There is something ironic about the club that prides itself on being quintessentially British falling foul of Her Majesty’s Revenue and Customs. But events over the last few months have put the two on collision course, and there will be more to come.
The key fact is quite simple: Rangers owe money for tax they failed to pay some years back and HMRC want their money.
The total sum involved is £4.2 million. That’s £1.9 million for the original bill, £0.9 million in interest and an additional £1.4 million in penalties. Rangers do not dispute that they owe the first two sums, totalling £2.8 million, but are challenging the additional statutory penalty.
Discussions between the two parties have been going on for some time without resolution, and HMRC eventually lost patience, taking the matter to court. This first resulted in the much publicised visit to Ibrox by Sherriff Officers. They delivered a statutory notice giving Rangers 21 days to pay the amount due.
Three weeks went by and it appears that no progress was made. It now appears that HMRC went back to court and got an order to arrest a sum from Rangers’ bank account. It is not clear whether the amount is the total sum due of £4.2 million or just the uncontested amount of £2.8 million.
What does this mean to Rangers? Quite simply they cannot use the money arrested. It has to sit in their bank account until the matter is concluded, one way or another. The point of the action is to avoid a debtor simply spending its money and then claiming to be penniless.
So is there a way out of this for Rangers?
Well, the club could simply pay the total sum HMRC and the courts say it owes.
But from piecing together information that is in the public domain it seems that this may not be an option for the cash strapped club. Or, if the money is there to pay the bill, it could be that it would leave the club unable to pay the usual monthly outgoings that it must face.
Did new owner Craig Whyte gamble on European qualification to generate short term income? If he did, defeats to Malmo and Maribor blew that out of the water.
It was revealed on Friday that Rangers had sold off future profits from catering at Ibrox. Now this is the act of a business with cash flow difficulties; one which needs cash right now rather than later. There can be no other purpose to this move than to raise cash in a hurry.
If things really are as bad as they seem, then matters are likely to come to a head very soon. In addition to the money owed to HMRC, the club is being sued by its former legal advisers over an unpaid bill and its recently dismissed CEO is also seeking a large compensation payment. Are there other bills outstanding? You wouldn’t bet against it, would you?
It is looking extremely likely that some form of relief through administration will be sought sooner rather than later for Rangers. There is no other solution that appears likely – unless Craig Whyte has a plan up his sleeve.
Mind you, this is the man who promised a £15 million summer spend on transfers and failed spectacularly to deliver.
And this isn’t just a short term cash flow problem. Later this year the result of a tax tribunal into a much larger tax liability will be announced. And that could mean a bill of anywhere between £40 million and £70 million. The club would, quite simply, have no way to pay such a sum.
Not a good time to be a Rangers supporter, is it?