Tom English: If only Murray and his men had been co-operative from day one

THE headlines were stark and, in many ways, understandable. No more talk of the Big Tax Case, now it was the Big Tax Farce, no more Rangers under the microscope, now it was HMRC and their part in the downfall of Rangers. In the wake of the club’s 2-1 victory over the tax authorities the narrative of this story changed and changed  utterly.

Now it is this: For years the Big Tax Case was the sword of Damocles hanging over Ibrox, the possibility of a £49m-plus tax bill rendering the sale of the club to a responsible owner a virtual impossibility. David Murray tried to find a buyer, but couldn’t, not while the case was unresolved, not while all the vibes were that there was a financial howitzer coming down the track.

And it wasn’t just gossip either. Murray tried to settle with HMRC. Offered them just over £10m. HMRC told him to get lost, that they were coming after his group for substantially more than £10m and they were supremely confident of victory. The gorilla in the room was how former Rangers chairman, Alastair Johnston described it. “And nobody knows how big an appetite it’s got.”

If there were potentially decent owners out there, they were frightened away by something that has amounted to half-nothing. The Big Tax Case? It was like the bogeyman. The anticipation was infinitely more frightening than the reality. Murray did sell, though. He had to. He was under pressure and was forced to give it away for a quid to the one guy prepared to take it on with the threat of Armageddon still lingering. Enter Craig Whyte. Enter administration. Enter liquidation. Enter disgrace. All avoidable, if only HMRC hadn’t been so vengeful and so wrong in their pursuit of the club. That’s the narrative as articulated by a spokesman for Murray, by Johnston and by fans. That and the time it took for the First-Tier Tribunal to pass judgment, a veritable age in which Whyte appeared and did untold damage. While they waited, Rangers burned. So the story goes.

Johnston: “If the tax case had been resolved in the original timescale there would have been no need to sell to Craig Whyte. The taxman let Whyte into our club to drive a hearse to the cemetery.”

A source close to Murray: “They (HMRC) effectively destroyed a Scottish institution. They made the club unsellable because of the potential debt.”

The analysis is understandable and has merit, but it’s lacking something. Firstly, this notion, expressed widely now in the aftermath of victory, that HMRC had taken a farcical case against Rangers in the first place is rather compromised by the fact that Murray himself never thought it farcical. He does now, but not previously. If he did he wouldn’t have offered to settle it to the tune of around £10m. That act has never sat well with Murray’s oft-expressed confidence that Rangers were going to win the case, as they have now done. Neither was his confidence on show when potential buyers, as part of the purchase agreement, asked him to assume liability for the big tax bill, if it ever came.

Paul Murray, of the Blue Knights, said he made a late bid to buy the club from Murray just as Whyte was about to seal the deal but the Knights wanted Murray to take responsibility for whatever tax bill came down the line – and Sir David wouldn’t do it. Where was his confidence in the fight with HMRC? He opted instead to give the club to Whyte.

Murray, or people close to Murray, have been briefing in the last few days, the message being that it was HMRC that destroyed the club. It’s a deflection tactic because HMRC had very good reasons to pursue Rangers. They lost their case, but that’s not to say their case was rubbish to begin with. It wasn’t. That fact is evidenced  by the fact that it was a split decision. None of the panel members have criticised  HMRC for taking the case. Clearly, they were torn by what they heard.

The story of Mr Red is told in the FTT report. There’s not a lot I can tell you about Mr Red, apart from the fact that that is the codename ascribed to him in the tribunal report published on Tuesday. He is a chartered tax advisor, a qualified tax inspector and is, or was, a senior member of the Murray Group’s tax function. His name features throughout the 145 pages. When critics slam HMRC for pursuing this case so vehemently and slam the FTT for taking an age to rule on it, they reckon without the presence of Mr Red, one of Murray’s own people.

Mr Red caused HMRC and the tribunal some problems. Of the three person panel, Kenneth Mure and Scott Rae were the two members who went with Rangers, but even Mure and Rae had issues with Mr Red, the key man in the tax affairs of the Murray Group and the person who operated the EBT scheme within the group. They called his evidence “somewhat defensive” and referred to a “culture of defensiveness” from the Murray Group both in their testimony and in their dealings with HMRC. Mure and Rae admitted to be being “disturbed” by part of Mr Red’s evidence.

Later in the report, the dissenting voice, Dr Heidi Poon, goes after Mr Red in a coruscating way and perhaps illustrates part of the reasons why this affair took so long. “The protracted and chequered course of the enquiry was largely due to a lack of candour and co-operation from Mr Red, who was the chief operating officer dealing with the enquiry,” writes Poon. She talks about documents not being disclosed despite repeated requests and statutory demands for information. She talks about Mr Red’s “hostility” and the fact that he “refused any meetings with HMRC in the course of the enquiry”.

The impasse was broken only when the City of London Police consulted with HMRC’s Criminal Investigation Section and seized documents from Ibrox. It was, according to Poon, only in May 2009 that the Murray Group finally provided the documents that were requested. That was, says Poon, fully five and a half years after the HMRC enquiry had begun.

She adds: “The conduct of the Murray Group in general, and Mr Red in particular, in the course of HMRC’s enquiry went beyond the [Mure and Rae] description of ‘a lack of candour’... There is evidence of active concealment of documents. Equally, to describe Mr Red as ‘somewhat defensive’ [Mure and Rae’s description] in giving his sworn testimony would be an understatement. On more than one occasion, Mr Red had attempted to mislead the Tribunal.”

Now, the fact is that Poon lost the argument. Rangers were found innocent in all bar a few individual cases and we now move on, all too slowly, to the SPL commission that is looking into dual contracts. For now, though, in trying to understand why HMRC took the case on and why it took so long to get to the bottom of it, Poon’s words are instructive. Maybe if the Murray Group had been co-operative from day one then Rangers might have got themselves over the winning line a long, long time ago. Maybe if Mr Red had coughed up the documents instead of waiting for search warrants to be issued there wouldn’t have been a need for the epic hysteria surrounding the case. Maybe the threat hanging over the club would have removed long before anybody had ever heard of Craig Whyte. Maybe a sensible owner would have been found before Whyte arrived in town bringing untold chaos and disgrace with him.

Maybe.

The bottom line is that the big tax case amounted to a little tax case but it was one that had horrendous, and avoidable, repercussions. It’s so easy to point the guns at HMRC, but they thought they had a case and neither Mure nor Rae have criticised them for going after it. Ask questions of the tax authorities for sure, but while you’re at it, read the report and ponder the role of Mr Red, and the man who employed him,  in turning this tax case into a preventable trauma.