Murray vindicated as Rangers win tax appeal 'in principle' after majority verdict
20:43 GMT, 20 November 2012
09:49 GMT, 21 November 2012
The tribunal which heard Rangers' appeal over their bill for the use of Employee Benefit Trusts has delivered a majority verdict allowing it 'in principle'.
The tax tribunal stated that the 'controversial monies received by the employees were not paid to them as their absolute entitlement'.
Rangers had argued that the payments, thought to be close to 49million, had been loans rather than wages and not subject to tax.
No verdict on any sum that the oldco Rangers were liable for was included in the findings, but Sir David Murray's company welcomed the verdict as vindication of their stance.
'In principle': Rangers' appeal was accepted by a majority verdict at the tax tribunal
Oldco Rangers had previously stated they could be liable for up to 75million but the tribunal ruled that Her Majesty's Revenue and Customs assessment should be 'reduced substantially' with only some payments subject to tax.
'It was conceded that advances in favour of certain players are taxable and liable to NIC (National Insurance Contributions), and 35 we have found that, in certain other limited instances, there may be a similar liability.
'To that extent the assessments should stand. In these circumstances we expect that it is sufficient that we allow the appeal in principle.
Vindicated: Former Rangers director Paul Murray's company welcomed the news
'Parties can no doubt settle the sums due for the limited number of cases mentioned without further reference to the tribunal.'
Murray International Holdings, who were majority shareholders of the oldco club until Craig Whyte's takeover in May 2011, declared in a statement: 'We are satisfied that the Tax Tribunal has now published its widely awaited decision and note the contents thereof.
'We are pleased with the judgement which leaves minimal tax liability and overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH itself.'
The decision does not affect the current football club at Ibrox, which was reconstituted as a new company when the oldco Rangers was consigned to liquidation in June.
New regime: Rangers' owner Charles Green
MIH also called for an inquiry into the leaking of information surrounding the case.
A website devoted to the case won the Orwell Prize for blogging while a BBC documentary team won a Scottish BAFTA for their investigation into the payments.
The Murray statement continued: 'This has been an exceptionally long, difficult and expensive process involving not just the Tax Tribunal but also significant efforts to resolve the matter with senior HMRC officials on a commercially sensible basis for all parties.
'We will therefore review the detailed content of the decision with our advisers and legal counsel to ascertain what action, if any, is now required by MIH.
'While MIH has at all times respected the privacy of the Tax Tribunal proceedings, a substantial quantity of confidential information relating to the case has become available for public consumption stimulating considerable discussion and often ill-informed debate.
'This has been wholly inappropriate and outwith the fundamental principles of natural justice.
'We therefore formally request that the relevant authorities investigate how these sensitive details have been released so widely.
Relegated: Rangers now play in the Scottish Third Division
'We have instructed our lawyers to retrospectively review online and printed publications relating to the case to identify whether legal redress is either appropriate or necessary.'
HMRC revealed they were thinking about mounting a challenge to the decision, which was supported by two of the judges, Kenneth Mure QC and Scott Rae, but opposed by the other, Dr Heidi Poon.
A statement from HMRC read: 'We are disappointed that we have lost this stage of the court process and we are considering an appeal.
'The decision was not unanimous and the diligence of HMRC investigators was acknowledged by the whole tribunal.
'HMRC is committed to tackling avoidance and it is right that we challenge the type of avoidance seen in this case.'
What does the verdict mean in layman's terms
In the vast majority of cases, the tribunal has found in favour of Rangers Football Club in that the payments to the individual players were loans and they were at the discretion of the trustees of the Employee Benefit Trust. Basically, they were determined to be loans, not remuneration. On that basis, there is no further tax payable in terms of PAYE or NI (National Insurance), as HMRC was claiming. It is indicated in the ruling that in some cases, a minority of cases, the tribunal found in favour of HMRC so in those cases it was determined that is was remuneration, not loans, and PAYE and NI should be paid. But that is in the minority – in that vast majority, the verdicts went in favour of Rangers.
WHO IS LIABLE FOR ANY MONEY OWED TO HMRC
In the majority of the cases, it would be Rangers oldco. If HMRC was unable to reclaim those monies from oldco, could it pursue individual players Maybe. But it would depend upon the individual circumstances of each player, what they've done on their tax returns. There is not a clear, uncomplicated route in terms of recovering money from the players. HMRC's primary is to go after oldco for those monies.
WILL HMRC GET ANY MONEY FROM OLDCO RANGERS
There is only a certain pot of money available via the liquidation route. For those sums that were discussed, it just increases by a small percentage how much of the overall pot goes to HMRC. By Duff and Phelps' estimate, about four months ago, they thought there might only be about 1million available via liquidation. They would just rank along with other creditors to get a proportion of that 1million pot so it's not going to make a huge difference to the overall pay-out that HMRC get. They were already due 25million-plus of VAT and PAYE that Craig Whyte didn't pay.
COULD ADMINISTRATION AND LIQUIDATION HAVE BEEN AVOIDED HAD THE VERDICT BEEN KNOWN BEFORE CRAIG WHYTE'S TAKEOVER IN MAY 2011
What actually put Rangers into administration was the fact that Craig Whyte didn't pay VAT and PAYE. It wasn't the big tax case, and I think that's a point worth stressing, it wasn't the big tax case that put Rangers into administration. I think the big tax case potentially had two influences. Firstly, when Sir David Murray was trying to sell the club, it could well have put off some potential buyers of the club because the big tax case was hanging over Rangers. Without it, maybe other buyers may have come along, buyers who might have been a better outcome for Rangers than Craig Whyte. Secondly, after Craig Whyte had actually bought it, was he influenced by the fact that the big tax case was there Did that influence the fact that he didn't pay VAT and PAYE and didn't put more money into club because maybe he thought he was going to lose the big tax case anyway Only Craig Whyte knows the answer to that. There were probably a couple of junctures where the big tax case may have influenced the final outcome of events.
WILL HMRC APPEAL
It's difficult to say. It was obviously a very complicated verdict, it was only a majority, it was 2-1, it wasn't unanimous. HMRC are clearly disappointed by the outcome. I think they will take their time and consider the likelihood of winning an appeal and the benefits of pursuing it further to try to get a favourable outcome.