Generic Sevco / Rangers meltdown thread

[CropleyWasGod]

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Not a good result for justice and fair play. You can bet the ex Rangers FC 1872-2012 (rip) players and office bearers won't have to pay back the loans and will have clauses inserted in their dodgy deals, and the dual contracts will be shelved.

How do you arrive at that conclusion?

If they had such clauses in the loan agreements, then they wouldn't be classed as loans. That is what the FTT has been deliberating this past two years.

[TheEastTerrace]

Whatever happens, Scottish football has permanently been disfigured by this episode.

Gutted is the wrong adjective but safe to say that it's going to be hard to stomach the club and their fans for the forseeable future.

[JeMeSouviens]

A potentially significant section?:

161. Side-letters, of course, had not been registered with the football authorities, the SFA and SPL. The spirit of their rules was that the whole contract terms should be registered. Suspiciously, no evidence was led as to who decided that the benefits in terms of the side-letters should not be registered. Non-registration of side-letters was
40 incompatible with both authorities’ policing and disciplinary powers. For example any fines imposed on players would customarily reflect the disclosed wage. Non- disclosure would thwart the authorities’ powers.
162. Mr Grey had indicated correctly that payments from promotional and other
commercial bodies need not be registered, but the side-letter payments, Mr Thomson 45 argued, were not from such a third party but from the Club and for playing football.
38
The Rules required the widest declaration of benefits, he submitted. It seemed that Mr Grey was unaware of the trust being used for “appearance money”, he observed.
163. On any view, Mr Thomson argued, Rangers could have sought a ruling from
the SFA or SPL about disclosure of side-letters but, clearly, they had chosen not to do 5 so. There was a conscious decision to conceal their existence, and that extended even to the Club’s auditors. The nature and arrangements under the Remuneration Trust had not been disclosed in full to the auditors. In the “key issues document” for 2004 they indicate that they have not reviewed the Trust’s operation and receipts in detail. Mr Thomson noted in particular payments made relating to Mr Purple’s contract in 10 relation to disclosure. Significantly, while Rangers granted numerous indemnities in respect of players’ potential tax liabilities, these documents did not refer expressly to
side-letters, Mr Thomson added.

[CropleyWasGod]

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A potentially significant section?:

Could be very damaging, if they are talking about payments that were ultimately deemed to be earnings rather than loans.

[ballengeich]

Given what was in public I'm surprised by the verdict. Could we see court cases where HMRC try to recover 100% of loans from ex-players while these ex-players argue that the EBT money was contractual despite the FTTT verdict so only liable to 40% tax?

I had a brief look at a few pages on RM. The usual triumphalism and vitriol. Predictably lacking was any sign of concern about their former heroes who're likely to find very large tax demands in the mail some day. Perhaps Sportsound will ask Billy Dodds when he plans to repay his loan.

[CropleyWasGod]

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Given what was in public I'm surprised by the verdict. Could we see court cases where HMRC try to recover 100% of loans from ex-players while these ex-players argue that the EBT money was contractual despite the FTTT verdict so only liable to 40% tax?

I had a brief look at a few pages on RM. The usual triumphalism and vitriol. Predictably lacking was any sign of concern about their former heroes who're likely to find very large tax demands in the mail some day. Perhaps Sportsound will ask Billy Dodds when he plans to repay his loan.

It's not up to HMRC to try and recover the loans. The loans were from the trust(s), and so the Trustees will have to do it.

Good luck with that, though .... there will, as you say, be many Court cases.

You raise an interesting point about the 100% vs 40%. Indeed, if the recipients claim the latter, they might be liable for interest and penalties on the tax that should have been paid years ago......

[ballengeich]

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It's not up to HMRC to try and recover the loans. The loans were from the trust(s), and so the Trustees will have to do it.

Is the trust a part of the liquidated company? If not, can the trustees simply continue the present arrangement that no money will be recovered during the recipient's lifetime? What could HMRC do?

[CropleyWasGod]

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Is the trust a part of the liquidated company? If not, can the trustees simply continue the present arrangement that no money will be recovered during the recipient's lifetime? What could HMRC do?

The trust is separate.

This is where my lack of Trust tax law shows its ugly head. I know that, in a Limited Company situation, where a loan to a "participator" is written off or remains unpaid for more than 9 months, HMRC deem that to be a taxable advance. They then recover the tax from the company.

I don't know if that applies in a Trust situation, though. Indeed, it's likely that the Trust(s) won't have any cash anyway, so it would be a futile exercise. Having said that, they were never going to get much cash out of OldHun anyway; it was more about the principle.

HMRC have the option of an appeal, of course. I think they will consider that as their first step. If that fails, you may see them issuing tax assessments on all of those who haven't repaid the loans. That would twist Dodds' melon

[CropleyWasGod]

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Whatever happens, Scottish football has permanently been disfigured by this episode.

Gutted is the wrong adjective but safe to say that it's going to be hard to stomach the club and their fans for the forseeable future.

I'm not sure why you're gutted (or whatever adjective you decide to use) . It was never going to affect the new club. Any feeling of triumphalism amongst the hordes is misguided and, indeed, may be short-lived. The double-contracts have still to be investigated, and that was always going to be more important for the new club.

[VickMackie]

CWG, if the trust doesn't call in the loan will the loan need to be repaid upon death and be counted in their assets and liabilities?

[VickMackie]

Am I the only one who finds it hilarious that the BTC figure was used in the liabilities total that gave HMRC 75%+ of the total debt and used it to force them into liquidation?

[TheEastTerrace]

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I'm not sure why you're gutted (or whatever adjective you decide to use) . It was never going to affect the new club. Any feeling of triumphalism amongst the hordes is misguided and, indeed, may be short-lived. The double-contracts have still to be investigated, and that was always going to be more important for the new club.

Yep fully aware that the contract issue remains.

Gutted (or whatever) because I've been sparring in online debates with a current bun mate of mine since this kicked off! If the joy is short lived, tomorrow is a new day haha

[ballengeich]

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Am I the only one who finds it hilarious that the BTC figure was used in the liabilities total that gave HMRC 75%+ of the total debt and used it to force them into liquidation?

I think that the small tax case and the withheld PAYE and VAT gave HMRC the 25% they needed to block the cva regardless.

[VickMackie]

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I think that the small tax case and the withheld PAYE and VAT gave HMRC the 25% they needed to block the cva regardless.

Aw well. Cheers

[EuanH78]

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Suppose the good thing is that no-one would touch Rangers whilst the Big Tax Case was outstanding. There is every likelihood that they could have been saved rather than sold to Whytie. Shame eh!

****in hilarious by my reckoning

[ballengeich]

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The trust is separate.

This is where my lack of Trust tax law shows its ugly head. I know that, in a Limited Company situation, where a loan to a "participator" is written off or remains unpaid for more than 9 months, HMRC deem that to be a taxable advance. They then recover the tax from the company.

I don't know if that applies in a Trust situation, though. Indeed, it's likely that the Trust(s) won't have any cash anyway, so it would be a futile exercise. Having said that, they were never going to get much cash out of OldHun anyway; it was more about the principle.

HMRC have the option of an appeal, of course. I think they will consider that as their first step. If that fails, you may see them issuing tax assessments on all of those who haven't repaid the loans. That would twist Dodds' melon

Neil Patey of Ernst & Young on Sportsound just now has given an opinion that there's no way for HMRC to get anything out of the trust or people it's shelled out to. Dodds is safe

[Part/Time Supporter]

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Neil Patey of Ernst & Young on Sportsound just now has given an opinion that there's no way for HMRC to get anything out of the trust or people it's shelled out to. Dodds is safe

Same Neil Patey who said that HMRC would vote for the CVA proposal.

[hibs0666]

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I'm not sure why you're gutted (or whatever adjective you decide to use) . It was never going to affect the new club. Any feeling of triumphalism amongst the hordes is misguided and, indeed, may be short-lived. The double-contracts have still to be investigated, and that was always going to be more important for the new club.

I think that the dual contract situation is now a given. If the tax authorities have determined that EBT payments were loans then these payments can hardly be considered by the SPL to be a contractual payment.

[CropleyWasGod]

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I think that the dual contract situation is now a given. If the tax authorities have determined that EBT payments were loans then these payments can hardly be considered by the SPL to be a contractual payment.

They didn't determine that they were all loans. Some were deemed to be taxable . It's not clear which these are....and that will be important for the SPL .

See also JMS post above

[Spike Mandela]

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Neil Patey of Ernst & Young on Sportsound just now has given an opinion that there's no way for HMRC to get anything out of the trust or people it's shelled out to. Dodds is safe

Surely the liquidators will take an interest in this trust and it's 'loans'.

[LeighLoyal]

This bit 100% confirms the illegal, from a football association point of view, side letters. So they are still going to be stripped, oldco that is, of the tainted titles.




Rangers Tax Result Para 161 p38:

Side-letters, of course, had not been registered with the football authorities, the SFA and SPL. The spirit of their rules was that the whole contract terms should be registered. Suspiciously, no evidence was led as to who decided that the benefits in terms of the side-letters should not be registered. Non-registration of side-letters was incompatible with both authorities’ policing and disciplinary powers. For example any fines imposed on players would customarily reflect the disclosed wage. Non- disclosure would thwart the authorities’ powers.

[matty_f]

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This bit 100% confirms the illegal, from a football association point of view, side letters. So they are still going to be stripped, oldco that is, of the tainted titles.


Rangers Tax Result Para 161 p38:

Side-letters, of course, had not been registered with the football authorities, the SFA and SPL. The spirit of their rules was that the whole contract terms should be registered. Suspiciously, no evidence was led as to who decided that the benefits in terms of the side-letters should not be registered. Non-registration of side-letters was incompatible with both authorities’ policing and disciplinary powers. For example any fines imposed on players would customarily reflect the disclosed wage. Non- disclosure would thwart the authorities’ powers.

Nae luck zombies!

[EuanH78]

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This bit 100% confirms the illegal, from a football association point of view, side letters. So they are still going to be stripped, oldco that is, of the tainted titles.




Rangers Tax Result Para 161 p38:

Side-letters, of course, had not been registered with the football authorities, the SFA and SPL. The spirit of their rules was that the whole contract terms should be registered. Suspiciously, no evidence was led as to who decided that the benefits in terms of the side-letters should not be registered. Non-registration of side-letters was incompatible with both authorities’ policing and disciplinary powers. For example any fines imposed on players would customarily reflect the disclosed wage. Non- disclosure would thwart the authorities’ powers.

Whilst I agree with you, playing devils advocate here - this ruling does not give any obligation to the SPL's ruling. I would strongly suspect that they would (as they said) be taking the lead from this, but Doncaster is a slimey little basturd.

[Eyrie]

Is it worth remembering what happened with John Terry?

Although cleared in a court of law, he was still banned by the FA. Could the SPL take a similar approach and say that there is enough evidence for a conviction under their rules regarding dual contracts even if no tax is due?

[LeighLoyal]

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Whilst I agree with you, playing devils advocate here - this ruling does not give any obligation to the SPL's ruling. I would strongly suspect that they would (as they said) be taking the lead from this, but Doncaster is a slimey little basturd.

I wouldn't put anything past zombie helpers Regan or Doncaster, you are correct, but it isn't their call. It's meant to be an independent tribunal. Surely they have to get on with it and apply the sanctions on oldco.

[Crazyhorse]

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Is it worth remembering what happened with John Terry?

Although cleared in a court of law, he was still banned by the FA. Could the SPL take a similar approach and say that there is enough evidence for a conviction under their rules regarding dual contracts even if no tax is due?

Let us hope so. But of course McCoist, Green etc will demand to know the names of the people who make this decision so that their loyal(ist) fans can terrorise them.

[CropleyWasGod]

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This bit 100% confirms the illegal, from a football association point of view, side letters. So they are still going to be stripped, oldco that is, of the tainted titles.




Rangers Tax Result Para 161 p38:

Side-letters, of course, had not been registered with the football authorities, the SFA and SPL. The spirit of their rules was that the whole contract terms should be registered. Suspiciously, no evidence was led as to who decided that the benefits in terms of the side-letters should not be registered. Non-registration of side-letters was incompatible with both authorities’ policing and disciplinary powers. For example any fines imposed on players would customarily reflect the disclosed wage. Non- disclosure would thwart the authorities’ powers.

That, for me, doesn't prove anything.

If the side-letters refer to payments that were deemed by the FTT to be loans, then there is no problem.All that is required to be lodged with the SPL/SFA is the contract that sets out the player's wages. They are not interested in anything else.

If, however, they refer to those payments that were deemed to be wages, then there is a problem.

[banchoryhibs]

This is only a First Tier tribunal decision and the BBC reports HMRC saying: "We are disappointed that we have lost this stage of the court process and we are considering an appeal. The decision was not unanimous..."

I expect that there will be many other companies with similar schemes so perhaps HMRC will not be able to leave matters as they are. If there is an appeal it goes to a Second Tier Tribunal where the result could be completely overturned. There are then further avenues of appeal so this may run and run .....

If I supported deadhun I would not get overly excited just yet.

[CropleyWasGod]

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This is only a First Tier tribunal decision and the BBC reports HMRC saying: "We are disappointed that we have lost this stage of the court process and we are considering an appeal. The decision was not unanimous..."

I expect that there will be many other companies with similar schemes so perhaps HMRC will not be able to leave matters as they are. If there is an appeal it goes to a Second Tier Tribunal where the result could be completely overturned. There are then further avenues of appeal so this may run and run .....

If I supported deadhun I would not get overly excited just yet.

If you supported DeadHun, you'd be having a boring old season, eh no?

Actually, Hector was asked if he would appeal, and he was heard to mumble..... "Too right.....Chucky Ar La!!!"


(our day will come)

[banchoryhibs]

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If you supported DeadHun, you'd be having a boring old season, eh no?

I'd also be doing my nut at this decision and greeting about how HMRC royally shafted the loyal ones Entertaining times