Hearts "Big" Tax Case

[Footballfirst]

It might be worth reading a blog from the Rangertaxcase blogger from April which suggests that Hearts may well be in deeper poo with the tax authorities than has been made public up until now.

 

http://rangerstaxcase.com/2011/04/14/campbell-ogilvie/

 

This was written in the run up to the Rangers takeover so the comments aren't generally on topic, but the blog itself sounds a warning that should be heeded. The guy has good sources so I wouldn't dismiss what he says.

 

Vlad has sounded off in some of his recent rants with passing reference to tax issues. I think that the issue raised by Rangerstaxcase is the reason why. What we have seen to date with the late payment of tax bills is just the tip of the iceberg. Hearts also have a gorilla in the room with a big case still to come. It may be next spring before it erupts but we could find ourselves embroiled in a FTT of our own, that is if Vlad doesn't pull the plug beforehand.

[Geoff Kilpatrick]

It might be worth reading a blog from the Rangertaxcase blogger from April which suggests that Hearts may well be in deeper poo with the tax authorities than has been made public up until now.

 

http://rangerstaxcas...mpbell-ogilvie/

 

This was written in the run up to the Rangers takeover so the comments aren't generally on topic, but the blog itself sounds a warning that should be heeded. The guy has good sources so I wouldn't dismiss what he says.

 

Vlad has sounded off in some of his recent rants with passing reference to tax issues. I think that the issue raised by Rangerstaxcase is the reason why. What we have seen to date with the late payment of tax bills is just the tip of the iceberg. Hearts also have a gorilla in the room with a big case still to come. It may be next spring before it erupts but we could find ourselves embroiled in a FTT of our own, that is if Vlad doesn't pull the plug beforehand.

 

It's possible. Having said that, given that we had a tendency to recruit players via Kaunas, the UK earnings may be true and the player paid Kaunas wages as well. It's more plausible than Rangers' EBT scheme in any case!

[jamboozy]

That could be the reason that he MAY be pulling the plug, long live hearts!

[Barney Rubble]

Aw fer feck snake ! i cant take much more of this goin to go and lie doon in dark room !

[The Old Tolbooth]

There's not a cats chance in hell that Hearts are in the same predicament as Rangers through the EBT scheme, players had to earn in excess of ?6,000 per week for this to be a worthwhile venture for the player and club to take advantage of, and considering it all stopped around the time we started paying higher wages to players, then I'd think our liability would be pretty much zero, so the EBT scheme debt I reckon can be ruled out (feel free to correct me someone if this is wrong)

 

I honestly don't think Rangers will lose their case anyway when it comes up in court, HMRC have tried on another 5 separate occasions to take others to court for the same venture, and have lost every time, and Rangers have hired the lawyer who had a hand in these previous cases, smart move!

[Footballfirst]

There's not a cats chance in hell that Hearts are in the same predicament as Rangers through the EBT scheme, players had to earn in excess of ?6,000 per week for this to be a worthwhile venture for the player and club to take advantage of, and considering it all stopped around the time we started paying higher wages to players, then I'd think our liability would be pretty much zero, so the EBT scheme debt I reckon can be ruled out (feel free to correct me someone if this is wrong)

 

I honestly don't think Rangers will lose their case anyway when it comes up in court, HMRC have tried on another 5 separate occasions to take others to court for the same venture, and have lost every time, and Rangers have hired the lawyer who had a hand in these previous cases, smart move!

 

I'm not saying that it is an EBT case. It may just be untaxed offshore payments, but I am more concerned for the future of Hearts by this case than the current issues around the winding up, firesales and wages issues. I guess we will just have to wait to see how it pans out.

[Geoff Kilpatrick]

I'm not saying that it is an EBT case. It may just be untaxed offshore payments, but I am more concerned for the future of Hearts by this case than the current issues around the winding up, firesales and wages issues. I guess we will just have to wait to see how it pans out.

 

 

Indeed. I've no idea about the exactitude of loan deals between Kaunas and HMFC but you can imagine that the deals were set up to avoid tax in the UK. However, if the player is registered in Lithuania and loaned to us I'm not sure what HMRC could do about it given free movement of labour across the EU.

[Jambo66]

There's not a cats chance in hell that Hearts are in the same predicament as Rangers through the EBT scheme, players had to earn in excess of ?6,000 per week for this to be a worthwhile venture for the player and club to take advantage of, and considering it all stopped around the time we started paying higher wages to players, then I'd think our liability would be pretty much zero, so the EBT scheme debt I reckon can be ruled out (feel free to correct me someone if this is wrong)

 

I honestly don't think Rangers will lose their case anyway when it comes up in court, HMRC have tried on another 5 separate occasions to take others to court for the same venture, and have lost every time, and Rangers have hired the lawyer who had a hand in these previous cases, smart move!

 

I have a fairly good working knowledge of how these EBT schemes work and I agree that it is unlikely that we will have a big exposure even if we did use EBTs - if for no other reason than those given by you. As for the likelihood of Rangers winning their case, it really depends on what tax HMRC are trying to recover. Without boring you with the case law, HMRC have been broadly unsuccessful over the years in attacking these schemes on income tax, NICs, inheritance tax and capital gains tax. However, their success rate on corporation tax is very high indeed.

 

The problem for Rangers will be if they have tried to claim a corporation tax deduction on any payments they made into the EBT. If they did, then they are much more likely to lose that part of the case. I suspect that HMRC is doing what it normally does and goes after all the tax it believes should have been paid. In other words, the headline figure may be much higher than the sums HMRC are likely to be awarded.

[JAYEL]

Campbell Ogilvie worked for both Hearts and rangers so there must be a connection.

 

 

I doubt it.

 

 

 

.

[Footballfirst]

Charlie-Brown - For some reason I cannot PM you directly or reply to your messages, although I can receive your messages ok. If you PM me with your email address I'll get back to you that way.

[Charlie-Brown]

Charlie-Brown - For some reason I cannot PM you directly or reply to your messages, although I can receive your messages ok. If you PM me with your email address I'll get back to you that way.

 

I cleared out all my old PM's and tried to send you a new message but it's saying I can't send a new message until a set date & time - quite bizarre!

[Footballfirst]

I cleared out all my old PM's and tried to send you a new message but it's saying I can't send a new message until a set date & time - quite bizarre!

Your PM came to me as "deleted". When I try to PM to you directly you name comes up as invalid.

 

You can contact me through the HYDC site as the Comments page routes to my email.

[The Old Tolbooth]

I have a fairly good working knowledge of how these EBT schemes work and I agree that it is unlikely that we will have a big exposure even if we did use EBTs - if for no other reason than those given by you. As for the likelihood of Rangers winning their case, it really depends on what tax HMRC are trying to recover. Without boring you with the case law, HMRC have been broadly unsuccessful over the years in attacking these schemes on income tax, NICs, inheritance tax and capital gains tax. However, their success rate on corporation tax is very high indeed.

 

The problem for Rangers will be if they have tried to claim a corporation tax deduction on any payments they made into the EBT. If they did, then they are much more likely to lose that part of the case. I suspect that HMRC is doing what it normally does and goes after all the tax it believes should have been paid. In other words, the headline figure may be much higher than the sums HMRC are likely to be awarded.

Gotcha!

 

Thanks for that mate, it makes much more sense explained in the way you put it. In real terms the bill they (Rangers) could be facing is negligible compared to the overall bill then, disappointing!

 

As for Hearts, I wasn't stating that our tax debt was due to the EBT schemes FF, I was merely saying that I very much doubt that we would be liable under such a scheme

[The People's Chimp]

Indeed. I've no idea about the exactitude of loan deals between Kaunas and HMFC but you can imagine that the deals were set up to avoid tax in the UK. However, if the player is registered in Lithuania and loaned to us I'm not sure what HMRC could do about it given free movement of labour across the EU.

 

This. Any steps taken which could be said to prevent free movement would be unlawful.

[Charlie-Brown]

Your PM came to me as "deleted". When I try to PM to you directly you name comes up as invalid.

 

You can contact me through the HYDC site as the Comments page routes to my email.

 

Email sent FF

[Charlie-Brown]

Do Hearts itemise Tax payments in the annual financial accounts ie PAYE, NIC, VAT etc. More specifically do our payments look proportional to our wage bill? Or does it appear we have been under-paying any tax elements?

[CBjambo]

The case has been dropped.

 

Normal service resumes!

[Footballfirst]

Do Hearts itemise Tax payments in the annual financial accounts ie PAYE, NIC, VAT etc. More specifically do our payments look proportional to our wage bill? Or does it appear we have been under-paying any tax elements?

only breakdown is "Social Security Payments"

 

In Vlad's time that figure has ranged between 9.7% and 13.3% of wages, so nothing sticks out there..

[Charlie-Brown]

only breakdown is "Social Security Payments"

 

In Vlad's time that figure has ranged between 9.7% and 13.3% of wages, so nothing sticks out there..

 

But payments for Income Tax & VAT would be quite substantial amounts given a wage bill of circa ?10M and ST & merchandising sales of circa ?5M you would expect Tax payments of approx ?4M or ?5M on those amounts combined ?

[Footballfirst]

But payments for Income Tax & VAT would be quite substantial amounts given a wage bill of circa ?10M and ST & merchandising sales of circa ?5M you would expect Tax payments of approx ?4M or ?5M on those amounts combined ?

 

The turnover figure is always given as net of VAT, so you tend not to see it in the accounts. The wages figure probably includes paye contributions. The separate social security costs is probably the NIC element.

[Charlie-Brown]

The turnover figure is always given as net of VAT, so you tend not to see it in the accounts. The wages figure probably includes paye contributions. The separate social security costs is probably the NIC element.

 

Do the accounts show a flow of funds or a cash flow changes statement that indicates tax payments or even aggregated payments to HMRC?

[Charlie-Brown]

The case has been dropped.

 

Normal service resumes!

 

The current court petition has been dismissed.

 

normal service has been resumed for now - the nagging question is though are we still under any investigation or facing any potential or future demands from HMRC for possible under payment of taxes?

[DalryJambo]

The current court petition has been dismissed.

 

normal service has been resumed for now - the nagging question is though are we still under any investigation or facing any potential or future demands from HMRC for possible under payment of taxes?

 

Was the insinuation not that for a while we had several players on loan from Kaunus and the players wages were being paid in Lithuania, thus meaning the players were paying no income tax in this country, despite earning the money in this country? The Rangers case revolves around the payment of money to players who were registered to the club but whose wages were being paid off shore into some sort of retirement fund, meaning (in clubs opinion)the income tax wasn't due to HMRC but to the country in which the fund was based, which happened to be a low/no tax zone.

 

Ironically, the chap employed by the government to run Northern Rock, when it became a 'Bad Bank' was paid using a similar model, I think.

[ToadKiller Dog]

I am just amazed how Hearts have managed to keep the truth of a Big tax case out of the news ,given somebody runs to the press every time a hearts official farts . I have not a clue but the minimum wage claim seems a bit suss ,tho there were voices saying some of our Lithuanian players were paid peanuts .

[DalryJambo]

I am just amazed how Hearts have managed to keep the truth of a Big tax case out of the news ,given somebody runs to the press every time a hearts official farts . I have not a clue but the minimum wage claim seems a bit suss ,tho there were voices saying some of our Lithuanian players were paid peanuts .

How many hours do our players work each week? Is it just the hours they need to be at the club? They might only average 3-4 hours a day. Makes it hard to work out a average hourly rate I would say. don't think that's the issue tbh.

[Jambo66]

Gotcha!

 

Thanks for that mate, it makes much more sense explained in the way you put it. In real terms the bill they (Rangers) could be facing is negligible compared to the overall bill then, disappointing!

 

As for Hearts, I wasn't stating that our tax debt was due to the EBT schemes FF, I was merely saying that I very much doubt that we would be liable under such a scheme

 

Difficult to know really without knowing whether or not HMRC have finally learned their lesson on the bits they are likely to lose! The way it works is that where a company has a profit, that profit is subject to corporation tax (currently a maximum rate of 26%). One of the deductions that can be made is wages, so if Rangers made a profit of ?20m and paid their employees ?15m, corporation tax would be payable on only ?5m. I think that what is likely here is that a big chunk of the wages will have been paid into the EBT instead of as wages. If Rangers claimed that the payment to the EBT was deductible for corporation tax purposes, that is what HMRC will be after. It might have been deductible, but it was very, very difficult to achieve and extremely unlikely if Rangers simply bought an off the shelf EBT.

 

Whether or not the figure being bandied about as being the sum sought by HMRC is high depends on how much and for how long Rangers were pumping money into the EBT and whether or not they claimed a corporation tax deduction. I was under the impression that this has been going on for more than 10 years, so the figures may not be too wide of the mark. Here's hoping, anyway!!

[Francis Albert]

So now we have a "big tax case" based on some seven month old old speculation at the edge of the Rangers story (which in fact was posted on here at the time but didn't raise a ripple because it wasn't feeding frenzy time).

[Charlie-Brown]

So now we have a "big tax case" based on some old speculation at the edge of the Rangers story (which in fact was posted on here at the time but didn't raise a ripple because it wasn't feeding frenzy time).

 

It might be wise if we at least keep ourselves alert to a potential or possible threat that there might be tax issues bubbling away under the surface.

 

The Rangers Tax Case was dismissed for long enough as rumour & speculation not least by the club themselves until it eventually became a clear & present danger.

[Francis Albert]

It might be wise if we at least keep ourselves alert to a potential or possible threat that there might be tax issues bubbling away under the surface.

 

The Rangers Tax Case was dismissed for long enough as rumour & speculation not least by the club themselves until it eventually became a clear & present danger.

 

And what are we going to do with this alertness?

 

And since the speculation is 7 months old it doesn't seem we are being very alert.

[Coco]

The last set of Hearts accounts said that there was an ongoing HMRC investigation into Hearts.

 

I have no idea of what it is investigating or if it has been completed. But it hasn't been hidden from anyone.

[Charlie-Brown]

And what are we going to do with this alertness?

 

And since the speculation is 7 months old it doesn't seem we are being very alert.

 

Not be surprised if this story perhaps rears it's head again in a few months?

[Dunks]

Since the latest HMRC claim to Hearts was for half a million pounds, do you think we would have paid it if Mr Romanov was going to walk?

 

I think not.

[Charlie-Brown]

Since the latest HMRC claim to Hearts was for half a million pounds, do you think we would have paid it if Mr Romanov was going to walk?

I think not.

 

It depends - the Taxman can't get quite heavy for non payment of taxes ie arrest monies, winding up orders, criminal charges.

[Francis Albert]

Not be surprised if this story perhaps rears it's head again in a few months?

 

Based on some of the hysteria on here over the last couple of days it will be surprising if Hearts are still around in a few months.

[Charlie-Brown]

The last set of Hearts accounts said that there was an ongoing HMRC investigation into Hearts.

 

I have no idea of what it is investigating or if it has been completed. But it hasn't been hidden from anyone.

 

The only thing HMRC is mandated investigate is to assess or establish whether there has been any underpayment of taxes and/or false or misleading or fraudulent tax returns.