HMRC begin appeal against Rangers’ Big Tax Case victory

By ANGUS HOWARTH
Published on 04/12/2012 23:30

HM REVENUE and Customs is seeking to appeal the outcome of a tribunal that saw the former Rangers football club win its tax case.

Under tribunal rules, parties need to apply to the tribunal to seek leave to appeal.

A spokesman for HMRC said it had begun that process.

Last month, oldco Rangers won its appeal in principle against a bill from HMRC over its use of employment benefit trusts (EBTs) from 2001 to 2010.

Rangers argued that the payments, thought to be close to £49 million, were loans rather than wages and not subject to tax.

The First Tier Tax Tribunal agreed and stated that the “controversial monies received by the employees were not paid to them as their absolute entitlement”.

The oldco was consigned to liquidation in June after it failed to exit administration via a company voluntary arrangement.

The tribunal heard Rangers’ appeal concerning the EBT bill over 29 days and last sat in 
January.

It delivered a majority verdict two weeks ago which allowed the appeal in principle and declared that the assessments of HMRC be “reduced substantially”. Two of the three judges 
decided that only some of the payments made to players through EBTs were taxable, but that many of them could be 
described as loans, as the club had argued.

Rangers was under the control of Sir David Murray when it began using EBTs. He sold the club for £1 to Craig Whyte in 2011, while the tax liability was in dispute.

The old club went into administration in February, owing up to £134m to unsecured creditors, including HMRC.

Mr Whyte had stated that the tax liability could have been as high as £75m, including interest and penalties, for payments made from 2001-10.

Although no final figure was revealed in the 145-page verdict, Murray International Holdings (MIH), the former majority shareholders of the liquidated club, declared itself vindicated after being left with what it described as “minimal tax liability”.

In a statement, two tribunal judges agreed with the club’s outline case.

They stated: “The majority view reflects the argument that the controversial monies received by the employees were not paid to them as their absolute entitlement. Thus, the payments are loans, not earnings.”

The decision came too late to save oldco Rangers from being wound up and does not directly affect the current Ibrox regime.

Charles Green led a consortium that purchased the business and assets of Rangers after it were consigned to liquidation in the summer. The Ibrox side was subsequently relaunched as a newco in the bottom tier of Scottish football.