Rangers have won their so called Big Tax Case against HMRC. Her Majesty’s Revenue and Customs had claimed the Employee Benefits Trusts (EBTs) Rangers used to pay a number of high earners at the club between 2000 and 2010 was illegal and designed to avoid tax. However, after two years and a lengthy appeal process a tribunal panel has today ruled that the EBTs were loans, not earnings and so are not recoverable by the taxman but from the employee who received them.
While the tribunal found most of the trusts were valid it conceded some advances to players were taxable and any bill is likely to be substantially reduced from the initial £46.2m assessment. In basic terms, it means that the Newco Rangers is no longer facing the prospect of another hefty fine from HMRC, instead its former players and directors could be asked to return the monies they received under the scheme. Among those who could be forced to pay back is Sir David Murray, the former owner and director of Rangers Football club, who is thought to have received up to £6 million through EBT’s.
Following the tribunal verdict a spokesperson for Sir David Murray 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 judgement which leaves minimal tax liability and overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH [Murray International Holdings] itself.
– Spokesperson for Sir David Murray
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 advisers and legal counsel to ascertain what action, if any, is now required by MIH.
The spokesperson added: "We are pleased with the judgement which leaves minimal tax liability and overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH [Murray International Holdings] itself."
"While MIH has at all times respected the privacy of the Tax Tribunal proceedings, a substantial quantity of confidential information relating to the case has become available for public consumption stimulating considerable discussion and often ill-informed debate. This has been wholly inappropriate and out with the fundamental principles of natural justice.
"We therefore formally request that the relevant authorities investigate how these sensitive details have been released so widely. We have instructed our lawyers to retrospectively review online and printed publications relating to the case to identify whether legal redress is either appropriate or necessary."
The threat of this verdict not coming back in Rangers favour is believed to have been one of the reasons Craig Whyte chose to place the Glasgow club in administration in February this year. At the time the club was also facing another court case from HMRC for £14million unpaid PAYE and National Insurance since Mr Whyte had took over in May 2011.
HMRC have issued a statement stating their intent to appeal today’s ruling: ‘’We are disappointed that we have lost this stage of the court process and we are considering an appeal. 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.’’
Rangers have yet to release a statement.