So what about the small tax case?
Every year up and down the country sole traders, partnerships and companies are enquired into by hmrc. If any mistakes are detected then that person / company gets billed along with interest and maybe a penalty. This is just typical policing of the system and is just hmrc doing their job.
The Small TC is a typical example of this.
I would be amazed if none of the other SPL clubs, or companies run by the various chairmen have never been in this position.
Again, I should emphasize, this does not mean wrongdoing or financial impropriety.
For Rangers, they made a mistake with the beneficial share scheme, they accepted the mistake and agreed to repay what was due (which was a relatively small amount in comparison to turnover). That became payable only during 2011/12.
But under Whyte, this agreed payment was defaulted and was then rolled up with the withheld PAYE / VAT that led to the administration.
So in summary, Rangers went into liquidation for failing to pay duties that only became due during the 2011/2012 season. No wrongdoing in earlier years.
And Rangers have been punished for this, by a 10 point deduction.
Except the Wee Tax Case can't be waved away as a "mistake". It was as clear and blatant an attempt to avoid tax as you can get. The wrongdoing occurred in 2002-03.
The 10 point deduction was not for this. It was purely for going into administration - not liquidation, not the wee tax case. Rangers have as yet received no sanction for entering liquidation.
So have Rangers done wrong before 2011/12?
As it stands today, no, they have not. And importantly the creditors accept that Rangers have not done anything wrong.
How do we know Rangers have done nothing wrong even if they lose the Big Tax Case?
Firstly, let’s examine what is in the hmrc statement.
“….allowing the potential investigation and pursuit of possible claims against those responsible for the company's financial affairs in recent years..”
Taken on face value, it is said that efforts will be made to collect the duties from “those responsible”.
The original poster on Follow Follow does not understand how the tax system works. It is HMRC who decide if a taxpayer has done wrong - by issuing a demand for payment.
The taxpayer can chose to appeal this to a First Tier Tribunal. This is not "innocent until proven guilty". As far as HMRC are concerned they have already proven Rangers guilty.
That is why at the CVA creditors meeting HMRC vote was for the full value of the the EBT case + the unpaid PAYE/NI + the remaining payment on the WTC.
So who is responsible?
Clearly not Rangers as a company / employer based on this. This leaves (1) the ex-directors and / or (2) the players / employees who benefited.
So what does this mean?
It means that the Income Tax (PAYE) 2003, regulation 72(5) can be applied.
For the employees this means that while normally if a company or employer fails to deduct tax/NIC then it becomes liable for the amount due. But if hmrc are satisfied that the company / employer (1) took reasonable care to comply with these regulations, and (2) that the failure to deduct the excess was due to an error made in good faith then under condition A, the tax bill can be directed onto the individual employee, whether that be Ferguson, McLeish or whoever.
For directors, Condition B applies, which says that if hmrc are of the opinion that the director as an employee has received relevant payments knowing that the employer willfully failed to deduct the amount of tax then that director will have the tax bill directed onto them. So wallets out Messes Murray, Bain et al
Yet again, the original author doesn't understand the system.
He implies that RFC plc (in administration) can't be held responsible because HMRC are going to chase the directors. Whereas in fact HMRC are having to chase the directors because RFC plc (ia) is unable to pay. He's put the cart before the horse.
Secondly he has interpreted the regulations and how they would apply to Rangers wrongly. He assumes that HMRC are satisfied that " the employer took reasonable care to comply with the regulations/error made in good faith". In respect of the EBT case this is simply not true. Rangers knowingly misused a tax avoidance scheme - the only reasonable care they took was to avoid tax!
In respect of the unpaid PAYE/NI, the responsibility lies entirely with RFC plc (ia). As far as the players were concerned, the PAYE/NI had been correctly deducted and collected by the employer. The employer simply failed to pay the collected funds to HMRC, instead using the funds to fund running costs of the company to delay administration.
But what does that mean for Rangers?
It impacts on the penalty situation if the EBTs are found to be taxable by the 1st tier tribunal.
Put simply, in order to pursue the directors or employees for the tax, there has to be acceptance that Rangers took reasonable care to comply with the tax regulations and that the tax bill on the EBTs was no more than an error made in good faith.
So it is accepted that Rangers did no wrong?
Yes, it is accepted that they as an employer, took reasonable care, and did nothing wrong.
It then follows that this is a load of nonsense. HMRC have other powers to pursue directors (unlikely they would pursue the employees - especially as it appears they were told by the club that all taxes had been paid correctly.
Widespread tax evasion.
Widespread tax avoidance.
Widespread financial wrongdoing.
Extensive financial doping.
Wholesale breach of sporting integrity
But what about “dual contracts”?
This is a false description of an EBT.
There are no 2nd contracts of service of employment. This is important.
What there is, is an agreement (at best / worst) promising a payment from a 3rd party, that party being the trust. If it is ruled that the trust payments are taxable that still does not mean that the letters constitute a contract of service. That’s a totally different argument and one that has not been pursued.
And importantly, one that cannot be pursued if it is decided to pursue others for the tax. So in summary it is already accepted that the letters are not contracts of employment, of service and as such are not liable for reporting to the sfa / spl.
If either took a different view, then it is a view at odds with that of the experts, hmrc.
A complete distortion of the situation.
There is evidence that RFC plc gave players and staff letters saying that they would receive a "loan" from the EBT and that they would have not to repay the loan. In the eyes of HMRC and the SFA that makes these payments contractual. It those same letters that made it clear to HMRC that the use of EBT was not merely "a mistake made in good faith" but the deliberate and wrongful use of a tax avoidance scheme.
It also makes the EBT unlawful - because the employer has taken away the discretion from the EBT trustees and the "loans" are not loans to be repaid but clear payments.
Who is pursued for the tax is irrelevant. It was the responsibility of the club to ensure that the SFA/SPL are informed of all remuneration for football services and the SPL have a prima facie case that RFC plc (ia) failed to do so.
So why would the SPL legitimately refuse newco Rangers admittance?
The only legitimate reason to believe that newco Rangers should be refused admittance is if the other SPL clubs reasonably believed that (1) Rangers will lose the BTC and (2) that in losing it, it will be ruled that they actually did something wrong, and didn’t just make a mistake, made in good faith.
The problem for the SPL clubs, if they want to be honest and show integrity, is that they will not know the outcome of the BTC before the vote, and even then won’t know if that outcome includes a conclusion of wrongdoing or innocent error.
So what can they do? If I was an SPL chairman, I’d put forward a proposal to allow newco Rangers to join on the basis that at the time of the vote they had not been found guilty of wrongdoing. But with a condition that if the EBT case was ruled to be taxable and if it was held that Rangers did do wrong (in comparison to just making honest mistakes) then they would be automatically relegated at the season end in Div 1. If I was representing Rangers, this is what I’d argue for.
So to summarise what I said above:
HMRC have already ruled that RFC (ia) plc did wrong in the EBT case, and that it wasn't a mistake made in good faith.
Double contracts is not dependent on the outcome of the EBT case. RFC plc (ia) could be found guilty even if in the extremely improbable scenario that the FTT accept the appeal of RFC plc (ia). Such is the seriousness of the offence, the only suitable penalty would be termination of membership.
Furthermore, the Appellate Tribunal is reconsidering the question of sanction for bringing the game into disrepute (by appointing Craig Whyte, not paying taxes, not filing accounts with the PLUS exchange and not paying football creditors). The sanction will likely be suspension of membership (they said themselves that they would have no option otherwise if they couldn't devise the transfer embargo).
There also remains serious questions about whether Sevco 5088 Limited are eligible to join any football league.
There is no mechanism for relegation to Division 1 as proposed. But since this proposal involves accepting responsibility for the actions of RFC plc (ia), this wouldn't really matter as the ultimate sanction would be termination of membership.
The errors in this scandal were not "honest mistakes" but the deliberate and knowing breach of tax laws and league rules for sporting advantage. This is just another pathetic example of the lies, wilful blindness and whataboutery that marks how the Rangers community try excuse their vile behaviour - whether it is tax avoidance or sectarian violence.