on 10 July, 2014
‘at least I’ll not have anything in common with a Hun or an Orange marching self righteous sectarian bigot.’
####
You’ll both be Scottish.
Moonbeams isn’t Scottish
He’s some kinda Caledonian, Vulcan superbeing thingie.
The filum Highlander is a biopic of his existing life to date.
Keep the Secret Tony!!
HH jamesgang
KevJungle – I read your pish on here almost daily and get really bored with the “bored” crap you spout. Let us into your simple world for 5 minutes (and then let us get off) and tell us what Celtic should be doing. If the game is over should we just all pack up, hand back our season books and say we’re not playing anymore and take up golf / pool.
KevJungle – Murdo Macleod is my favorit CELTIC player ever. @ 14:31
That imo is drivel. The actions and outcome of Resolution 12 will be prove one of us right. imo.
On this day in 1914, the finest man I ever knew was born in Portstewart, Northern Ireland.
His father relocated the family to Glasgow where he opened a wee fruit shop just about opposite St Thomas’s in Riddrie.
He was a devoted father and husband and a great friend to many.
He was a devout Catholic and the church was his pride and joy and his faith was everything..
He volunteered to serve in the British Army and was involved in the D-Day landings, where, in a town called Caen, on D-Day plus 4, he was seriously wounded by German machine gun fire and for him, his war was over.
After the war he settled with his family of 5 kids in a one bed flat in Edmiston Street, right next to Celtic Park.
He was a season book holder and used to lift me over into the stand to watch the games, insisting always that we stayed until the end, win, lose or draw.
Unfortunately in those days, the early fifties, it was mainly “lose” but he insisted we stay until the end to support our team.
He never hated anyone, and always looked for the good in people, alas not something I have inherited.
He was teetotal and never used foul language although he liked a cigarette.
The day he died, in 2002, he told me he was certain that not only was he about to meet his maker, but that he would again meet up with my Mum. He knew his mortal body was done and he was absolutely thrilled at the joys death would bring him.
My old man would have been 100 years old today.
Still miss you Dad.
westies
01:34 on
10 July, 2014
he totally encouraged Souness to buy Catholic players……also said that Charlie Miller (Catholic young boy) would become a big star….well that was wrong.
*CM a Ben Affleck, don’t know, don’t care but what I do know was he was a Celtic supporter….big difference……as for being a star…..see Tony Watt for an example.
Philbhoy
lump in my throat at that post. can identify personally with a lot of that.
Moonbeams WD. Wee Oscar’s our Bhoy and Kano’s our mhan.
14:14 on 10 July, 2014
‘at least I’ll not have anything in common with a Hun or an Orange marching self righteous sectarian bigot.’
==============
The Orange Order are anti abortion. I guess that makes me like them too.
Alex Thomson’s view.
http://shar.es/NtHNz
I am in home tkt scheme so not being following
Is the 1st Marrayfield game on season tkt ?
My bhoys pal whom i take to games
His dad has just asked.
Cheers in advance busy so look in later
Philbhoy
15:10 on
10 July, 2014
Someone said the other day on here a good Da usually results in a good son(in my case eventually):))
I hear my da more today than I did up until he passed in 2001.
Through my Da & the prompting of my uncle John (passed in 2010) I still stay to the fnial whistle even walking to train station then bus home rather than take an early lift.
I can still see & hear then when I ‘m making my way.
goodhabitsCSC
Be proud of what he left you.
Do you think frankie and benny’s will be screening the popes’s final on sunday?
bankiebhoy1
From much earlier, – sorry grass must be cut.
Celtic in our lifetime have never dealt with the ‘Rangers problem’ head on particularly well, and this is not just a criticism of the present board. They didn’t deal with the demise of Rangers at all, let alone well. They did however, as virtually, every other Scottish club did, and voted Sevco 5088 into the lowest league.
We must assume that Celtic were powerless in the SFA granting Sevco 5088 the licence to play, just like we have to accept that despite detractors we are caught in the SPL, with nowhere else on the known earth, to play football. Some fans even want Celtic to remain in Scotland, despite reaffirmation and conclusive proof that down through generations Celtic have been arguably the most cheated club, in world football.
Where Celtic the club / business go from here will be back to precisely where we’ve been all our lives, it’ll say Celtic v Rangers in the official programme when they come calling, and we allow in them in, to take their money.Coming with it, will be the dusted down song book, redoubled hatred and unique pestilence, They will be assisted by officialdom in the corridors of power and in the game itself, where adults run around kicking a ball.
Where the Celtic suporters go and in whatever number, will be to support Celtic.
Because – your living room doesn’t hold 60,506, and undying support of Celtic is unconnected to this peculiar Scottish problem now officially named Sevco 5088.
Phil hoy,
Lovely post.
My own father would gave celebrated his centenary next year, but, unfortunately, get only got to 63.
However, like yours, amongst many other things, he gave me the gift of Celtic.
A gift to cherish and nurture. not to be abused, or used for the wrong reasons.
Bob Kelly summed it up well, if, perhaps difficult to achieve ; Pro Celtic – Anti No One.
I am proud to say that in my lifetime I have passed the gene on to my two sons and one daughter ( the other two don’t bother) and I also had the privilege of taking my eldest grandson to Celtic Park last March, for his first game.
leftclicktic
I talk to him every day.
It can be a wee bit off putting for other shoppers when I’m in Tesco’s right enough.
Catch a few fish and it’s not even a Friday. :-)
MWD says AYE. Fissshhhiiinnnggg in an independent Scotchland will be so much more fullfilling though.
Philbhoy
Thanks for sharing.
Happy Birthday to your Da.
HH
Philbhoy
Yer da sounds like a fine fella. Much like your good self.
MWD says AYE
thomthetim
No sons for me so I am the end of a long line.
My daughter has the bug though although the last time I took her we got our photies taken by Scotlands finest on the way in to the ground.
A wee bit unnervvng and upsetting.
Philbhoy @ 15.10
Nice post