THE GO-AHEAD HAS BEEN GIVEN by the courts to allow HM Revenue & Customs to challenge a tax ruling over Glasgow Rangers’ use of an employee benefits trust to remunerate its players and staff.
Last month, HMRC was defeated in an upper-tier tax tribunal that upheld a first-tier ruling 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. Rangers disputed the bill and the tribunal held the payments were loans that can be repaid and, as such, were not taxable.
In a statement confirming the action, an HMRC spokesman said: “We are pleased that the upper tribunal has given HMRC leave to appeal to the Court of Session. We continue to believe that schemes using employee benefit trusts to avoid income tax and NICs do not work.”
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 now plays in the Scottish Championship having secured consecutive promotions from the bottom tier, where the club was placed following its liquidation.
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.
The ongoing legal battle does not affect the current Rangers regime.
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