Up to Eight Other Teams

[Guest GhostHunter]

Rangers owner Craig Whyte is on the brink of tipping the club into administration in an attempt to avoid the ruinous impact of a ?50 million tax investigation that could also affect up to eight Premier League clubs.

 

By Paul Kelso telegraph.co.uk

 

 

The Old Firm club on Monday filed notice of their intention to enter administration, citing the threat of a tax bill of between ?5 million and ?50 million ? and possibly as high as ?100 million ? as the reason for a move that would see an automatic 10-point penalty.

 

Rangers?huge potential tax liability is the result of an ongoing tax inquiry by Her Majesty?s Revenue & Customs into the club?s use of a complex tax avoidance device, Employee Benefit Trusts.

 

HMRC is seeking as much as ?49 million in unpaid tax, interest and fines for Rangers? use of EBTs in the 10 years before Whyte bought the club last year.

 

The Daily Telegraph understands that up to eight current or former Premier League clubs are facing a similar investigation into their use of EBTs, which were considered an efficient ? and legal ? means of reducing tax until relatively recently.

 

Administration, which will come within 10 days of Monday?s notice, would leave Rangers 14 points behind Celtic in the Scottish Premier League and effectively see them concede the Scottish title. It will, however, provide significant protection for the club and Whyte, who remains the majority shareholder and largest secured creditor, against HMRC?s demands, and can be seen as a proactive, defensive measure.

 

A tax tribunal is currently considering its verdict in the Rangers case, which if it went against them would be ruinous to the club and have a significant impact on Whyte.

 

Under EBTs companies pay money into a trust that then loans the money to the employee for benefits, typically pensions or for the purchase of shares, on the understanding that the loan is never repaid. HMRC alleges that Rangers? previous owners simply used EBTs to avoid paying millions of pounds in tax and National Insurance on the player payroll.

 

Sources said on Monday night that HMRC is investigating whether Premier League clubs operated in a similar way.

 

Whyte has openly considered the prospect of administration since he took over at Ibrox, notably in an interview with The Daily Telegraph last September, and statements released on Monday night suggested the latest move is part of a negotiation with HMRC.

 

The chairman is Rangers? secured creditor after a company he controls cleared bank debts of ?17 million with a loan from one of his companies upon his takeover last year.

 

In normal circumstances HMRC would be first in the queue for repayment of outstanding debtors, but in administration the taxman has no protection, and will have to join the line behind Whyte and the players to get its money back.

 

If administration is successfully negotiated Whyte could emerge in control of the club, albeit through a new holding company, with any potentially crippling tax liability drastically reduced.

 

In a statement the club said they had already approached HMRC with proposals for a Creditors Voluntary Agreement ? a deal to pay off outstanding debts ? and were seeking a moratorium from further action.

 

If approved the Rangers CVA would allow the club to emerge from administration within a month, crucially allowing it to hit Uefa deadlines for gaining a licence to play in European competition, a crucial revenue stream for the club. It also said that Whyte, the majority shareholder, would continue to fund the club if the tax authorities agreed to ?ring-fence? that funding from any tax issues.

 

Last night HMRC indicated it would not agree to any such deal, with sources claiming that the EBT issue was ?entirely unconnected? with Monday?s move by Whyte, and a ?red-herring?. Whyte said the opposite was the case.

 

?The fact is that Rangers ongoing financial position and the HMRC first tier tribunal are inextricably linked,? Whyte said. ?Rangers costs approximately ?45 million per year to operate and commands around ?35?million in revenue. From the outset I have made it clear that I do not think it is in the best interests of Rangers to throw good money after bad. Against a backdrop of falling revenues, costs have to be cut significantly. Painful as though that may be, it is the future of clubs such as ours.

 

?There is no realistic or practical alternative to our approach because HMRC has made it plain to the club that should we be successful in the forthcoming tax tribunal decision they will appeal the decision.

 

?This would leave the club facing years of uncertainty and also having to pay immediately a range of liabilities to HMRC which will be due whatever the overall result of the tax tribunal.? Whyte?s own business background has been the subject of intense scrutiny since he took control at Ibrox.

 

Last week he was ordered by a court to pay a disputed bill of ?86,000 to a roofing contractor for work carried out on his home, Castle Grant on Speyside, with the judge describing his evidence as ?wholly unreliable?.

 

A self-styled ?company turnaround? specialist he has to a mixed record, and has admitted not disclosing that he was banned from operating as a director for seven years. An investigation into the allegations, made by BBC Scotland, by the stock exchange is ongoing.

 

 

I don't know whether he means EPL or SPL.

 

[jamboceej]

That Rangers tax case site i'm sure had us named from under Ogilvie's time here, no idea if true though. Someone on here said yesterday that our players don't get paid enough to have benefited from it?

[stevie]

I read on another forum that several English clubs were to be investigated but it was dependant on the outcome with Rangers.My thinking is that they were using the same dodgy payment methods as Rangers and HMRC are going for the smallest debt first.It now looks like HMRC have Rangers over a barrel so the others will follow shortly.

I have little understanding of our tax laws,i just hope that the fact we have had to pay some overdue tax arrears lately means that HMRC have looked at our finances and we arent in the same boat.

[Currahee!]

I heard its all English clubs and Rangers that are under investigation.

 

Some big clubs involved.

[alanjambo]

Oh well, it doesn't matter anyway. Apparently all you have to do is go into administration for a wee while and you come out debt free. It's as if there never was a debt. That's if you listen to Rangers fans and most of the media.

[Gregory House M.D.]

Heard we were being investigated for loaning players from Kaunas and paying them in Lithuania. Which I'd have thought was perfectly legal.

[stevie]

Oh well, it doesn't matter anyway. Apparently all you have to do is go into administration for a wee while and you come out debt free. It's as if there never was a debt. That's if you listen to Rangers fans and most of the media.

 

I know Rangers are in a different situation but Motherwell and Dundee (twice) certainly seemed to benefit from going into administration.

[alanjambo]

I know Rangers are in a different situation but Motherwell and Dundee (twice) certainly seemed to benefit from going into administration.

 

That is true. Especially Motherwell.

 

It just sickens me, the thought of Rangers going into administration for a little bit, taking a ten point deduction, and getting away with it all scot-free. Surely that can't happen. Yet, you listen to the media and it's as if this ?50m+ tax bill is really just a minor irritant. Annoying.

[spartan]

That is true. Especially Motherwell.

 

It just sickens me, the thought of Rangers going into administration for a little bit, taking a ten point deduction, and getting away with it all scot-free. Surely that can't happen. Yet, you listen to the media and it's as if this ?50m+ tax bill is really just a minor irritant. Annoying.

 

I'm pretty sure they'll be pursued ruthlessly for any due tax.

[phoenix]

I know Rangers are in a different situation but Motherwell and Dundee (twice) certainly seemed to benefit from going into administration.

 

I know Dundee perhaps looked like they benefited from it, but it was a hard road back for them with many players and, probably more important, club staff, being paid off.

[henry]

It appears too good to be true that you go into administration and then come out debt free. The gers squad other than mcgregor and Davis is fairly worthless so losing some staff and starting again sounds great when you could otherwise have 100 million to pay. It makes you wonder if things will work out as easy as this but I'm no financial expert.

[Bainy]

With dundee and motherwell their creditors agreed to a reduced rate of about 6p to every ?1 owed and there was nothing hmrc could do cause the amount due to them in those cases were so small. However, its a different story with rangers as the amount due to hmrc is so large and they wont accept such pittance for every ? due to them.

[The Old Tolbooth]

I don't know whether he means EPL or SPL.

 

Has to be English clubs unless Celtic have been involved too Dex, they're the only two who paid big enough wages who could take advantage of the situation, the only other player outside of the Old Firm but still in Scotland who would be able to benefit from the EBT scheme would be Craig Gordon

 

I'd imagine that the likes of Chelsea, Man Utd, Portsmouth, Liverpool (I think), Arsenal, Newcastle (possibly) are the type of clubs who could suffer.

[Ross21]

With dundee and motherwell their creditors agreed to a reduced rate of about 6p to every ?1 owed and there was nothing hmrc could do cause the amount due to them in those cases were so small. However, its a different story with rangers as the amount due to hmrc is so large and they wont accept such pittance for every ? due to them.

 

This exactly

 

I've heard Arsenal are one club who could be in major, major bother if HMRC goes after then for this. Rangers is 50-75m, I reckon Arsenals would be far, far more than that

[soonbe110]

Has to be English clubs unless Celtic have been involved too Dex, they're the only two who paid big enough wages who could take advantage of the situation, the only other player outside of the Old Firm but still in Scotland who would be able to benefit from the EBT scheme would be Craig Gordon

 

I'd imagine that the likes of Chelsea, Man Utd, Portsmouth, Liverpool (I think), Arsenal, Newcastle (possibly) are the type of clubs who could suffer.

Arsenal settled with HMRC about 3 years ago. Paid ?15m if I remember correctly.

[The Old Tolbooth]

Arsenal settled with HMRC about 3 years ago. Paid ?15m if I remember correctly.

I didn't know that mate, in that case then it looks like Rangers have no chance of winning their tax case.

 

 

[Boris]

Has to be English clubs unless Celtic have been involved too Dex, they're the only two who paid big enough wages who could take advantage of the situation, the only other player outside of the Old Firm but still in Scotland who would be able to benefit from the EBT scheme would be Craig Gordon

 

I'd imagine that the likes of Chelsea, Man Utd, Portsmouth, Liverpool (I think), Arsenal, Newcastle (possibly) are the type of clubs who could suffer.

 

The article referred to current and former Premier league clubs....I reckon West Ham may one of them. Leeds?

[benny]

The article referred to current and former Premier league clubs....I reckon West Ham may one of them. Leeds?

I would guess West Ham,Portsmouth,Southampton and Spurs.Work out the link for yourselves.

[Manny1874]

I would guess West Ham,Portsmouth,Southampton and Spurs.Work out the link for yourselves.

 

[soonbe110]

The article referred to current and former Premier league clubs....I reckon West Ham may one of them. Leeds?

Lierpool are definitely one. During his pub brawl troubles a couple of years ago it was revealed that Gerrard is paid via an overseaas trust which then loans him money. The loan will never be repaid.

[The Old Tolbooth]

The article referred to current and former Premier league clubs....I reckon West Ham may one of them. Leeds?

West Ham most definitely I'd say, but I think Leeds woes would be before the EBT scheme was used.

 

I would guess West Ham,Portsmouth,Southampton and Spurs.Work out the link for yourselves.

[Jam Tarts 1874]

Heard we were being investigated for loaning players from Kaunas and paying them in Lithuania. Which I'd have thought was perfectly legal.

 

 

Wouldn't be anything wrong with the payment method, however if the players are resident here for at least 183 days in a fiscsal year they are due to be paying tax and N.I. probably Hearts due to pay employer's N.I. too.

[andrew]

Arsenal settled with HMRC about 3 years ago. Paid ?15m if I remember correctly.

 

I remember this, although I thought it was close to double that.

 

It all seemed to be a bit hush hush at the time, the media barely reported it.