Tax officials blamed for the downfall of Rangers

[Walterbear 557]

Re the claim by Worthington, BDO dismissed it and they have significant legal powers to do so but this could be the sticking point in terms of court signing off as a judge can question their decision. I don’t think it’s over yet but can’t be definitive. I knew RIFC owned the stadium but want sure about the land. Have we seen land registration documents to confirm? I’m to mean to pay £15. 

[Bluedell 5,627]

5 minutes ago, Walterbear said:

. I knew RIFC owned the stadium but want sure about the land. Have we seen land registration documents to confirm? I’m to mean to pay £15. 

Yeah, it was done to death around the time that John Brown was shouting about "show me the deeds".  His own agent confirmed that he had seen all the title deeds for the stadium, the land around it and Auchenhowie….and the Albion as well..

[ian1964 10,724]

 

[RANGERRAB 3,677]

As I see things:-

 

There were 72 EBT’s with a total value of £48m between 2001-09

 

HMRC sent a tax demand for £24m which was appealed. Then HMRC added a £50m penalty.

 

seems to me it is this £50m penalty that Oldco liquidators BDO are now questioning.

 

if they’re successful then it surely means HMRC wouldn’t have been able to block the CVA. 

[Big Jaws 570]

11 hours ago, Frankie said:

Yes, as I said in my earlier post, MIH did offer to settle but, unlike what happened with Arsenal, HMRC refused and no wonder if they thought they could get the best part of £100m.

 

That was 2010 and like I said it would be interesting to know what figure MIH and HMRC were working off at that point.  For example, did HMRC say £94m then because, if so, then there's no way MIH/LBG were even going to meet them half-way so a sale was inevitable and SDM's words of the mid-noughties where he said he'd only sell to the right person were about as tangible as the other moonbeams he spraffed on about in that period.

 

Enter Whyte and Murray being 'duped'. 

 

To be clear, there's no doubt in my mind HMRC have played fast and loose here but proving it is another matter entirely.  

Let me be as clear as I possibly can. I'm not an accountant, I don't have any of the exact figures in front of me nor the links to articles/details of those figures either, I am merely basing my assumptions on what I have memory of and my own knowledge of certain tax vehicles. 

 

We know that there were 72 EBT's that held a total estimated to be £48mil. We believe that HMRC levied a bill of £24mil that MIH/RFC disputed and as a result HMRC then imposed fines and penalties to the sum of £94mil. The reasons and legality of these penalties were and indeed still are under dispute. We've also been told that Rangers, by all and sundry, were a test case and were being used to set a precedent.

 

First of all working backwards Rangers were NOT a test case as there had been a prior case also involving Arsenal, whom also crop up again after the fact, which would be considered THE precedent. MIH/RFC Murray were correct to dispute the £24mil bill as in situations where Trusts are established there are rules to govern this. Of course this has been updated since these events and also now include possible income tax rules.

 

The rules at the time which haven't changed and from experience; 

 

Trust containing dividend < £1k are taxed at 7.5% on the first £1k and thereafter taxed at 28%.

Trust containing dividend > £1k are taxed at 38.1% on the first £1k and thereafter taxed at 45%.

 

At no point in any of the subsequent calculations does the tax due ever reach 50% or above. Therefore the 50% figure as you can see is incorrect in ALL cases of dividend in trust even after the change. If we can accept that these Employment Benefit Trust vehicles were, at the time of operation, not subject to income tax then it follows that up until April 2011 they could be recovered/transferred at their previous tax rates although there was a degree of uncertainty, with regards to that, at that time.

 

This degree of uncertainty is what I believe Murray was partly disputing remember that what I am saying is valid with regards to the date where the HMRC claim is established circa 2009-11. The uncertainly aspect, as I remember, was whether or not these new rules would be retrospectively applied. Now Murray could never be accused of altruism but he is right to dispute the HMRC claim a) to allow trustees and employees to make arrangements for transfer, and b) at the time EBTs weren't subject to income tax, not until the SC ruling 2017, and even under these new rules income tax/company tax is only due when funds are 'earmarked' i.e set for withdrawal/transfer*.

 

Now I stick to my previous assertion that Murray had some idea that income tax rules might be retrospectively applied and that he was attempting to clear the debit, at the lower rate, circumventing these probable new tax rules quickly before legislation had been put in place. He NEVER refused to pay HMRC, in fact he offered £9mil plus £10mil over a number of years which IMO is much closer to the correct liability than HMRC's £24mil claim, therefore their step of applying fines and penalties was NOT only inaccurate but was also UNPRECEDENTED!

 

The argument, we [rangers supporters] have always maintained skulduggery, playing out before our very eyes is, not that the HMRC assertion that income tax was due re: the SC case, but that the outlandish figure of £94mil was a gross misrepresentation of the debit Oldco owed on the part of HMRC and that claim effectively hamstrung Oldco as toxic is not only correct but it is also an absolutely unprecedented tragedy of an overarching government body that requires nothing less than a full public enquiry. 

 

* I'm not sure if transferring 'earmarked' funds is subject to income tax/company tax as I haven't looked at them since the rules were amended.

Edited November 15, 2019 by Big Jaws
detail

[RANGERRAB 3,677]

11 hours ago, Big Jaws said:

Let me be as clear as I possibly can. I'm not an accountant, I don't have any of the exact figures in front of me nor the links to articles/details of those figures either, I am merely basing my assumptions on what I have memory of and my own knowledge of certain tax vehicles. 

 

We know that there were 72 EBT's that held a total estimated to be £48mil. We believe that HMRC levied a bill of £24mil that MIH/RFC disputed and as a result HMRC then imposed fines and penalties to the sum of £94mil. The reasons and legality of these penalties were and indeed still are under dispute. We've also been told that Rangers, by all and sundry, were a test case and were being used to set a precedent.

 

First of all working backwards Rangers were NOT a test case as there had been a prior case also involving Arsenal, whom also crop up again after the fact, which would be considered THE precedent. MIH/RFC Murray were correct to dispute the £24mil bill as in situations where Trusts are established there are rules to govern this. Of course this has been updated since these events and also now include possible income tax rules.

 

The rules at the time which haven't changed and from experience; 

 

Trust containing dividend < £1k are taxed at 7.5% on the first £1k and thereafter taxed at 28%.

Trust containing dividend > £1k are taxed at 38.1% on the first £1k and thereafter taxed at 45%.

 

At no point in any of the subsequent calculations does the tax due ever reach 50% or above. Therefore the 50% figure as you can see is incorrect in ALL cases of dividend in trust even after the change. If we can accept that these Employment Benefit Trust vehicles were, at the time of operation, not subject to income tax then it follows that up until April 2011 they could be recovered/transferred at their previous tax rates although there was a degree of uncertainty, with regards to that, at that time.

 

This degree of uncertainty is what I believe Murray was partly disputing remember that what I am saying is valid with regards to the date where the HMRC claim is established circa 2009-11. The uncertainly aspect, as I remember, was whether or not these new rules would be retrospectively applied. Now Murray could never be accused of altruism but he is right to dispute the HMRC claim a) to allow trustees and employees to make arrangements for transfer, and b) at the time EBTs weren't subject to income tax, not until the SC ruling 2017, and even under these new rules income tax/company tax is only due when funds are 'earmarked' i.e set for withdrawal/transfer*.

 

Now I stick to my previous assertion that Murray had some idea that income tax rules might be retrospectively applied and that he was attempting to clear the debit, at the lower rate, circumventing these probable new tax rules quickly before legislation had been put in place. He NEVER refused to pay HMRC, in fact he offered £9mil plus £10mil over a number of years which IMO is much closer to the correct liability than HMRC's £24mil claim, therefore their step of applying fines and penalties was NOT only inaccurate but was also UNPRECEDENTED!

 

The argument, we [rangers supporters] have always maintained skulduggery, playing out before our very eyes is, not that the HMRC assertion that income tax was due re: the SC case, but that the outlandish figure of £94mil was a gross misrepresentation of the debit Oldco owed on the part of HMRC and that claim effectively hamstrung Oldco as toxic is not only correct but it is also an absolutely unprecedented tragedy of an overarching government body that requires nothing less than a full public enquiry. 

 

* I'm not sure if transferring 'earmarked' funds is subject to income tax/company tax as I haven't looked at them since the rules were amended.

As well as the BTC , doesn’t the £94m include the wee tax case & Whyte’s   non-payment of income tax /NI?

[RANGERRAB 3,677]

I’d always thought HMRC expected to lose the BTC but they won it (in the end).

 

Now we’re seeing oldco liquidators BDO trying  to reduce the amount owed and are questioning much of HMRC’s conduct throughout the BTC

 

I suspect they’ll also be asking why Whyte was allowed to avoid paying income tax/NI for almost 6 months 

 

 

 

 

[pete 2,499]

48 minutes ago, RANGERRAB said:

I’d always thought HMRC expected to lose the BTC but they won it (in the end).

 

Now we’re seeing oldco liquidators BDO trying  to reduce the amount owed and are questioning much of HMRC’s conduct throughout the BTC

 

I suspect they’ll also be asking why Whyte was allowed to avoid paying income tax/NI for almost 6 months 

 

 

 

 

In the court case the letter of the law didn't matter to the judge it was common sense tax had to be paid. in the court case against Sport Direct it is the letter of the law that counts. Common sense that it was a stitch-up has gone out the window.

[der Berliner 3,747]

The BTC rubbish was in full swing long before SDM sold us to Whyte.

 

Why is it that BDO are seemingly successful here and OldCo failed or never tried?  To argue this is because HMRC now agrees that they will possibly not get the full amount anyway is one way of explaining it. But after spending millions to go to the virtually very last possible court they now also accept less money? Did anyone ever attempt a Freedom of Information inquest about how much money HMRC had to pay here?

 

Thing is, the Times would most likely have not burned their fingers with this without some fire behind the smoke. But where their info comes from and how valid it is remains to be seen.

[Redwhite+blue 1]

On 15/11/2019 at 17:39, RANGERRAB said:

As I see things:-

 

There were 72 EBT’s with a total value of £48m between 2001-09

 

HMRC sent a tax demand for £24m which was appealed. Then HMRC added a £50m penalty.

 

seems to me it is this £50m penalty that Oldco liquidators BDO are now questioning.

 

if they’re successful then it surely means HMRC wouldn’t have been able to block the CVA. 

Had a look at administrators proposals: 

 

So HMRC were included in the proposal for 14 million. This did not take into account the small and large (ebt) tax cases. The 14 million works out at more than 25% of the total creditors claims in the proposals. A CVA wouldn't have passed even without determining the ebt liability as HMRC would not have voted in favour it.

 

Another reason why a CVA wouldn't have been possible is the shareholders would have had to transfer their shares to the purchaser. Politics involved this wouldn't have happened.

 

A CVA rescues the company as a going concern, the book value of the freehold properties in the last set of accounts was £109 million. On that basis the going concern value would have been extremely high, who was really going to purchase it on a going concern valuation.

 

However, the breakup value/forced sale value undertaken by administrators was around 4 million if I remember right.