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HMRC lose Rangers’ ‘Big Tax Case’ appeal

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HMRC have lost its appeal over Rangers’ use of Employee Benefit Trusts [EBTs] in what was dubbed the ‘Big Tax Case’.

Judge Lord Doherty dismissed HMRC’s appeal against the First Tier Tribunal decision, but several issues were sent back to the panel to reconsider.

HMRC had claimed payments made to players and other employees, through the EBT scheme, should be taxable. However, the Murray Group, which owned Rangers argued they were loans.

A majority verdict, in the FTT, ruled in favour of Rangers [in principle]and ordered that HMRC’s demands of £46.2 million, be ‘reduced substantially’.

The upper tier tribunal ruling, announced today, has largely upheld the FTT verdict but some payment will have to be re-examined by the FTT. Payments including termination and guaranteed bonus payments.

The judgement, which has no impact on the current Rangers or their owners, reads: “The appeal is dismissed except in so far as it relates to the termination payments.

“I shall remit the case to the FTT with a direction to allow the taxpayers’ appeals against the assessments relating to the payments to the sub-trusts of Sir David Murray, his sons, Mr McClelland and Mr MacMillan; to proceed as accords in relation to the termination payments, the payments in respect of guaranteed bonuses, and any related questions of grossing up.

“Standing my findings and my disposal, the remit should be to the FTT as originally constituted.”

After the ruling was announced, Sir David Murray issued a statement welcoming the decision.

Murray said: “In response to the release of the judgement of the Upper Tier Tax Tribunal (“UTT”) on HMRC’s appeal against the original decision of the First Tier Tax Tribunal (“FTT”) on the operation of the Employee Benefit Trust (“EBT”), a spokesperson said: “We are satisfied that the UTT has now published its widely awaited decision and note the contents thereof. We are pleased with the judgement which again leaves negligible tax liability and overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH itself.

“We will therefore review the detailed content of the decision with our legal counsel and advisers to ascertain what action, if any, is now required by MIH.

“The decision substantially reduces HMRC’s claim in the liquidation of the old Rangers Football Club.

“While we have been successful in both the FTT and UTT, there are, as we have stated previously, no victors. This has been an exceptionally long, difficult and expensive process involving not just the FTT and UTT but also several approaches to resolve the matter with senior HMRC officials on a commercially sensible basis for all parties which were rejected.

“MIH has, at all times, recognised that the tax tribunal proceedings stemmed from arrangements put in place during its ownership. They were introduced before legislative changes removed the tax efficiency of such arrangements from the end of 2010.

“However, it is obvious that the much publicised existence of these proceedings over-shadowed Rangers Football Club for many years and tarnished the external perception of its value. There can be little doubt that despite favourable legal opinion, potential acquirers were therefore dissuaded from pursuing their interest during a period in which we were marketing the sale of MIH’s shareholding.

“The case has also stimulated extensive press and social media comment, discussion and speculation, a significant quantity of which has been ill informed. During proceedings, it would have been entirely inappropriate for us to highlight fundamental misunderstandings or contribute to this public debate.

“Notwithstanding all of this, it is abundantly clear that Rangers Football Club would not have gone into administration or liquidation had the purchaser fulfilled its contractual obligations and responsibilities. Similar to the resolution of the UTT appeal, we hope that the relevant authorities conclude their investigations and commence proceedings at the earliest opportunity.”

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scotzine

Andy Muirhead is the Editor of Scotzine and the Scottish Football fanzine FITBA. He is the Scottish Football columnist for The Morning Star and has written for a number of other publications including ESPN, Huffington Post UK, BT Life's a Pitch and has had his work featured in the Daily Record, The Scotsman and the Daily Mail.

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