Rangers’ tax case: outcomes and scenarios

My thanks again to the many great contributors to this board. It is said that politics makes for strange bedfellows and it appears that this blog has brought an unusual array of interests together. Information sharing, fact checking, and the inevitable rumour mongering is going into high-gear while as diverse a cast of characters as could be imagined collaborate on piecing together the mysteries surrounding Craig Whyte’s ownership of Rangers FC. If the enemy of my enemy is my friend, someone has managed to make a lot of enemies in a very short time.

In today’s post, I will try to stimulate some discussion on likely end-games to the tax case and what that would mean for Rangers. By definition, this cannot be anything more than informed speculation, so I welcome alternative views and scenarios from all readers.

There are three broad types of outcome from Rangers’ appeal of the assessments from HMRC:

  1. Complete win for Rangers: no payments on the assessments
  2. Complete win for HMRC: Rangers face bills of £36m immediately with £18-24m in penalties to follow
  3. Some midway point where tax is due but Rangers have managed to get the amounts reduced- let us suggest to £18m

For simplicity of analysis we will ignore possibility 3. that there would be some intermediate level bill. It would take a book to go through all of the permutations for this, but until we know more about how the tribunal has gone, we will not know how applicable this might be.

Option 1: Rangers get a complete win

Obviously, this would be great news for everyone attached to Rangers FC. Craig Whyte’s company could sell its shares which it acquired for £1 for a price anywhere between £5 and £10m. Even if the reported £700k in legal and PR costs during the takeover process are true, this would still be a tremendous return. With UK gilts yielding about 2.5% this year, any investment that could provide an APR return of over 1000% would be worth having a small stake flutter. Whyte would have the option of retaining the £18m bank debt on his own books and charging a commercial interest rate. Or it could be sold to another banker for par value (£18m). Rangers would still have to deal with the fundamental problems that lead them to the nadir in the first place: the ‘benefactor’ model for football club ownership is not sustainable. Everyone will eventually tire of pumping cash in without any prospect of a payoff. However, if Rangers were to end up with an owner who at least balances revenue and outgoings, the club would be stable and in a relatively healthy position compared with many others in Scotland and around Europe.

Option 2: HMRC have their bills for underpayment and interest of £36m confirmed, with £12-18m in penalties to follow.
I am going to discount the possibility that Craig Whyte and his partners are really so naive or so stupid that they really believe that there is no risk of this happening. (It is the perception that the new owners are trying to mislead Rangers fans that is at the heart of the growing disquiet among the club’s more sentient supporters.) Whyte’s team will have gone into this venture with their eyes open and will have a strategy for dealing with this outcome. Whether it is a smart strategy will remain to be seen, but I believe that they will have one. We can look at a few of these possible approaches to dealing with such a monumental problem:

a) Fathomless Wealth:

If Whyte and his backers are men of fathomless wealth who are willing to pay any price for the personal honour of being custodians of their beloved club, then simply paying the bills would be an option. Nothing in the available public records indicates that Whyte would have even a fraction of the wealth required to do this. If the rumours of James Mortimer’s involvement are true, does he have that kind of wealth? He will have accumulated a considerable fortune over a career at the top of the nightlife business in the West of Scotland that has spanned about 25 years. However, does he have the kind of wealth that would allow you to spend about £80m before you have even bought a single player? Are there other mystery backers? We do not know, but it seems unlikely that any group would be willing to have this amount of cash tied up to just retain control of their beloved football club. Certainly, it would not be a business decision to bail Rangers out of trouble as such an amount could never be recovered.

b) Liquidation:

As we have presented on here several times, by being assigned Rangers’ debt to the Bank of Scotland/Lloyds, Whyte’s group will have retained Lloyds’ security interest (floating charge) in Rangers’ assets. If HMRC decide to be difficult, Whyte’s only way to enforce these rights would be via liquidation of Rangers FC. Could a group of lifelong Rangers fans really do this to their club? If forced to liquidate, a receiver would sell Rangers assets to the highest bidder and pay Whyte & partners off with the proceeds. Whyte & partners would likely recover all of their £18m debt from Rangers.

c) Make A Deal:

It is known that the previous Rangers’ board made two offers to HMRC to settle the tax case. These were rejected. If Rangers are hit with bills totalling £54-60m, and no one is fronting the cash to pay them, insolvency becomes inevitable. Yet, given its unsecured creditor status, HMRC is unlikely to receive much, if anything, from the liquidation of Rangers FC. From a narrow financial perspective, HMRC should accept a settlement offer of almost anything. Whyte & partners cannot (rationally) offer much as they would find their investment marooned by having over-invested in a business that would never be able to produce a sensible return on invested capital. Balancing this impetus to settle is HMRC’s need to ‘save face’.

HMRC has in recent years faced considerable public criticism for perceived weakness in the face of large corporations disputing massive tax bills. In particular, Dave Hartnett, the Permanent Secretary for Tax, has faced public ridicule and media innuendo over claims that he “caved in” on the £6 billion tax dispute with Vodaphone and agreed a sweetheart deal for investment banking giant, Goldman Sachs. Famously labelled “Whitehall’s most wined and dined mandarin” by The Daily Telegraph last year, Hartnett was also in the firing line over the PAYE fiasco that saw many millions of tax payers face claw-backs from HMRC. These public disasters have captured a greater public mindshare than the larger number of enforcement successes.

In the face of early hints of tax troubles ahead for Rangers, the conventional wisdom amongst radio talking-heads and the man in the street was that “they will just do a deal for pennies on the pound. They always do in the end.” The widespread perception that “taxes are for little people” and previous public disasters may limit HMRC’s room for manoeuvre. In a time of fiscal difficulty for the country, anything that provides an encouragement to businessmen to engage in (yet to be declared illegal) tax avoidance schemes or conscious tax fraud in the belief that they can agree to pay a smaller amount in a decade’s time will not be good for revenue collection. Certainly within Scotland, HMRC’s credibility could be said to depend upon how the Rangers case is handled.

Assuming that Rangers’ lose their appeal of the tax assessments in their possession, Rangers’ future appears to be in the hands of Whitehall mandarins. The continuity of the football club incorporated in 1873 would depend on whether HMRC looks at the low probability of receiving much from Rangers or agrees to accept whatever crumbs Whyte and his friends decide to throw its way. If HMRC feel that a deal could damage the public sense that it is best to pay to taxes, in-full and on-time, the public display of the metaphorical corpse of The Rangers Football Club plc could follow swiftly thereafter.

About rangerstaxcase
I have information on Rangers' tax case, and I will use this blog to provide the details of what Rangers FC have done, why it was illegal, and what the implications are for one of the largest football clubs in Britain.

242 Responses to Rangers’ tax case: outcomes and scenarios

  1. Diffo says:

    I have been following this excellent website since inception and cannot thank RTC enough for helping bring this to the fore and trying to explain in lay mans terms the details as known by him and guessed by others.
    Assuming I have got the gist of this correct; CW buys the debt from lloyds for £18m (for arguments sake). Rangers lose the tax case and HMRC play hardball and force rangers into liquidation.
    As CW is the preferred creditor, providing rangers or rangers assets are sold for more than £18m, then CW makes a profit on his investment. As the people backing CW are presumably charging interest on the sum (debt could still be with lloyds but now assigned to CW/Wavetower) or will be looking for a return on their investment, it actually makes sense for rangers to lose the tax tribunal (in CW’s eyes anyway) and get it over with quickly to avoid the accumulation of further interest charges. If £18m cannot be realised by the sales of rangers assets, I assume, CW gets to keeps the lot as he is the preferred creditor.
    If in fact I have summarised correctly and if CW is not a diehard rangers fan, I frankly cannot see any other outcome working in his favour.

  2. KevMc says:

    Brendan says:

    04/06/2011 at 6:26 pm

    No doubt true but is Wavetowers position advanced by selling the family silver ? I realise that most transfer deals are not cash up front so is it possible to tie the terms to the new rangers ie Wavetower or does this cause Tevez like registration issues /

    Wavetower no longer exists. It’s gone. It’s disappeared into the ether. It has transmogrified into “The Rangers FC Group Limited”. It get’s even more absurd that TRFCGLtd owns RFCPLC. HMRC are going to get shafted by RFCPLC, who will cease to exist when HMRC present the bill, because TRFCGLtd will point the finger at RFCPLC as being the culprits for the tax dodging that has been going on. Don’t be surprised if there is an amalgamation announced on Monday. The amalgamation of RFCPLC and TRFCGLtd to create yet another company called “………………………..” fill in the blanks.

  3. Lord Wobbly says:

    The Tyrell Corporation?

  4. droid says:

    The GIRUYFC Ltd?

  5. sligobhoy says:

    Please explain the significance of the MGO5s form lodged with Companies House.From discussions elsewhere,it would appear that HBOS still have security over season ticket revenue until 2014/15?
    What is going on?

  6. Adam says:

    There is a small chance i could be wrong, but methinks that is made up rubbish. lol

  7. Boab says:

    I have to go with you on this one, Adam.

    Sound like bunkum to me.

  8. Adam says:

    By the way Boab, in the main, i think we agree on the HMRC thing as in the likelihood of any schedule may be miniscule and would be of such a scale as to not make a difference(if the penalty was of such a high value), we just have a difference of opinion on the “potential of offer” and how it would come about.

  9. Mark Dickson says:

    why would HMRC cut a favourable repayment deal with a massive tax avoider like Rangers Football Club? Look at Farseley Celtic, Wrexham, Sheffield Wednesday, Portsmouth, Falkirk and numerous others for examples of the ultra hardline HMRC are taking with football clubs in tax arrears, liquidation and winding up orders are currently the rule not the exception. If Rangers lose the tribunal and appeals they are fecked imo because they simply cannot pay anything like the amounts quoted, multi-year or decade or more long repayment deals are a fanciful notion and inconsistent with recent HMRC actions towards football clubs, people who hope for some leniency and non-crippling payment plan from HMRC are in denial imo.

  10. Boab says:

    I don’t think it’s “ultra hard line” per se. HMRC’s first responsibility is to collect the tax and they will do that wherever possible.

    However, for most football clubs which have gotten into tax problems the chances of them coming up with a deal which is satisfactory to both themselves and HMRC is quite slim. They got into the bother by not paying their tax in the first place. Presumably because they were spending that tax money on other things. The chances of them reversing that and being able to both pay their tax, and also pay off an outstanding debt is surely quite slim.

    If they can get a pennies in the pound deal (due to HMRC being a minor creditor) then things obviously become more manageable. Hence administration, cancelling HMRC’s attempt at winding up.

  11. gorillainaroom says:

    As far as I can ascertain this seems to be a kind of “test case” for HMRC who are looking at the bigger picture of chasing bigger fish than the MIM works team and it seems a forgone conclusion they will hit them with “the full whack” with no easy payback schedule as they will earn more elsewhere whilst holding a scalp. That is why murray sold for a pound. That is why whyte would not agree to a deal whereby he is liable for more than his initial outlay. He is not there for the long term.

    The bill will land, whyte will pull the plug, the dust will settle and he will sell a debt-free new rangers for more than he paid for. Nothing else makes sense.

    Hmmmm, I don’t know if I like this sensible me! :p

  12. Adam says:

    Just out of curiosity on this thinking, do you really think someone will pay £19m for Rangers in administration ?

  13. Michael says:

    Hi Adam,
    I don’t get this. Why will anyone have to pay > £18m for Rangers?
    I think the administrator (who’d want to get that job?) will have a duty to sell what s/he can. Your goalie, boogie, davies, jelavic, murray park, ibrox – surely that is the £18m that Whyte expects. Anything else is profit. Am I totally wrong?

  14. Mark Dickson says:

    so do you beleve Craig Whyte has made a malinvestment? He’s got his valuation wrong and could be looking at a loss?

  15. Michael says:

    sorry remove Boogy from my list and replace him with £1m

  16. Boab says:


    What makes you think that HMRC would accept such a deal, if Rangers were in administration.

    Are we still working on the basis that every asset Rangers have, all properties, all player registrations, everything, would be worth £18m or less.

    I still don’t see that as being a reasonable valuation of all Rangers assets. Even in a fire sale.

  17. gorillainaroom says:

    Well maybe the full £19m isn’t required. If McGregor and say Davis or Bougherra can be sold beforehand then the asking price could be lower.

    But a “real” investor and I mean a fan, not in it for a buck but instead as a fan who wants to see a team do well on the park? 10 – 20m for the stadium, training facilites and team – and with no impending debt seems an attractive prposal surely?

  18. Not The Huddle Malcontent says:

    Is there any way that CW/Rangers Group PLC could

    1. sell off all of the players they might get some money for – McGregor, Davies, Bhougherra, Jelavic and maybe a few quid for a few others

    2. somehow pocket that money from Rangers FC PLC, i dunno, paying Whytes Due Diligence and legal bills, paying interest on the assigned LTSB debt, maybe even taking a wage and hefty consultancy fees for the takeover – but NOT repaying any of teh £18M debt for which they now hold security over Rangers FC assets

    3. sign a team full of bosmans to replace them (no significant cash outlay, but give the impression they are building for the new season)

    4. Lose the tax case, get the hefty bill and go into liquidation.

    5. a “friendly investor” – i.e. a rangers fan with some cash – Mortimer? pays £5M for Murray Park, Ibrox and forms a new rangers, which (IMO) would somehow be welcomed into the SPL

    6. CW/Rangers Group PLC take the £5M plus season ticket money that is sitting in the bank – getting their £18M back (a deby that they mighthave only paid £14M for)

    This would give a “rich fan” ownership of ibrox, Murray Park and a football team playing in blue, called Rangers at Ibrox and (probably in the SPL) all debt free and with a basic working squad to get by in the SPL – a club that would be debt free – he could then look into a flotation of the club selling all the shares to the supporters to generate further income (to repay his initial investment and working capital that would be needed) – basically making him athe rangers equivalent of Fergus McCann.

    CW would get the £4M profit from selling Ibrox/Murray park for £18m (against a debt they bought from LTSB for £14M – assuming they did get a discount) and he would also get a nice wee wedge for all involved parties from teh proceeds of selling the current 1st team playing squad

    So, everyone gets a tickle, a few games out at the football and a slice of the profit at the end of the day. A rich rangers fan gets to own the club briefly – saving Ibrox and the “club” and sell it onto the fans (to avoid a repeat of people like Murray and Whyte owning and ruining their club) making him one of “ra peepil” for ever more

    Tax man and other creditors get shafted and the history of the club is lost, but most of the money men are pretty happy and there is still a rangers for the hordes to follow follow – will they care if it’s NOT the same club if it LOOKS like the same club?

    I’m sure the media won’t make a big deal out of the “name change”

  19. Michael says:

    5. a “friendly investor” – i.e. a rangers fan with some cash – Mortimer? pays £5M for Murray Park, Ibrox and forms a new rangers, which (IMO) would somehow be welcomed into the SPL

    under the current SPL rules NEW RANGERS cannot be in the top 12 of Scottish Clubs and so cannot qualify for the SPL.

  20. Boab says:

    I didn’t know that. I thought that if a space opened (Rangers folding) then anyone could apply for the space.

    I also thought that “New Rangers” would automatically get it, as every other team there would want it to happen.

  21. Auldheid says:

    If they have more players covered by the “Webster” clause they might not get what they think.

    This should sort out the jersey kissers from the loyal.

  22. The Taxman Cometh says:

    How many players are over 28? And in the last year of their contract? The longer the FTT takes to publish their decision the more entertaining this will be.

  23. Mark Dickson says:

    my prediction is that whatever happens we will see a push for stringent financial fair play rules in the SPL to prevent clubs being run in a basketcase manner but also to limit the ability of teams to make big speculative investments in the playing squad that can only be balanced with champions league money, if restricted to domestic revenues from the spl and cups then neither rangers nor celtic would be in a position to ‘buy’ the title and champions league entry.

  24. Auldheid says:

    Mark Dickson says:

    04/06/2011 at 10:16 pm

    I have a wee article coming up on CU after their current competition is over that sets out the necessity, the reasons and the how to make it happen.

    It becomes a high priority for Regan and co if the SFA AGM empowers him.

  25. gorillainaroom says:

    Well I do think that Whyte is no more than a “dustpan man”. There to get his hands dirty, take the flak and then run off into the sunset to leave a new improved southside team to emerge. He’s palying with someone elses money just now and will be a patsy and disappear having passed his hand along.

    On the other point are the UEFA fair play directives not about to kick in which should calm any crazy spending?

  26. cardiffbhoy says:

    Another great article, RTC . This site is now essential reading for both green and blue sides of the divide.

    On your point @9.57 “The Rangers Football Club plc would have been liquidated, its league place lost, and its records consigned to history” Does this mean they would lose their 5 stars !!!!!!?

  27. Mark Dickson says:

    bougherra has invoked the webster ruling and will be leaving and due Rangers approx £1M for the remaining value of his contract. Fun and games begin?

  28. Auldheid says:

    Sorry did not see yours. Fun and games indeed.I have been saying for a while the tax case will impair Ranger’s ability to attract the calibre of player they would like to sign.

  29. Auldheid says:


    Has this been picked up on yet. It looks like Boogey is invoking the “Webster” clause that would reduce his transfer value.

    Any player Ragers have or are targetting wishing a contract over a years length will have to wonder if it can be honoured.


    Interesting this for if it applies to other players as it might mean Rangers “assets” value dropping.

    I wonder if due diligence picked this up.

  30. The Taxman Cometh says:

    Well that’s another 1M added to the warchest, must be ganting to spend

  31. Ian Ferguson says:

    hi Adam,

    I am way behind as i am on holiday in California. It is raining cats n dogs today so I have come on to catch up..

    There have been several points raised & questions asked of you.

    On the issue of the potential tax/interest/fines owed by rangers should they lose their tribunal & being granted time to pay, I would think this is a non runner purely because rangers would be found to be serious long term offenders & would have no mitigating circumstances to allow a deal.

    On the “would new rangers” be rangers to the support I think they would, if the transition was completed quickly. I don’t think the 5 stars or loss of entitlement to past honours would be dwelt on if the only viable solution was a new start.

    My personal opinion of Whyte is that he is an experienced boiler-house dealer. Given this I think a scam might be forthcoming. Earlier you said potential buyers might play hardball & offer £10m. i think that is possible given that he is probably using borrowed money.

    I think in this circumstance he would raise a save the rangers bond 50k x £1k investments by rangers fans to save the club from the tax man, promises of board representation etc. If this happened & was a success then he could do the £25m now £25m later you envisaged & have cash to improve the stadium & playing staff.

    Big question is would rangers fans invest?

  32. Jonbhoy says:

    Great article RTC.

    If Rangers had won there appeal at FTT would we not have heard about it by now ?

    Surely this would be major news for RAngers regarding the ST sales at present ?

    Thanks for any replies

  33. If the judges had published a decision in either direction, we would have heard about it. (Rather, I would know and would tell you).
    If Rangers had won their appeals, you can be sure that every media outlet in Scotland would have been carrying the story as front page news.

  34. Jonbhoy says:


    I was under that impression surrounding scotlands media.

    Another question on the same subject of your quote “if the judges had PUBLISHED a decision in either direction , we would have heard about it ”
    If the judges make a decision when do they need to publish it ?

    Also I have heard the info from a well placed source that it is indeed Mr J. Mortimer who is behind the takeover.

    Although I could not pass any personel comment on this , I just don’t understand why he is not in the limelight and taking all the credit?

    As well as being a professional Scottish business man he does not have anything to hide?

  35. tomtom says:

    I take it your comments re Mortimer are tongue in cheek?

  36. Duggie73 says:

    SPL rules are written by the SPL clubs, so if they want a NEW RANGERS in then they’ll change the rules. Or reformulate the SPL. Simples, no?
    Am wondering if an open-market sale of a liquidated Rangers would raise as much as £18mil (would be for Ibrox, Murray Park, existing player contracts, end of?). Could this be why there’s the ring-fencing of season tickets so that Whyte & co. don’t lose out on the investment? Apart from anything else a NEW RANGERS couldn’t operate at a decent level if they alienate season ticket buyers by giving them no football for their bucks, so dependent on the timing season tickets might have to be refunded in some way.Don’t really understand it, just notions here folks….
    Oh, and I don’t think I’ve mentioned yet- GREAT blog RTC.

  37. Duggie73 says:

    Can I also suggest that if a NEW Rangers were to come into existence, it would be in a better financial position than Celtic. Again, just an uninformed opinion…


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