Darrell King Exclusive on RFC Tax Issues

[Frankie 8,665]

Ibrox Stadium

 

Exclusive by Darrell King

 

Share 0 comments 27 Apr 2010

 

Rangers are under investigation from HM Revenue and Customs over offshore payments made to players.

 

The case could see the club hit with a backdated tax bill running to millions of pounds.

 

A source today confirmed to the Evening Times what the implications could be and conceded the club is ââ?¬Å?unsellableââ?¬Â unless any prospective buyer is given a written warranty that any sums owed to HMRC ââ?¬â?? once the investigation is complete ââ?¬â?? will be picked up by its banker, Lloyds, or the clubââ?¬â?¢s owner, Murray International Holdings.

 

The payments, which began a decade ago to some of Rangers biggest stars, are believed to have been made into an employee remuneration trust.

 

This is a controversial loophole that has seen the taxman launch investigations into a string of English Premiership clubs who have also used the same payment methods in players� contracts, along with payments for image rights.

 

The stunning revelation has emerged on the day the Evening Times reveals how ...

 

Members of the Rangersââ?¬â?¢ board believe Lloyds is about to ring-fence incoming season ticket monies from supporters ââ?¬â?? in the region of Ã?£20million ââ?¬â?? to be used to reduce the clubââ?¬â?¢s overall debt, which is still believed to stand at around Ã?£30m.

The vast majority of the �£15m windfall brought in from next termâ��s Uefa Champions League ties will also be gobbled up by the bank as Rangers are forced to work under a crippling business plan that is about to kick in.

Director Dave King, in a meeting with fans in Johannesburg last week, confirmed he had tried to buy the club in January after offering �£18m to Lloyds and �£1 to Sir David Murray for his shareholding, but would not return to the table until the bank agreed to take on the warranties over this tax probe.

The SPL champions ââ?¬â?? who retained their title on Sunday ââ?¬â?? were told last October administration could be an option. The Evening Times revealed there was only a 5-4 boardroom vote to accept Lloydsââ?¬â?¢ business plan. It has been overseen by controversial ââ?¬Ë?turnaroundââ?¬â?¢ specialist Donald Muir, who joined the board at that time.

London-based property developer Andrew Ellisââ?¬â?¢s bid to take over the club is being viewed by the board as ââ?¬Å?dead in the waterââ?¬Â six weeks after he expressed interest.

But it is the HMRC investigation that will shock supporters.

 

HMRC have been aggressively pursuing clubs such as West Ham and Portsmouth, who have used the image rights payment method to boost players contracts.

 

Revenue inspectors believe a tax loophole has been exploited and are determined to rake back tax payments they believe have been avoided.

 

Rangers also used employee remuneration trusts to pay monies into offshore accounts of several players over the past decade.

 

ââ?¬Å?The bill for this, when HMRC complete its investigations, could be double figures in the millions. No-one knows the exact figure, but who is going to buy the club unless someone agrees to pick up that bill?ââ?¬Â said the source.

 

ââ?¬Å?It is the ultimate poison pill and the investigation could be some time from its conclusion. There are people who want to buy Rangers, Dave King being one of them, but not under the current conditions.

 

ââ?¬Å?There has not been one indication Andrew Ellis will proceed.

 

ââ?¬Å?The business plan expected will see no investment in new players, with the total emphasis on driving down the debts to as low as they possibly can. The club is about to be squeezed even further.ââ?¬Â

 

News of the latest bank squeeze comes as Lloyds today revealed it returned to profit in the first quarter and expects its recovery to continue throughout 2010

 

Hmmmm, sensationalist nonsense IMO but perhaps one of our own tax specialists on here could confirm...?

[Stefanovitch 0]

Scary scenario if true. If the club have a �£10m+ future liability then should that not be subtracted from Lloyds valuation. Why should a new owner become liable for Murray's mismanagement?

 

I can see administration looming and worry how quickly we would come out of that.

[rbr 1,266]

Hmmmm, sensationalist nonsense IMO but perhaps one of our own tax specialists on here could confirm...?

 

Frankie I have known about this for quite a while , just watch the players departure , lloyds have made it known they want their money now , what is left of Rangers they couldn't care less to be honest , and Murray will not return to help as he is not in any position , in fact he has even tried to distance himself even further from this whole sorry mess , even though he was the mastermind of the off shore scheme , just remember the Arsenal scheme from years ago , well it's very simillar .

 

 

This is shaping up to be the single most important period in our history , and by that I mean the next few months

[rbr 1,266]

Scary scenario if true. If the club have a �£10m+ future liability then should that not be subtracted from Lloyds valuation. Why should a new owner become liable for Murray's mismanagement?

 

I can see administration looming and worry how quickly we would come out of that.

 

The figures being talked about inside the club is �£20 million

[ascender 352]

No idea what to say, for the last 6 months or so I've learned to just sit back and wait as there's been so many rumours from sources that the only thing I'm sure of is that I don't know who to trust anymore.

 

The above sounds like a loophole which means avoidance rather than evasion, so how does that play from a legal point of view I wonder?

Edited April 27, 2010 by ascender

[OnlyOneAmoruso 0]

I don't think it's nonsense unfortunately.

 

In a way I'm glad things like this are coming out. We need to know what we're dealing with.

[rbr 1,266]

OTE=OnlyOneAmoruso;202007]I don't think it's nonsense unfortunately.

 

In a way I'm glad things like this are coming out. We need to know what we're dealing with.

 

The only problem is time , we cannot beat it , if this isn't sorted out in the next couple of months we will have no management team , hardly any players and a support totally depressed , o and a shell of a club .

 

But look on the bright side all the posters that stated we didn't have a problem have all dissappeared

[Bluedell 5,679]

Tax avoidance or tax evasion? Avoidance is legal, evasion is not.

 

If there is a loophole and the club have taken advantage of it then HMRC should be able to do little about it. Often though it can just be interpretation and there may be no definitive answer, and it may take the courts to decide.

 

The payments to employee trusts has been going on since 2001 and has been as much as �£9m, and was still going on last season.

 

A warranty on this kind of issue would be standard in deals, but MIH may be unwilling to give it.

 

Some of the other stuff that Darrell King writes about is questionable.

 

He has been going on about the club avoiding administration by one vote. However it is clarified that it was acceptance of the business plan that was carried by one vote. A totally different thing and his previous statements have been misleading.

 

He claims that Dave King revealed to fans that he "would not return to the table until the bank agreed to take on the warranties over this tax probe." That was not mentioned in any of the reports of the meeting that I saw.

 

Avoiding the truth again, Darrell? Or perhaps that should be evading the truth?

[rbr 1,266]

Tax avoidance or tax evasion? Avoidance is legal, evasion is not.

 

If there is a loophole and the club have taken advantage of it then HMRC should be able to do little about it. Often though it can just be interpretation and there may be no definitive answer, and it may take the courts to decide.

 

The payments to employee trusts has been going on since 2001 and has been as much as �£9m, and was still going on last season.

 

A warranty on this kind of issue would be standard in deals, but MIH may be unwilling to give it.

 

Some of the other stuff that Darrell King writes about is questionable.

 

He has been going on about the club avoiding administration by one vote. However it is clarified that it was acceptance of the business plan that was carried by one vote. A totally different thing and his previous statements have been misleading.

 

He claims that Dave King revealed to fans that he "would not return to the table until the bank agreed to take on the warranties over this tax probe." That was not mentioned in any of the reports of the meeting that I saw.

 

Avoiding the truth again, Darrell? Or perhaps that should be evading the truth?

 

Unfortunately Bluedell his info comes from inside the club right at the top , the next few weeks will be very interesting and not in a good way , we could be left with the shell of a once great club .

[Frankie 8,665]

Another article:

 

Exclusive by Darrell King

 

Share 0 comments 27 Apr 2010

 

The ticker-tape has fallen, the din of a title triumph hushed.

 

In football, nothing stands still; it is always about what comes next.

 

For Rangers, and their supporters, however, that future is only about facing up to stark reality.

 

And that is that, even though they are SPL champions, even though the smell of sweet success is still wafting through the air, they remain a club riven with crippling financial worries, torn apart by boardroom in-fighting and very much in need of rescuing.

 

As the Evening Times reveals today, just three days on from the retention of the SPL championship, the Ibrox club remains no closer to being salvaged, no nearer new ownership and very much within the iron grip of its bankers, Lloyds.

 

Indeed, the severity of their situation has only increased. For the past few months, sources have spoken privately to this paper about the fears of what was coming, even if the championship and guaranteed Champions League revenue was secured, and about the possible implications of the ‘poison pill’.

 

That pill is the ongoing investigation from HM Revenue and Customs over alleged offshore trust payments made to players over the past decade that could see, if a case is proven, a massive, backdated tax bill that someone will have to pay. That investigation, effectively, renders a sale impossible unless one of two things happen.

 

Someone does a deal to take Rangers over, and then prays HMRC either fail to prove their case or the bill is a small one; that is a highly unlikely scenario.

 

Or the people who are currently trying to move Rangers on, Sir David Murray and Lloyds Banking Group, agree to a written warranty that they will pick up the bill somewhere down the line, leaving any new owners without liability.

 

Untangling Rangers’ finances and breaking them down into layman’s terms for those who matter most – the club’s supporters – is not a straightforward task and much of the information this paper has obtained in the last two days was, understandably, retained until such times as the league championship was won as it was felt it would not serve any good to further muddy the waters when the team was on the cusp of the title.

 

The immediate move will be to seek clarity from Lloyds on the exact detail of the business plan they want to implement for next season, but already sources have major fears about what that plan will be. In October ust after Walter Smith had gone public with the revelation that the bank was running Rangers, not long after ‘turnaround specialist’ Donald Muir (the enemy within) was appointed to the board, we revealed how administration was put forward as an option had the board not agreed to accept the bank’s stringent plan.

 

We highlighted how this summer would see the real problems beginning, with budgets being slashed, no investment in new players and limited funds being made available to offer new contracts to the six players – David Weir, Kris Boyd, Nacho Novo, DaMarcus Beasley, Kirk Broadfoot and Stevie Smith – who are now entering the final months of their current deals.

 

Shortly, Rangers’ powerbrokers will meet the bank and they expect to be told that millions of pounds of incoming season ticket money will be taken and used to attack the overall debts, believed to now be standing at around Ã?£30million.

 

Champions League revenue will also be put towards that figure, and the crippling business plan, which will see Rangers operate on a reduced wage bill and without any funds for new players, would then kick in.

 

But at what cost? A first-team without reinvestment again, after almost two years of no money being made available for new players. An out-of-contract manager who is almost certain to walk if asked to continue under such restrictions, much as it would hurt him.

 

A squad consisting of those players who remain in contract, supplemented by players from the Murray Park youth ranks.

 

Those are the harsh realities as the bank have their idea of the future, one that doesn’t match the vision of those charged with running the football side of Rangers. They are desperate to break free and get on with running the football operation, but that situation is outwith their control.

 

They hoped a white knight would have ridden to the rescue by now and have done all they can behind the scenes to broker it.

 

But even though there are people interested, no-one has stepped in and completed the transaction that would allow the club to take control of its own destiny.

 

And, unless something changes in the stand-off with the bank and the current owner, Sir David Murray, salvation appears to still be some way off.

 

All the while, supporters are being asked to hand over their hard- earned cash for season tickets in the knowledge that their money is going to pay off historic debts, not help fund new players coming in, not to help with stadium improvements – but to reduce overheads.

 

This, those inside Ibrox say, will be Rangers’ 2010 unless a change can be forced through.

 

Here, the Evening Times tries to untangle the Rangers web and lay bare the harsh realities, the truth behind what’s been going on at Ibrox, and where exactly the main players are in the battle for the very heart of the club ...

 

 

 

OCTOBER AND THE ADMINISTRATION VOTE

 

In October, the club were told they had to agree to the bank’s business plan, or administration would be an option. As we revealed back then, that plan, according to those who viewed it with astonishment, would strangle the club.

 

It was ferociously contested, as chairman Alastair Johnston conceded at the AGM in December, as it only suited one party – the bank.

 

A vote was taken, with all the men there mindful of the consequences. John McClelland, John Greig, Paul Murray and Dave King all voted against the bank’s business plan for Rangers, attempting to call the money men’s bluff.

 

They did not think they would enforce the administration option, and hoped they would back down and agree to a more flexible plan that would allow Rangers to breathe. They wanted the club put first.

 

Donald Muir and Mike McGill, one of Sir David Murray’s Murray Group men who was elected to the board at the same time as Muir, voted in favour of the business plan. Martin Bain, chief executive, and Donald McIntyre, Rangers’ financial controller, were the only two paid employees on the board and were acutely aware of the potential consequences had they not voted in favour. They had no choice. It stood at 4-4.

 

Johnston, only two months into his chairmanship, had to decide. He knew what the implications of administration would be – a crippling SPL points deduction and expulsion from the Champions League due to a breach of Uefa’s solvency rules.

 

He was dead against the plan, but he could not gamble. He voted in favour and the plan was accepted by five votes to four.

 

 

 

DAVE KING AND HIS STANCE

 

Last week, Dave King took the unusual step of meeting a group of supporters in Johannesburg. He confirmed that he had offered the bank Ã?£18m to take control of Rangers back in January, and had tabled an offer of Ã?£1 for Sir David Murray’s controlling shareholding. Mindful of the HMRC investigation, he wanted certain warranties agreed and structured his bid at what he felt was fair. It was rejected.

 

King, for all there has been criticism of his apparent lack of haste in making a move, gifted Rangers �£20million back in 1999. That money is gone.

 

He maintained to the supporters that he will only move in when the terms become acceptable, and not under current conditions.

 

He has funding, he has spoken with other men who are interested in helping. But not unless warranties are agreed.

 

 

 

ANDREW ELLIS’S BID

 

We revealed in March that Andrew Ellis wanted to take over Rangers in a �£33m deal. His approach was then reported to the Stock Exchange by Rangers three days later.

 

Since then, there has been little information from the Ellis camp despite numerous attempts to ask for a comment.

 

It is believed he had agreed to pay Sir David Murray �£15m for his shareholding. However, sources believe his entire approach was linked to what is known inside Ibrox as the G51 development.

 

That is the land earmarked for regeneration across from Ibrox. As we revealed last month, there is no planning permission agreed and our sources have told this paper the deal will not proceed.

 

 

 

PLAYERS’ CONTRACTS

 

Six players are out of contract, and it is unlikely any of them will stay next season. Nacho Novo has been offered a one-year deal, despite the football management requesting he was offered two.

 

The terms are unacceptable to the Spaniard. Kirk Broadfoot is in the same position. Kris Boyd’s contract offer, which was only ratified when money was cut elsewhere, is half of the cash being offered down south and he is expected to leave. Stevie Smith and DaMarcus Beasley have not been offered extensions. David Weir has an annual agreement to discuss his situation at the end of every season, although it is believed the skipper would need to accept a wage cut to stay on for another term.

 

 

 

Donald Muir's ROLE

 

Muir remains the most controversial figure at the club, and is apparently disliked by the players due to the perception that he is the man making the calls on the contracts.

 

It is believed the T-shirts the squad wore at Ibrox on Sunday night, which read: “Nae dough, two in a row” were part of a pre-planned attempt to make a public statement as to what has been going on.

 

After becoming the public target of fans’ anger through banners at matches, and surviving an attempt to vote him off the board at the AGM, Muir has attempted to meet fans’ groups, and did hold talks with several influential supporters in an attempt to clarify his position.

 

Lloyds maintain he is in place at the behest of the Murray Group and is paid by them for his expertise. Inside Ibrox, the view is different.