HM REVENUE & CUSTOMS is seeking permission to appeal a first-tier tax tribunal ruling over the Glasgow club's use of employee benefit trusts (EBTs).
The corporate entity that formerly housed Rangers FC, now in liquidation, had the scheme in place between 2001 and 2010 to pay £47.65m to players and staff in tax-free loans.
The arrangement was challenged by HM Revenue & Customs, which said it was illegal, but Rangers disputed the bill and the first-tier tribunal ruled the payments were loans that can be repaid.
The ruling, endorsed by two judges with one dissenting, said: "The majority view reflects the argument that the controversial monies received by the employees were not paid to them as their absolute entitlement."
The club was placed in administration in February 2011 of the non-payment of tax totalling £14m under the control of Craig Whyte, who had purchased the club for £1 from Sir David Murray. It was under Sir David that the club began its use of EBTs.
The club was liquidated after the taxman vetoed a company voluntary agreement (CVA) to save the stricken club in June.
Administrators from Duff and Phelps then negotiated a sale of assets to a consortium led by for Sheffield United chairman Charles Green for £5.5m. He has since formed a new-co, which plies its trade in the Scottish Third Division.
I have to assume that HMRC is pursing the right to appeal on the basis that other, bigger, organisations than the former Rangers' company were using the legal Trust mechanism to greater effect. Certainly some far bigger football clubs have been mentioned in this regard. In the light of the truly significant amounts of tax being equally legally avoided by proper multinationals operating in the UK, it would seem that HMRC needs whatever victory it might get and is hanging its hat on this case. I hope the total spent on this case ends up being money well-spent, even if it just to encourage governments to simplify the absurdly complex tax code that lets all the avoidance happen in the first place. Oh well, perhaps not. Governments only ever seem to meddle for the worse when tax is concerned.
Posted by: Iain Rosebery, 05 Dec 2012 | 16:42
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