Rangers/RFC 2012 (in liquidation) “Big Tax Case” verdict in layman’s terms, as I understand it.

Rangers lodged an appeal to dispute a claim from HMRC that they had failed to declare and pay tax on earnings paid to players, directors and other employers via EBT’s.

RFC claimed that these payments were not part of a remuneration package (earnings for services rendered) but were in fact loans.

Now by definition, a loan is temporary, not permanent and has to be repaid to the lender.

Rangers today won their appeal as the tribunal voted 2 to 1 in favour of RFC, great news for RFC, but this has massive implications for those players, directors and other employees who were in receipt of loans via the EBT scheme.

As RFC are in fact in liquidation, and have very little assets , even had they lost the appeal, they would not have had the funds to pay the bill, so of course would have been wound up, which as we know, is already underway and so the “victory” is indeed a very hollow one.

Now, as I mentioned, this will have serious implications for those who were in receipt of these EBT “loans”, as of course, they are liable for the repayment of these loans, and they have now all subsequently become debtors of RFC.

The liquidators of RFC can now recall all these loans in order to recover as many assets as they can in order to pay into the creditors pot.

The SFA/SPL investigation into undeclared payments to players, is in fact a side issue to today’s verdict, and is in fact (AFAIK) unaffected, as whilst the EBT “loans” are not classed as a payment for services rendered, they are still in breach of the rules as set out by the SFA/SPL.

All payments, by whatever method, have to be declared to the SFA/SPL, failure to do so results in any player in receipt of an undeclared payment as being improperly registered, and therefore ineligible to play in competitive matches.

Any improperly registered player, fielded in a competitive match will result in the team forfeiting the game by default at 3 – 0.

So, is this really a victory?

Comments

  1. Sorry to disagree,but I would not be too hasty in saying that the loans now fall to be repaid by the players and Directors.

    Of key importance is the fact that in the course of the tribunal HMRC conceded that they did not view these loans as a sham– despite the fact that some players have gone on record to say that they were never intended to be repaid.

    Crucially, Rangers paid money into a trust and it was the trust who then made the loans. Accordingly the borrowers owe the money back to the trust– not Rangers PLC in liquidation.

    The Liquidators have no jurisdiction over the trust which is a separate legal entity to Rangers PLC.

    What is possible is that the Liquidators claim that any money simply paid into any such trust by Rangers in the last 5 years is a gratuitous alienation– namely a payment that it did not legally need to make. In that case the the payments to the main trust can be recalled.

    The trustees would then be forced to collect any such money from the player in theory.

    There is much more to come out of this right enough but I am not sure that a lot of the initial knee jerk reaction is correct– the detail of any such judgement is going to have to be very carefully considered before anyone at HMRC or BDO can determine how to proceed.

    The SPL enquiry, the sale by D&P, and the actions of Whyte and D&P over the course of a year are very different matters.

  2. Sorry to disagree,but I would not be too hasty in saying that the loans now fall to be repaid by the players and Directors.

    Of key importance is the fact that in the course of the tribunal HMRC conceded that they did not view these loans as a sham– despite the fact that some players have gone on record to say that they were never intended to be repaid.

    Crucially, Rangers paid money into a trust and it was the trust who then made the loans. Accordingly the borrowers owe the money back to the trust– not Rangers PLC in liquidation.

    The Liquidators have no jurisdiction over the trust which is a separate legal entity to Rangers PLC.

    What is possible is that the Liquidators claim that any money simply paid into any such trust by Rangers in the last 5 years is a gratuitous alienation– namely a payment that it did not legally need to make. In that case the the payments to the main trust can be recalled.

    The trustees would then be forced to collect any such money from the player in theory.

    There is much more to come out of this right enough but I am not sure that a lot of the initial knee jerk reaction is correct– the detail of any such judgement is going to have to be very carefully considered before anyone at HMRC or BDO can determine how to proceed.

    The SPL enquiry, the sale by D&P, and the actions of Whyte and D&P over the course of a year are very different matters.

  3. No Problem.

    There are some interesting phrases in there (FTT decision|) right enough– including the hypothetical situation where the trust is no more than an agent of RFC.

    One of the things it does not address in detail is when certain payments were made to whom— especially after the party concerned has left Rangers

    1. But am I right in thinking it won’t affect the SFA/SPL side of things? The fact BDO might go after the recipients was just a mischievous thought on my part.

      Let’s face it, most MSM will try to spin this to The Rangers fans as a positive, which it doesn’t appear to be, as the NEW Rangers wouldn’t be affected or effected one way nor the other regards the tax bill?

    2. It seems I’m not far out, a lot of journos saying EBT’s will have to be paid back, but some players saying they never agreed to pay them back, loans by definition have to be repaid, this story isn’t over.

  4. No Problem.

    There are some interesting phrases in there (FTT decision|) right enough– including the hypothetical situation where the trust is no more than an agent of RFC.

    One of the things it does not address in detail is when certain payments were made to whom— especially after the party concerned has left Rangers

    1. But am I right in thinking it won’t affect the SFA/SPL side of things? The fact BDO might go after the recipients was just a mischievous thought on my part.

      Let’s face it, most MSM will try to spin this to The Rangers fans as a positive, which it doesn’t appear to be, as the NEW Rangers wouldn’t be affected or effected one way nor the other regards the tax bill?

    2. It seems I’m not far out, a lot of journos saying EBT’s will have to be paid back, but some players saying they never agreed to pay them back, loans by definition have to be repaid, this story isn’t over.

  5. Sparkybhoy

    This is one area I will need to leave to others. I have no technical knowledge and there has been so many assumptions and presumptions I want my hopes neither built up nor dashed. It just worries me that this decision has a psychological effect on the SPL commissioners. However, I have faith that the men involved who are experienced professionals are immune to external influences. It will be interesting also to observe how the liquidators react to this decision. All of these outcomes are still to come so I will await the future with interest – and some concern.

    H H

  6. Sparkybhoy

    This is one area I will need to leave to others. I have no technical knowledge and there has been so many assumptions and presumptions I want my hopes neither built up nor dashed. It just worries me that this decision has a psychological effect on the SPL commissioners. However, I have faith that the men involved who are experienced professionals are immune to external influences. It will be interesting also to observe how the liquidators react to this decision. All of these outcomes are still to come so I will await the future with interest – and some concern.

    H H

  7. There is no time limit on the lone as long as the recipient pays it back b4 his death which is a total joke if every business in the country used ebt,s the country would be bankrupted in a month plus if ebt recipient don’t pay b4 death how can hmrc get it after death

  8. There is no time limit on the lone as long as the recipient pays it back b4 his death which is a total joke if every business in the country used ebt,s the country would be bankrupted in a month plus if ebt recipient don’t pay b4 death how can hmrc get it after death

  9. a trustee gives a loan to a employee at rfc ltd (1872),said company goes into liquidation,said loan now owed to creditors,end of matter.
    hmrc case and spl/eufa/fifa investigationinto dual contracts a more worrying case for sevco/trfc rangers (2012).

    keith

  10. a trustee gives a loan to a employee at rfc ltd (1872),said company goes into liquidation,said loan now owed to creditors,end of matter.
    hmrc case and spl/eufa/fifa investigationinto dual contracts a more worrying case for sevco/trfc rangers (2012).

    keith

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