Taxman given green light to challenge Rangers ruling

by Calum Fuller

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05 Feb 2013

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THE RIGHT TO APPEAL a tax tribunal against Glasgow Rangers FC on how it avoided tax when paying players has been granted to HM Revenue & Customs. 

Last year the taxman was defeated at a first-tier tribunal, which ruled in favour of Rangers' use of employee benefit trusts (EBTs) to pay its players. 

HMRC applied in December to appeal the decision that the corporate entity which formerly housed Rangers, now in liquidation (oldco), had legitimately used the scheme between 2001 and 2010 to pay £47.65m to players and staff in tax-free loans.

The arrangement was challenged by HMRC, which said it was illegal. However, Rangers disputed the bill and the tribunal held the payments were loans that can be repaid and, as such, were not taxable.

The case can now be heard at an upper-tier tribunal, with the potential to be handed up to the Supreme Court, should the upper-tier fail to settle the dispute.

Rangers entered administration in February 2011, with the oldco liquidated and the transfer of the club's assets, such as player contracts, to a newco – Rangers FC.

Chief executive to Rangers FC Charles Green announced on the club's website the appeal will have no bearing on the club "as it stands today". 

"The appeal will have no effect on us becuase this is an historic case for The Rangers Football Club," he said.

In June 2011, the administrators arranged a rescue deal for the club (CVA) which HMRC vetoed.

Green added there is "no money to be gained by HMRC as the old company was liquidated".

HMRC issued a winding-up order after the club failed to pay its tax liabilities, estimated to be about £14m. Craig Whyte purchased the club for £1 from Sir David Murray less than a year before the club collapsed. it was under Sir David that club began its use of EBTs.

Administrators from Duff & Phelps negotiated a sale of the club's assets to a consortium led by Sheffield United chairman Charles Green for £5.5m. Green has since formed the new club, which plies its trade in the Scottish Third Division.

BDO liquidators were appointed to Rangers oldco and are currently investigating the books to determine whether further repayment can be made to creditors, and to pursue any outstanding debts owed. 

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