Many of you by this time will have had the chance to read the update on Res 12 published via CQN Magazine. READ HERE. It makes for a detailed read and a forensic analysis of what happened when in relation to the Rangers FC policy of operating the EBT scheme.

Yet for the average fan, or indeed the partly informed pundit, the timeline and much of the recent press coverage does not fully explain what actually happened here or provide a simple explanation of what the ordinary football fan should know, or provide any real inkling as to the extent that rules were broken — not just the football rules, but the business rules to which every business is subject.

So, let’s start at the beginning with what is normal day to day business practice.

If you have a business, whether it is a LTD company, a partnership or if you are a sole trader, which has an employee, then on the 19th of every month you are meant to submit a return to HMRC which details the names of your employees, what you have paid them and the amount you have deducted for NIC and PAYE.

Millions of businesses, including football clubs do this every month.

If an employer does not timeously pay the money deducted from the employee for PAYE and NIC to HMRC, then HMRC will chase for payment and if the money is repeatedly or significantly late then they will charge interest and penalties, because a business is not allowed to use PAYE and NIC monies to fund its business activities or boost its cash flow.

All very logical eh?

Well, on 20th May 2011, HMRC wrote to Rangers Football Club, addressing their correspondence to the then Company Secretary, Donald McIntyre, and effectively told Rangers PLC that they were totally fed up with the company and alleged that the company had deliberately and fraudulently understated the PAYE and NIC monthly returns between the years 2000/2001 and 2002/2003 in respect of Ronald De Boer and Torre Andre Flo.

The chargeable sums for just these two players alone amounted to £2.8 Million plus and the debt had started to accrue over a decade before. HMRC had discussed this with MIH and Rangers PLC officials at length, had written to them repeatedly, and by this time they were scunnered!

This sum formed the basis of what is known as The Wee Tax Case and was based upon Rangers operation of what were known as DOS based EBT’s.

When you go to a large firm of accountants or a tax planning firm such as Baxendale-Walker (whether they are eventually struck off or not) and discuss or enter into such a scheme, you are told – warned – at the outset that there is a considerable risk with every such scheme.

No firm will ever tell you that the scheme is wholly 100% legal. Every firm will tell you that if you do not administer the scheme the right way and follow their advice to the letter then the scheme will be deemed illegal and you will be liable for tax, huge penalties plus interest.

Further, the fee you pay for the scheme will include a large sum to cover advance legal fees in anticipation that HMRC will attempt to have the scheme declared illegal through the courts and that these fees will cover legal costs at the FTT, the second tier and even the Court of Session.

The fees will not cover an appeal to the Supreme Court and you will have to pay that in addition.

Further, the professional advisers will also advise you that even if the scheme is legal, there is no guarantee that Parliament will not pass legislation that will make your EBT scheme illegal retrospectively, with the result that you will still be clobbered for the tax you have tried to avoid plus huge interest and penalties.

So, it is against that background that every fan, every radio and television pundit and former player, every official of the football authorities and every journalist and social blogger should consider the Rangers EBT schemes.

They were high-risk schemes from the outset, and Rangers/MIH will have been warned at the outset that there would be no guarantees that the schemes would work and the penalties in the event of them not working would be huge.

However, EBT’s do not work on their own like some mysterious third party stand alone action operated by a firm of accountants or employees.

No, they require those who are at the very heart of the business to adjust their records, alter what they would normally submit by way of business records and to deliberately conceal all and any existence of payments made under the EBT scheme.

So, when you think about the Wee Tax Case AND the Big Tax Case put together, the position is that each and every month since the year 2000, Rangers Football Club stand accused, and indeed convicted, of submitting wholly factually inaccurate PAYE and NIC returns month after month for something like 11 years.

Not only that, but when HMRC started asking questions and asked Rangers/MIH to supply them with all the necessary documentation to assist with a proper investigation into these matters, the officials of Rangers/MIH denied that side letters and key documents ever existed. This was later shown to be a series of deliberate and calculated lies that went to the very top of the organisation.

However, the matter does not stop there because while all of this was going on, Rangers FC operated in a business sector which required the annual granting of a domestic licence to trade at all.

Each and every year, all football clubs have to submit a thick, lengthy and detailed application to the SFA as the primary football licensing authority in Scotland. A similar application has to be made to the SPFL or the SPL as it used to be.

Within these applications, all football clubs have to list their players for the coming season, and they have to state what they will pay these players and provide copies of their contracts of employment. The clubs also have to submit financial information which shows the overall level of wages they will pay, and nowadays they have to show that wage bill as a percentage of their turnover in an attempt to ensure what has become known as financial fair play.

Throughout the period of the EBT scheme being in operation, Rangers PLC failed in their duty to provide the SFA/SPFL with all the necessary financial information each and every year since 2000/2001 at least. In fact, they provided the SFA/ SPFL/UEFA (and so every football club in Europe) with wholly false financial information each and every year – just as in the same way they provided wholly false information to HMRC throughout the same period by way of the false monthly PAYE/NIC returns.

Every business, every football club, can make a mistake or their circumstances can change. Accordingly, the football rules allow for a process whereby a club can report a change in circumstances which differs from the position that they put forward in their licensing application.

Not only that, The football rules require any club to promptly report any material change in circumstances that have arisen between the date of the licensing application and the change in circumstances concerned. This is an ongoing obligation which applies each and every month, each and every year.

Accordingly, in this way and through these rules, Rangers FC had any number of opportunities during every year to declare their previous under declaration of wages, their previous under declaration of PAYE and NIC and their differing circumstances to those presented to the SFA and SPFL in prior years or months.

On every single occasion, they failed to take those opportunities and failed the footballing rules.

One of the questions that RES 12 has asked the SFA is just when did the SFA, as licensing authority, become aware that Rangers FC had started to file inaccurate wage and PAYE/NIC returns and specifically were the SFA aware of the date and terms of the letter of 20th May 2011 which alleges that this went back as far as the turn of the century.

Despite solicitors letters, The SFA have never answered that question citing that they, as a licensing body, have a duty of confidentiality to football clubs not to disclose the clubs’ private information (which is understandable to an extent) and by making it plain that the SFA are not, and never will be, accountable to the ordinary football fan who holds no legal sway or status with them whatsoever.

Although it has to be pointed out that in correspondence the SFA have said they want to be as full and frank with fans as possible – however, what is possible and what is properly full and frank is open to interpretation.

Legally, the duty of confidentiality is at least questionable where there has been “fraudulent practice”, and the non-accountability to football fans (especially in these circumstances) is regrettable and open to debate, to say the least.

What is certain, is that both the SFA and the SPFL now know for certain that their officials and the officials of HMRC were deliberately lied to for over a decade by the officials of Rangers PLC and that those lies and untruths were told in furtherance of a dangerous and risky tax scheme which was, by admission, designed to save them money and so boost the club’s cash flow and make trading easier for them in comparison to their competitors.

It should be noted that the SFA have never undertaken any investigation or instructed a commission to look into any aspect of this affair, and that the SPFL Commission, under Lord Nimmo Smith, was deliberately precluded from looking at any aspect of the Wee Tax Case, proceeded on the basis that all EBT activity on the part of Rangers FC was lawful (it has since been declared not to be so) , did not consider all the documentation or available evidence, and only considered whether or not the relevant players were in fact properly registered. It considered no other aspect and in many respects never heard any counter arguments to those proffered by the SFA and its officials.

There is much to suggest that the decision is wrongly decided and failed to consider all the aspects of the case. It is without question that the judge’s terms of reference were incomplete by design.

Further, the logic and legal interpretation applied in the case flies in the face of arguments presented by UEFA themselves in considering very similar circumstances in the case of FC Giannina. There, UEFA argued that where a football club fails to properly declare social taxes which it has tried to avoid, where it fails to disclose side letters with players and where those players have received undeclared payments (undeclared to the football authorities and to the tax authorities), then the applications for a football licence should be deemed so incomplete, so lacking in accuracy and so artificial and against the spirit of the licensing process, that the licence applications should be deemed null and void and to have simply been never properly completed and so never received.

In short, the licensing system and what it is designed to achieve is sacrosanct even if the proper administration of that system leads to a draconian and, on the face of it, harsh summary conclusion.

EBT’s are, in themselves, legal instruments but it is the actions of the people utilising the EBT’s which takes them into the area of unlawful activity. No EBT ever set itself up or administered itself. Nor is it the case that an EBT is a stand-alone business tool. Operating an EBT comes with commercial risks and requires the operator to take a calculated risk by concealing what would otherwise be the true business position.

When a licensing system is vital to your business and that licensing system calls for the utmost good faith, the full declaration of all payments and contracts, and the utmost accountability to your fellow clubs, then to pursue an EBT scheme which, by necessity, requires you to break the licensing rules and to act in bad faith by concealing the truth to gain the benefit of the EBT, then that is a strategy and an ethos which that licensing system must crush for the sake of its own survival and future.

There is much talk of the “stripping of titles” and that will be at the forefront of the minds of many football fans.

However, of far greater importance is the fact that, if some are to be believed, The Scottish Football Association operates on the basis of a domestic and European licensing system that is so hopeless, so not fit for purpose, so wholly incompetent, that it does not even have the ability to investigate this debacle retrospectively and arrive at a sensible and legally appropriate set of conclusions which benefit the game of football as a whole.

Then again, no licensing system and no commission operating under a properly regulated licensing system, which is designed to be for the benefit of all football clubs operates and administers itself.

Such a system relies on people of integrity and intelligence who can apply proper analytical reasoning in each and every situation – no matter how difficult those situations may be to acknowledge and accept.

Where you fail to address the issues and jettison a proper system in favour of expediency, the licensing system is not worth a damn and you would be better shutting up shop and simply ceasing to be because you lose all respect in the eyes of your members and their customers.

Those customers are worth many millions of pounds each year to the Scottish economy, they create jobs, support all sorts of businesses and the reason they should be considered, consulted and respected is not to be found written down in any constitution or set of articles of association.

Written by BRTH on CQN.


Here is the new CQN Podcast featuring Paul67 and Matt McGlone giving their very considered views on the Supreme Court Judgment that established once and for all that Rangers cheated every club they played in Scottish and European football during their EBT years.



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