Old-co Rangers win first-tier hearing

The former Rangers football club wins an appeal against a tax bill for its use of employee benefit trusts to pay its staff and players

21 Nov 2012 Accountancy Age

By Calum Fuller


RANGERS FOOTBALL CLUB has won an appeal against a tax bill over its use of employee benefit trusts (EBTs) at the first-tier tribunal.

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 tribunal has 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 legal effect of the trust/loan structure is sufficient to preclude this. Thus the payments are loans, not earnings, and so are recoverable from the employee or his estate."

HMRC, however, is understood to be considering an appeal, while liquidators BDO said it is reviewing the judgment closely.

A spokesman for HMRC said it was "disappointed to have lost at this stage of the court process".

He continued: "The decision was not unanimous and the diligence of HMRC investigators was acknowledged by the whole tribunal.

"HMRC is committed to tackling avoidance and it is right that we challenge the type of avoidance seen in this case."

In a statement, Murray International Holdings, which was majority shareholders of the oldco, said: "We are satisfied that the tax tribunal has now published its widely awaited decision and note the contents thereof.

"We are pleased with the judgment which leaves minimal tax liability and overwhelmingly supports the views collectively and consistently held by our advisors, legal counsel and MIH itself.

"This has been an exceptionally long, difficult and expensive process involving not just the tax tribunal but also significant efforts to resolve the matter with senior HMRC officials on a commercially sensible basis for all parties.

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

BDO added: "The joint interim liquidators are reviewing the tribunal's decision closely so as to determine the impact on the liquidation of RFC 2012 Plc."

Visitor comments


When the news initially broke, there was a bandwagon of bloodlust against my club,

Mark Guidi specialised in the subject, where are they now that the not guilty verdict has been announced.

There AGENDA to bring my club down has failed and they dont have the bottle to show their true colours.

Well done to all at Ibrox and MIM for staying the course, things can only get better.

Posted by Gordon, 21 Nov 2012


Well if these were genuine loans - why don't they now ask the players to repay them? Seems a simple solution to the problem.

Posted by alan, 21 Nov 2012

At-arms'-length Trust ...

As with all such offshore schemes, this EBT loan scheme was run by a completely, legally and comercially separate entitiy, which disbursed loans to people as it saw fit. At no point did the football club have any input into who got what, when or where. The FTT verdict has verified all this. It would be up to that separate entity to approach the people now and ask for the monies back -- something that is outwith the legal bounds of any unit apart from that Trust fund to do so.

It wil be interesting to see how many more amateur "lawyers" and "financiers" will continue to infest this subject.

Their anti-Rangers vitriol has done its job, but is now seen clearly as a sham.

The HMRC can squeal all they want about an "appeal" but unless they find a point of law to hang it on (and there's nothing forthcomng ...) then it just won't be allowed to happen.

Posted by Aln Bill, 22 Nov 2012

Arms length my ....

Mr AB has not read the ruling.

The loans were made by the trust in a 1-1 correspondence with the "wishes" as expressed by the *club* when *the club* made their contributions to the trust.

The trustee was even changed when the 1st Trustee started to ask too many questions about the loans.

The judgment was not that there was an arms length relationship. It was that the loans were indeed loans and not completed payments, and thus the monies were not 100% under the control of the recipients of the loans, who could (in principle, no-one ever does) have to repay them later, or on death.

If RFC were not already in liquidation, HMRC would most certainly appeal. They may still do so.

Posted by Gregory House, 23 Nov 2012

title-stripping to follow

given that the dead RFC admitted to there being 'side-letters' about 'loans', and given that these were not at the time notified to the SPL in the players' contracts, it rather looks as though the Nimmo Smith commission will find the dead club guilty of serious 'crimes' of fielding ineligible players in many games over many years.

Bang goes a number of titles unfairly and unsportingly won.No?

Posted by john clarke, 23 Nov 2012


Having read the Judgement, it is clear that the HMRC erred in it's approach to the Third Tier Tribunal over payments to the Employee Benefit Trust.. If the trust instrument/Deed provides for the making of loans then the decision of the Tribunal is correct. there can simply be no tax consequences as all property GIFTED must be unconditionally owned by the Settlor, the Company. If the HMRC are to succeed, they must ignore the trust issues and concentrate on the legality of the Company gifting monies that had not been subjected to the statutory accounting practices of the Taxes Act 1988. Shareholders cannot gift monies to the trust fund until such time a dividend is declared and they have legal ownership of that distribution.

If this Judgement were to succeed/stand then every company would be able to employ on minimum wage their workforce, pay minimum NIC and make further 'payments' via a EBT. the HMRC needs to start with basics.

1. Has the trust been approved, what property has been settled and what type of EBT is it. Until that is known, there is little point in second guessing the outcome.

Posted by Des Doherty, 16 Dec 2012

Rangers 1872

This have nothing to with Rangers 1872 football club! It was the company est in 1899 that ran EBTs read this "BDO added: "The joint interim liquidators are reviewing the tribunal's decision closely so as to determine the impact on the liquidation of RFC 2012 Plc." the football club "Rangers 1872 is now plying in the SFL 3rd.

Posted by Naefear, 28 Dec 2012




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