Well, this is a turn up for the books.
After a lengthy delay, the First Tier Tax Tribunal that sat to consider the former football club’s use of Employee Benefit Trusts has issued its verdict. And the club has won on a 2 – 1 majority decision.
The full document issued runs to well over 100 pages and is written in the kind of legal and tax jargon that few of us fully understand. The names of those giving evidence have also been changed, giving a comic look as we read of Mr Magenta and Mr Scarlett. And two very different interpretations of the evidence and the law are contained within the document.
But the bottom line is that the decision has gone the former Rangers’ way.
Now, a few words for the many fans of the football club in liquidate who have visited this blog over the last couple of days. My policy is not to delete comments that disagree with me. I like a bit of debate. But I do delete those with bad language and sectarian epithets, so most of that time Follow Follow readers spent here is for nothing.
(Just to clear up a few matters for you. I’m an atheist not a Roman Catholic. I went to a non denominational school, not an RC one. My parents are married. And I’ve never had intimate relations with a non-human animal. So now you know.)
Back to the matter in hand. What does this decision actually mean?
Well the first thing to say is that Her Majesty’s Revenue and Customs (HMRC) are considering an appeal against the decision. That would mean another hearing and a further lengthy wait for a decision.
It should also be pointed out that the decision announced does not totally clear the former Rangers. It rules that tax was due on some, but not all, of the payments made. So the tax liability will be much reduced, but will not be zero. Unfortunately no figures are included so the exact amount that is due is unknown.
So in effect the former football club now has debts that are much lower than we had thought. But it still owes far more that it will ever be able to pay and so the liquidation process that is being overseen by BDO will continue. There are no degrees of dead – this decision doesn’t make the club slightly less dead.
The other big issue relates to Lord Nimmo Smith’s delayed inquiry on behalf of the Scottish Premier League into the contractual position of players of the former club. In short, that inquiry will look at whether payments were made to players outwith the contracts lodged with the footballing authorities.
Now far from clearing the former club, the FTT ruling issued actually makes a guilty verdict more likely.
It is now confirmed that so called side letters do exist. These are letters from the Trust acting on behalf of the club to individual employees, players and managers included, confirming that they will not need to pay back the loans made to them.
It is important to remember that the tax issue and the footballing issue are separate, Even if they payments made were legal under tax law they could still fall foul of football’s regulations. A successful tax appeal does not make the Nimmo Smoth inquiry go away.
And what about those who received the loans? Well, they could find a letter from liquidators BDO in the post sometime soon asking for repayment. But, they will argue, we have letters stating that we will never have to pay the loan back. And so there may be a few more court cases to come as that legal knot is untangled.
In relation to the former football club we are left with a lot of What Ifs? What if Craig Whyte had paid his bills – would the club have survived? What if the £10.5M payment David Murray tried to negotiate with HMRC had been agreed? Could he have continued to run the club rather than selling it to Whyte for £1?
We will simply never know.
Finally, to all of those who are calling for an apology from me, here it is. I apologise for stating that the former club would lose this appeal. I got that wrong.
But this ruling is not the end of the matter. There may well be a further HMRC appeal. And even if there is not there could still be footballing consequences to come from the use of EBTs.
As always, nothing to do with the affairs of the former Rangers football club is straightforward.