Generic Sevco / Rangers meltdown thread

[Offside Trap]

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The loans weren't from the company, though. They were from the Trusts. In that light, BDO have no power to recall them. As I understand the set-up, the loans are only repayable to the Trusts when the recipient wants to repay it, or when they die.

On your last point, there is new legislation proposed which would prevent that.

Yip agreed that BDO will have no power over the Trustees to influence repayment of the loans. However the Finance Bill 2017 is retrospective and I cannot see how there can be any escape from the Disguised Remuneration charge which will arise on the outstanding loans in April 2019. In "normal" circumstances HMRC will hold the employer as responsible for settling the PAYE and NIC amount due in April 2019 (as they do for normal month to month PAYE and NIC). It is then up to the employer to obtain that PAYE and NIC from the employee (loan beneficiary). In other words, the employee (beneficiary) rather than employer is ultimately liable for the PAYE and NIC.

In the case of RFC, there is no longer an employer, so I would think that HMRC will go straight after the beneficiaries (the ex players and management of RFC) for settlement. In simple terms, a PAYE and NIC charge of 47% (using current rates) of the value of the outstanding loan should apply. All that BDO should be concerned with from a creditors perspective is the 13.8% employer's NIC - which is the "true" oldco liability they dodged?

[Ozyhibby]

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From their view though, they have a set of corporate tax lawyers who were telling them they were OK. And two courts (until yesterday) agreed with them...I can't comment on the "two contracts" point mentioned elsewhere- as I don't know that detail..but I sort of recall you come from an accounting background - you will perhaps then acknowledge that as tax handling gets more complex it is often hard to get definitive views - even from the HMRC. Sometimes, you need to go with there advice you are getting and take the risk. Banks and Corporate Tax experts told them they were OK...On this occasion it has come up heads, when they bet tails...

Nobody advised them to conceal documents from HMRC and the SFA. They did that because they knew they were cheating. They produced not a single piece of advice they recorded during the whole case. They did this entirely of their own accord.


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[bigwheel]

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They had a guy who was struck off as a solicitor in 2007 for conflicts of interest. That was it.

I'm not sure whether they sought a second opinion (people rarely do, but it would make sense to), or to what extent they shopped-around. However, as has been said, they didn't take his advice fully, in that they recorded the arrangements by way of the side-letters. So, in short, they were okay, but they didn't do it the way they were told to.

My instinct in taking this sort of advice is to make sure that the adviser has adequate Indemnity Insurance, so that you can sue the hell out of them if things go wrong.

that approach is fraught with time, cost and risk that can take a companies attention for years - particularly if the advisors are large advisory businesses..

My understanding is that they had a range of advisors, some internal and some external - they certainly took an aggressive approach to minimise the tax liabilities of their employees that's for sure...

[bigwheel]

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Nobody advised them to conceal documents from HMRC and the SFA. They did that because they knew they were cheating. They produced not a single piece of advice they recorded during the whole case. They did this entirely of their own accord.


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don't know anything on the first point...so will bow to your knowledge on that one..

people don't do these more complex trusts on their own...they will have been facilitated by corporate and tax accountants through the process..

[CropleyWasGod]

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Yip agreed that BDO will have no power over the Trustees to influence repayment of the loans. However the Finance Bill 2017 is retrospective and I cannot see how there can be any escape from the Disguised Remuneration charge which will arise on the outstanding loans in April 2019. In "normal" circumstances HMRC will hold the employer as responsible for settling the PAYE and NIC amount due in April 2019 (as they do for normal month to month PAYE and NIC). It is then up to the employer to obtain that PAYE and NIC from the employee (loan beneficiary). In other words, the employee (beneficiary) rather than employer is ultimately liable for the PAYE and NIC.

In the case of RFC, there is no longer an employer, so I would think that HMRC will go straight after the beneficiaries (the ex players and management of RFC) for settlement. In simple terms, a PAYE and NIC charge of 47% (using current rates) of the value of the outstanding loan should apply. All that BDO should be concerned with from a creditors perspective is the 13.8% employer's NIC - which is the "true" oldco liability they dodged?

HMRC have already made their claim to BDO for the full amount of the assessed PAYE & NI, and that is what is now confirmed. They won't change that.

On the enforcement of the new draft proposals, this is what is on Deloitte's website:-

The retrospective move against historic third party loans made to current or former employees before 9 December 2010 was unexpected and is likely to be difficult to enforce.

In other words, any such move by HMRC will probably end up in more Court cases.

[CropleyWasGod]

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that approach is fraught with time, cost and risk that can take a companies attention for years - particularly if the advisors are large advisory businesses..

My understanding is that they had a range of advisors, some internal and some external - they certainly took an aggressive approach to minimise the tax liabilities of their employees that's for sure...

Who were they? The only one mentioned thus far has been Baxendale-Walker.

[InchHibby]

I'm not too clever regarding the ins and outs of whether it was legal or illegal, but too the layman like me, the prime motive for payments such as these were to avoid paying income tax and if two clubs were after me, both offering, say £100,000, one where it would be eligible for tax and one that wouldn't, I know which one I'd go for. So The The Rangers knew this and they also knew that by doing it this way, it would give them a better chance of acquiring that player.
In other words they cheated.

[Ozyhibby]

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Who were they? The only one mentioned thus far has been Baxendale-Walker.

If they had any advice they refused to share it with anyone so far. And Baxendale walker has already said that he told them not to have 2nd contracts.


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[FilipinoHibs]

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I'm not too clever regarding the ins and outs of whether it was legal or illegal, but too the layman like me, the prime motive for payments such as these were to avoid paying income tax and if two clubs were after me, both offering, say £100,000, one where it would be eligible for tax and one that wouldn't, I know which one I'd go for. So The The Rangers knew this and they also knew that by doing it this way, it would give them a better chance of acquiring that player.
In other words they cheated.

A player is looking for £40,000 a week in his hand. Pay him through PAYE and you have to pay him £66,666 a week. Through EBTs £40,000. You can afford £40,000 a week but not £66,666. Using EBTs you have a player you could not afford and cheat society by not paying taxes.

[bigwheel]

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Who were they? The only one mentioned thus far has been Baxendale-Walker.

they had a specific director at the time that came from a commercial background that was tasked with exploring it, and they were also using an Edinburgh firm (long time Murray associates) for informal advice...

[Offside Trap]

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HMRC have already made their claim to BDO for the full amount of the assessed PAYE & NI, and that is what is now confirmed. They won't change that.

On the enforcement of the new draft proposals, this is what is on Deloitte's website:-

The retrospective move against historic third party loans made to current or former employees before 9 December 2010 was unexpected and is likely to be difficult to enforce.

In other words, any such move by HMRC will probably end up in more Court cases.

I guess we get into a question of the interplay here between the liquidation process and the Finance Bill 2017. Put it this way, why would HMRC be prepared to accept a fraction of the pound in the liquidation process when they can exercise their likely powers under the Finance Bill 2017 in April 2019 to go after the individuals for the full amount of PAYE and NIC owed? The loans will remain outstanding at that point so fall squarely into the DR charge. Also unlikely to escape HMRC's attention that the individuals concerned are High Net Worth...

Deloitte's assertion of difficulty to enforce might be true but I don't believe it will stop HMRC. If I were one of the RFC EBT beneficiaries I would be more than a little concerned. Yesterday's ruling only serves to strengthen the HMRC hand.

[GreenPJ]

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I'm not too clever regarding the ins and outs of whether it was legal or illegal, but too the layman like me, the prime motive for payments such as these were to avoid paying income tax and if two clubs were after me, both offering, say £100,000, one where it would be eligible for tax and one that wouldn't, I know which one I'd go for. So The The Rangers knew this and they also knew that by doing it this way, it would give them a better chance of acquiring that player.
In other words they cheated.

But my understanding is they weren't the only ones. Other clubs including Celtic, not sure about other Scottish clubs, did it but they took the opportunity of a deal with HMRC previously, Rangers didn't. The issue is if everyone realistically who would win the league was doing it then how was their an unfair advantage.

[CropleyWasGod]

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A player is looking for £40,000 a week in his hand. Pay him through PAYE and you have to pay him £66,666 a week. Through EBTs £40,000. You can afford £40,000 a week but not £66,666. Using EBTs you have a player you could not afford and cheat society by not paying taxes.

It's nearer £75k, with Employers NI on top.

[FilipinoHibs]

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It's nearer £75k, with Employers NI on top.

And employees NI too.

[lapsedhibee]

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But my understanding is they weren't the only ones. Other clubs including Celtic, not sure about other Scottish clubs, did it but they took the opportunity of a deal with HMRC previously, Rangers didn't. The issue is if everyone realistically who would win the league was doing it then how was their an unfair advantage.

You could say the same about Lance Armstrong. He shirley wasn't the only one doping but he explicitly contravened the rules of his sport while he won titles. Similarly, the old thes contravened the rules of their sport (by doing the side-letters thing) while they won titles. Off with their heads/stars/whatevs!

[CropleyWasGod]

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I guess we get into a question of the interplay here between the liquidation process and the Finance Bill 2017. Put it this way, why would HMRC be prepared to accept a fraction of the pound in the liquidation process when they can exercise their likely powers under the Finance Bill 2017 in April 2019 to go after the individuals for the full amount of PAYE and NIC owed? The loans will remain outstanding at that point so fall squarely into the DR charge. Also unlikely to escape HMRC's attention that the individuals concerned are High Net Worth...

Deloitte's assertion of difficulty to enforce might be true but I don't believe it will stop HMRC. If I were one of the RFC EBT beneficiaries I would be more than a little concerned. Yesterday's ruling only serves to strengthen the HMRC hand.

As has been said a few times, this case is not about HMRC recovering money. It's about establishing a principle.

They have already set their stall out by making a claim in the liquidation. As I understand the Finance Bill proposals (and, of course, they're not law yet, and will take time to fully understand), any attempt to recover tax and NI from recipients is mitigated by any settlement already made. I would expect that Barry Ferguson's lawyers will be taking the line that "it's already been the subject of a settlement..."

Anyways, this is all academic. The Daily Record has already told us who's due what.

[CropleyWasGod]

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And employees NI too.

The £75k includes Employees NI.

You take off the tax and Employees NI to arrive at the £40k.

[Ozyhibby]

Dundee Utd fans group to release a response. We don't really have a group that speaks for us do we?


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[bigwheel]

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... but no "specialists" like B-W?

I know that Murray used his personal corporate tax advisors ...informally - seems he has protected them throughout this process

[JeMeSouviens]

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But my understanding is they weren't the only ones. Other clubs including Celtic, not sure about other Scottish clubs, did it but they took the opportunity of a deal with HMRC previously, Rangers didn't. The issue is if everyone realistically who would win the league was doing it then how was their an unfair advantage.

Celtic had 1 ebt recipient (Juninho) but there was no side contract, the payment was disclosed to the sfa and the revenue and they then paid the tax when told it was due.

As far as I know, no other Scottish club had anything to do with them (although Vlad had other allegedly nefarious schemes in play over at the PBS).

[CropleyWasGod]

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I know that Murray used his personal corporate tax advisors ...informally - seems he has protected them throughout this process

Ok, thanks.

I hope they've got PII in place.

[Robinho08]

Livingston were hit with a five-point deduction and £10,000 fine for non-payment of tax back in 2014. The Oldco Buns should definitely be stripped of their titles during that tax dodging era.

[CentreLine]

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From their view though, they have a set of corporate tax lawyers who were telling them they were OK. And two courts (until yesterday) agreed with them...I can't comment on the "two contracts" point mentioned elsewhere- as I don't know that detail..but I sort of recall you come from an accounting background - you will perhaps then acknowledge that as tax handling gets more complex it is often hard to get definitive views - even from the HMRC. Sometimes, you need to go with there advice you are getting and take the risk. Banks and Corporate Tax experts told them they were OK...On this occasion it has come up heads, when they bet tails...

One court agreed with them by a majority decision two from three judges. The next court decided they were guilty unanimously, hence the appeal by BDO. Yesterday's judgement was the Supreme Court verdict on that appeal. Unanimous by five judges. So out of 11 judges only two thought they were innocent of the charge. That's fairly conclusive.

[lord bunberry]

Two fans groups now making statements. It seems to be building the same way as when they were trying to shoehorn the tribute act straight back into the top division. This will snowball from here and fan pressure will be what makes the spfl take some sort of action.
Bring it on, the fun is only just starting.

[MichaelTheCelt]

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Dundee Utd fans group to release a response. We don't really have a group that speaks for us do we?


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Hibees bounce posted this on twitter

https://twitter.com/HibeesBounce/sta...16887846293505 (sorry dunno how to embed tweets)

And I see they are discussing it on their forum.

All of us that coughed up our hard earned dough to watch Hibs did so not knowing the competition we were paying to watch our club participate in was rigged. Us the fans were cheated with this lot of charlatans.

Rangers FC who died now need to have all trophies removed from the history books.

Regan at the SFA and Doncaster at the SPFL need to go.

Celtic FC have put out a very good media release with regards to this.

Hibs must do likewise.

http://www.hibeesbounce.com/showthre...-Hibs-Response

Please excuse my possible ignorance on this not sure if they represent Hibs fans in any way shape or form if they have sway with the club or whatever but thought I'd share anyway.

[ancient hibee]

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One court agreed with them by a majority decision two from three judges. The next court decided they were guilty unanimously, hence the appeal by BDO. Yesterday's judgement was the Supreme Court verdict on that appeal. Unanimous by five judges. So out of 11 judges only two thought they were innocent of the charge. That's fairly conclusive.

Not quite right.There was a second tax tribunal which also found for Rangers.Interesting that it was judges,often described as out of touch,who took what most of us would think was the common sense view.

[Deansy]

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Ah, I get you.

Like I say, though, he is correct in what he says. The "contributions" were not earnings. But he's deflecting.

The follow-up question should be "but, SDM, it's not the contributions TO the trusts that are the issue here. Would you now agree with the Court that the payments BY the trusts are earnings?"

Cheers Mate - as I thought, Murray was more or less just 'Playing with words'. Again, another example of our 'media's complete and utter 'Dereliction of duty' !

[Eyrie]

So if there's not enough money in the Huns RIP pot to satisfy the tax man, can HMRC go after the guys who actually took the money to get the balance of the unpaid tax?

[OxoHibby]

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So if there's not enough money in the Huns RIP pot to satisfy the tax man, can HMRC go after the guys who actually took the money to get the balance of the unpaid tax?

I have never understood why this hasn't happened. I know contractors in my line of work who were using ebts and are being personally being chased by hmrc and some in danger of losing their houses. Why haven't hmrc gone after the players who benefitted from avoiding tax?

[CropleyWasGod]

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I have never understood why this hasn't happened. I know contractors in my line of work who were using ebts and are being personally being chased by hmrc and some in danger of losing their houses. Why haven't hmrc gone after the players who benefitted from avoiding tax?

Obviously, I don't know the details of the contractors you're talking about. But I'm guessing that they are among those who have gone down the Limited Company route. If that's the case, they are both employer and employee in the EBT scenario, which is different to RFC.

Without getting too technical about things, HMRC will probably have treated the EBT payments as "distributions" , which in turn will affect the individual's personal tax. That would be a reason for their being chased personally.

As for the RFC case, none of us can know that the recipients AREN'T being chased.... except for the Record, of course, which has it all sussed today...we can only speculate.

Again, though...and I'm a stuck record here...this case isn't about the money, it's about the tens of millions that can now be hoovered up from other clubs and companies.

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