HMRC launches legal bid over Rangers ‘Big Tax Case’

THE taxman has launched a legal challenge against an appeal it lost in the long-running Rangers “Big Tax Case” over the use employee benefit trusts for football players and executives.

An HMRC appeal brought to an upper tribunal in the 'Big Tax Case' was largely dismissed last year. Picture: John Devlin

HM Revenue and Customs maintains that the effect of previous tribunal decisions in the case is that employees can avoid paying income tax by agreeing that payments be made to others of their choosing, rather than getting the money themselves.

But Julian Ghosh QC, for the revenue, told judges at the Court of Session in Edinburgh it was “still part of the remuneration package.”

Mr Ghosh said: “When money is paid for something you did it is also derived by the earner, the worker.”

“This cash payment was part of the remuneration package. It was wages and bonuses. This money was earned for work done,” he said.

He said so far as the players were concerned it was for appearing in football matches and winning games and for the executives for work performances.

Mr Ghosh argued it would be “odd beyond measure” if tax was to be avoided in the circumstances of the case.

He said the court was being asked to endorse a situation where an employee said to anyone who paid them for work done, do not pay me but pay another such as my brother or my wife.

The scheme used trusts and sub-trusts and the senior counsel said: “The employee would ask that the income and capital of the sub-trust was applied in accordance with his wishes.”

The Revenue maintains that both a First Tier Tribunal and an Upper Tribunal, chaired by judge Lord Doherty, have erred in the action.

It claims in the appeal: “The scheme in this case was established in terms that had effect so that, on appointment of the funds to the individual sub-trusts, the sums in question were ‘paid’ to the employee.”

The use of employee benefit trusts relate back to Sir David Murray’s time in charge of the Ibrox club before ownership changed.

Rangers were subsequently forced into administration while under Craig Whyte’s control and later went into liquidation.

Last year Lord Doherty largely dismissed the appeal the Revenue had brought to an upper tribunal in the “Big Tax Case” although he sent aspects of the case back to the first tier tribunal.

Today’s appeal before the Lord Justice Clerk, Lord Carloway, sitting with Lord Menzies and Lord Drummond Young is set down to last four days.