Rangers blame HMRC for driving club to brink of administration

RANGERS have lodged papers with the Court of Session in Edinburgh declaring their intention to go into administration.

The Ibrox club yesterday lodged papers signalling their intent to go into administration – an act which does not in itself make administration inevitable. But according to Rangers, barring a last-minute change of heart by HMRC, the club will be left with no alternative but to take that dramatic step.

Owner Craig Whyte claimed he took the decision to ensure Rangers did not die altogether under the potential burden of a “shocking” tax bill which could be as high as £75 million.

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“The £49m often quoted is the tax bill and interest but they can charge you a penalty on the tax bill so we could have been up at £75m,” Whyte said last night. “It is a shocking figure and there is no way we could pay it.”

Administration would bring a ten-point deduction and would likely lead to the sale of on-field assets. Rangers would also face a race to prove to the SFA that their finances are in shape before 31 March or face expulsion from Europe next season.

The tax tribunal had previously been presented as one which would result in a clear victory for either side. If Rangers won, they would at last be liberated from the threat of a huge tax bill; if the Revenue won, the government would recoup the cash. Now, however, Rangers have claimed that a different scenario is in place; one which would effectively place them under severe trading difficulties even if they won the case.

That is because, as the club explained in a Question & Answer article on their website last night, it has been told that HMRC will appeal if it loses the case – and that such an appeal could last years, which would affect Rangers’ ability to trade.

“Even if Rangers wins the tribunal, HMRC has made it plain that they will ‘appeal, appeal and appeal’ the decision,” the Q & A said. “The practical effect of this will be to plunge the club into years of ongoing uncertainty. It would also mean the club having to pay immediately a range of liabilities to HMRC.

“If we wait until the outcome of the tax tribunal, the risk to Rangers of being weighed down with an unacceptable financial burden and years of uncertainty is just too great. It would be counter-productive and in the longer term would jeopardise the club’s future both on and off the field.”

Rangers also believe that the club would be in a similar position of jeopardy if it launched an appeal in the event of an HMRC victory. “Again, the impact of possibly years of further uncertainty awaiting an outcome that could ultimately go against Rangers is too much to bear,” the Q & A continued. “Also the club would have to pay the liability immediately and it would only be returned if the appeal was successful. The liability could be substantially more than the £50m already reported widely. The club would simply not be able to function properly with this cloud of uncertainty hanging over it.

“Further investment in the club would be unlikely because of the threat of HMRC moving for a winding-up order. All of that together would seriously endanger the business on and off the field, and in the final analysis safeguarding the future of Rangers is paramount.”

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Rangers’ website did attempt to put some pressure on HMRC by making it clear that there was still a way in which administration could prove unnecessary.

“Is there any way in which this course of action can yet be avoided?” it asked. “Yes, it is possible. If HMRC were to strike a manageable and mutually acceptable agreement with the club, even at this late stage, that would safeguard the future well-being of Rangers, without any insolvency process.”

Whyte and his fellow directors have consistently expressed confidence that they would win the tribunal. Although many observers could see no grounds for that confidence, it may still be realised. Yesterday, however, Rangers finally accepted that even a victory in the case itself would not constitute a favourable outcome for the club.