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HMRC loses Rangers EBT appeal

HM REVENUE & CUSTOMS has seen its challenge to the employee benefits trust scheme used by Glasgow Rangers fail at the upper-tier tribunal.

HMRC applied in December 2012 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 in the first-tier tribunal 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.

That ruling has now been upheld by the upper-tier tribunal, although several issues were referred back to the original tribunal, including termination and “guaranteed bonus” payments.

The judgment has no bearing on the club’s current regime.

Lord Doherty said: “The appeal is dismissed except in so far as it relates to the termination payments. I shall remit the case to the FTT with a direction to allow the taxpayers’ appeals against the assessments relating to the payments to the sub-trusts of Sir David Murray, his sons, Mr McClelland and Mr MacMillan; to proceed as accords in relation to the termination payments, the payments in respect of guaranteed bonuses, and any related questions of grossing up. Standing my findings and my disposal, the remit should be to the FTT as originally constituted.”

In a statement made to the Press Association, a spokesman for Murray International Holdings (MIH) expressed satisfaction with the ruling.

He said: “We are pleased with the judgment which again leaves negligible tax liability and overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH itself.

“We will therefore review the detailed content of the decision with our legal counsel and advisers to ascertain what action, if any, is now required by MIH.

“The decision substantially reduces HMRC’s claim in the liquidation of the old Rangers Football Club. While we have been successful in both the FTT and UTT, there are, as we have stated previously, no victors.

“This has been an exceptionally long, difficult and expensive process involving not just the FTT and UTT but also several approaches to resolve the with senior HMRC officials on a commercially sensible basis for all parties which were rejected.”

A spokesman for HMRC said the ruling was a disappointment and they were considering lodging a further appeal, which would take the case to the Supreme Court.

The original dispute stems back to when 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 Championship.

Liquidators from BDO 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.

Image credit: efecreata mediagroup/Shutterstock


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  • Daniel

    Excellent news.
    Thank goodness we have our judicial system, that actually understands the law and how it is applied.
    EBT’s administered correctly were perfectly acceptable forms of tax avoidance. If something needs changing then make the tax laws more simple. The current finance bill passing throught parliament runs a horse & carriage through hundreds of years of natural justice. Sadly if passed many will be forced to make payments in advance for tax arrangements made years ago, this is a disgraceful act and fundamentally changes the rule of law in the UK. Tax laws should be prospective not retrospective!!!

  • Berkshiretaxpayer

    Surely it’s time for HMRC to take on the big football clubs who have used EBTs if they want to prove a point. Talk of a witch hunt against this particular club is beginning to have credibility as there is no prospect of any financial return to the taxpayer if HMRC were to win any future appeal.

  • No to HMRC agendas

    “Charles Green a former Chairman of Sheffield United formed a new operating Company” The football Club which was dropped to the lower tiers of Scottish Football as a consequence of of the persecution by HMRC is the same football club that existed prior to the persecution.