4 Nov 2015

Rangers: winning titles but cheating the taxman

The judgement by three Scottish Law Lords is as comprehensive as it is damning. Whilst Rangers FC were busy winning titles and silverware the entire basis upon which they paid many players and executives should have attracted income tax and did not do so.

Hundreds of thousands of pounds was paid in “loans” through a trust scheme which at the time was seen as a way of avoiding paying income tax. You may wonder why Rangers – and other clubs – could exist in some kind of non-PAYE parallel universe. Now the Law Lords have wondered too and simply stated that “common sense” would suggest Rangers should have paid tax like the rest of the UK does.

Further – the non payment of tax allowed the club to buy and pay players it could not otherwise have afforded. A previous legal judgement ruled that the club gained no advantage. Today’s successful appeal by the HMRC would seem to bring that ruling into question.

There is no getting away from it – the upheld appeal means Rangers were systematically cheating the taxman whilst winning titles on the pitch.

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HMRC will now lodge a claim with the old Rangers company which will be substantially bigger now they have won their appeal. The taxman believes the old company still has money and they say they are due some of it now in unpaid taxation. They also point out that the old Rangers club can also appeal if they wish, to the Supreme Court.

An HMRC spokesman told Channel 4 News:

“As supported by the decision in this case, HMRC’s view is that Employment Benefit Trust avoidance schemes do not work. HMRC has collected over £1.3 billion tax through 1500 users of similar schemes.”

That is why the Rangers test case means so much. We are talking about a great number of these tax avoidance schemes and £1.3 billion clawed back from wealthy punters who may have thought they could get away with it should be applauded the length and breadth of the land today.

The judgement delivered by Lord Drummond Young reads:

“A scheme involving payments to various trusts set up in respect of executives and footballers employed by the former Rangers Football Club amounted to “a mere redirection of emoluments or earnings” and was accordingly “subject to income tax”.

The Lord Justice Clerk, Lord Carloway and Lord Drummond Young heard that Rangers ran these tax-avoidance trusts from 2001 to 2009.

The judges said there was a “fundamental principle” in this case that “if income is derived from an employee’s services… it is… earnings and is thus accessible to income tax”.

You have to sit back in wonder and astonishment that this simple common sense approach has taken so long and so much money spent on lawyers by the HMRC to be upheld. But we are where we are.

Lord Drummond Young said of the side-letters which were used to pay footballers extra money at Rangers:

“It seems to us to be self-evident that the obligations in the side-letter were part of the employee’s employment package, and provided him with extra remuneration. They were negotiated as part of the total employment package…it inevitably follows that those payments represented emoluments or earnings of the footballer in question.”

And thus they should have attracted a quaint old thing called income tax.

“Self-evident”…”common sense” – the judgement is festooned with phrases like this. How come it has taken so very long for such common sense and the self evident to make itself what it always should have been: obvious.

You get money. You pay tax. Even at Ibrox.

Follow Alex Thomson on Twitter: @alextomo

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14 reader comments

  1. Edgar Blamm says:

    So would it be fair to say that the monkeys died chasing the lions?

  2. HRH Prince Charles says:

    Quite right.Very surprised it had to go through 2 appeals in the first place.
    Does this new demand for cash now put the The Rangers Scottish football second tier campaign on hold for another season?

  3. Barry M says:

    You hit the nail right on the head there Alex, no matter how much they garnish it it’s still earnings & should be subject to the same tax rules as everyone else. I look forward to seeing how the SFA consider this ‘common sense’ approach with regard to their previous decisions that there was ‘no sporting advantage’ when this was applied to players.

  4. philip spicer says:

    So Lord Drummond-Young in his written verdict calling it “The Former Rangers Club” also settles the Old Club/New Club debate as well. if its a Former Club it can’t be the present Club. care to give an Opinion ?

  5. David Barr says:

    As a Rangers supporter I am not happy with the findings of the court. Despite this I look forward to HMRC taking those English clubs that have used the same system to court ha! ha! I won’t be holding my breath.

  6. Billy Boyce says:

    “A previous legal judgement ruled that the club gained no advantage.”

    Alex, if you are referring to the Lord Nimmo Smith “judgment” then your comment (above) is not correct. LNS, having a legal background, was engaged by the Scottish football authorities purely as a consultant. His pronouncements on the Rangers BTC or title-stripping have absolutely no standing in law.

  7. D.Johnstone says:

    Oldco . ..who cares this does not effect newco in any way,people only report on this when they think newco will fall !!!!

  8. Marc says:

    And what about the 2 previous appeals that were rejected? Didn’t write about that at the time. Also, when does “common sense” trump the law? How can they rule on what they think it means as opposed to what the law states? The case hasn’t been ruled on, they won 1 appeal out of 3. Great journalism BTW, pretty impartial…

  9. Gerry says:

    There is no other country in the world where the honours ‘won’ would not be stripped.Only in Scotland where the football authorities do what Rangers tell them and the thugs who support them and who threaten ‘social unrest ‘ should things not go their way.A compliant Police Service sympathetic to all things Rainjurz is no small asset to the cause of the Peepul.Knowledge is power and we know we were cheated.

  10. DeeTee says:

    There is no “old Rangers club”. The football club is the same as ever but operated by a different limited company than before.

    As for the latest tax verdict, let’s cut the hysteria and sensationalism and remember that there can still be another appeal – and the taxman has already lost two of them.

  11. stuart says:

    So in regards to this judgement it seems the sfa will have to rescind all titles won during this period it also confirms that sevco are not old co and as such have only a third and second division title to their names?

  12. Scott Kilgour says:

    The SFA and football governing bodies should be conducting a full and through investigation into Rangers winning titles with immediate affect.

  13. Without a credit line... says:

    Thank you Alex, and to all the other investigators who laid this bare, even while suffering torrents of abuse and threats of harm. You are saluted.

  14. Aidan says:

    We salute you. And RTC. Paul McConville. Phil MacGoillaBhain. And those who stood up for truth

Comments are closed.