Tax Deal “Rumour”: What was the point?


Scotland’s sports journalists have surpassed themselves recently.  Even by their own fathomless standards for getting it wrong, the release of the summary minutes of the Rangers Supporters Assembly (RSA) meeting with Craig Whyte could not have done more illustrate the scale of the credibility problem facing the mainstream sports media in this country.

Mark Guidi’s regular slot on Radio Clyde’s Superscoreboard has given him a platform to embarrass himself repeatedly.  On 27 December, Mr. Guidi told us that there was “a groundswell that the tax case will be sorted out before the case resumes”.  Just this week, he used this pulpit to tell us all that HMRC will be happy to accept a greatly reduced figure (£5-6 million) from Rangers.  According to Guidi, HMRC has only won 5% of similar cases. (This is not only wrong, it does not even make any sense.  Rangers’ case is quite unique in several ways). His colleagues have made many similar misstatements.

When a caller (Terry) informed him that these stories were nonsense (citing this blog as his source), Guidi denied any knowledge of our existence let alone having ever read our content.  However, the caller was correct.  Guidi was talking nonsense.  Of course, there is no need to take my word for it. Who better than Craig Whyte and the RSA to clear up the confusion: “No scope for negotiating a settlement with HMRC due to the criticism they have had from MPs and the Media about some high-profile ‘deals’“. If someone can see fit to forward a link to our site to Guidi, it might be a good place for him to start doing research before he makes things worse.

Guidi and several other Scottish sport journalists have been pumping up the hopes of Rangers fans with these tales of a deal being imminent for several weeks. The question is: why?  We know already that Rangers’ PR firm, Media House (ran by Jack Irvine), have been spreading the optimisic ‘deal about to be done’ story around every newsroom in the country.  That does not answer the question as to why a journalist would believe any PR-rep’s stories about Rangers.  If they told me that Ibrox was in the G51 postcode, I would have to walk there and look- such has been the trail of lies and disinformation since Whyte’s name was first linked with the club. Were they promised upcoming transfer exclusives? Perhaps.  More to the point, why did Media House hype this story only to be contradicted by Whyte himself within a matter of weeks?  I hope that Jack is working cheaply because this looks like it was a complete waste of time and money.  Sources within Ibrox have described the daily operations since the takeover as ‘shambolic’.  It certainly seems that way from the outside.

Mr. Whyte also confirmed HMRC’s powers to demand payment if/when the First Tier Tribunal (FTT) finds against them.  We have made this point several times (including the previous blog entry): should the assessments of tax liability in Rangers’ possession be confirmed, the bill becomes due and payable immediately.  Even if Rangers appeal the findings, HMRC has the right to demand payment without further delay.  (If Rangers won their appeal, they would be entitled to full repayment plus interest, but that is academic as they would have already become insolvent).

If an appeal is seen to be reasonable i.e. where it is obvious that there is some ambiguity in the law or that the employer drifted over the line into illegality rather than raced across it, the taxman will not usually press for payment when doing so would cause insolvency. However, where the appeal is vexatious (i.e. no real chance of winning it- just being done as a heel-dragging exercise), then HMRC would be justified in taking a tougher line.

It may not help their case that Rangers have launched an appeal for the £2.8 million that was taken (most of it forcibly- after a court order) for the Discounted Options Scheme (“The Wee Case”).  After months of correspondence over The Wee Case where the admission of liability was clear, if Rangers’ appeal is viewed as being without a reasonable legal basis, HMRC might take a more dim view of an appeal relating to The Big Case.

Craig Whyte has made clear, in his own words and in the takeover contract documents, that he believes that his position in the event of insolvency is protected through the £18 million debt owed to him by Rangers and the floating charge over the club’s assets.  It is very obvious that Rangers FC have no intention of paying anything close to the full amount of tax, interest, and penalties that have been assessed.  The implicit threat is “we will go under and HMRC will get nothing” .

If this case was only about immediate revenue collection then HMRC should offer Rangers a deal.  However, it would lay down a marker for every business owner, inside and outside of football, that one can engage in a shockingly blatant tax scam and have little to fear.  If Rangers can negotiate a pennies on the pound deal now, it signals to every under-pressure company director that corners can be cut.  Even if rumbled, the worst he or she would have to deal with would be repaying 10-20%- and even that would be a decade later.  Sounds like a pretty tempting deal!  HMRC’s credibility, and a just outcome for this case, require that life is not made easy for those whose plans rely upon ducking their social and financial responsibilities.

This blog has been accused of wishing malice on Rangers FC.  This is not true.  I am not one who seeks the extinction of Rangers in the style of Third Lanark.  What I seek is a fair outcome- nothing more and nothing less. ‘Fair’ in this case would be any resolution that sees Rangers carry a millstone of sufficient weight, and for an appropriate duration, that counter-balances the benefits accrued from their use of the EBT scam.  Since its implementation in 2000, Rangers have won the Scottish Premier League five times.  The present day value of the £24 million in tax that was saved along the way is about £36 million. Without the benefit of this £36 million, Rangers’ would have have gone bankrupt years ago or would have been forced into draconian budget cuts. They got to stay at the roulette table eleven years after their own money had ran out.  Only the most blind or willfully ignorant could fail to see the issue of financial doping in tainting the Scottish championship during this time.  If Rangers succeed in ducking any meaningful financial restitution by exploiting kinks in bankruptcy law, then it will fall to the Scottish footballing authorities (SFA/SPL) to ensure that justice is done.  A 10-point penalty will be automatic if an insolvency process overlaps with any active football season, but a “newco” club must not be given a free entry into the Scottish Premier League to take the place of Rangers.  Scottish football administrators must find the balance between penalising Rangers so heavily that a new club carrying Rangers’ legacy never gets off the ground versus incurring the problems of ‘moral hazard’ by failing to extract a punishment.  If football becomes like the banking industry, where wrong-doing and excessive risk taking carries no penalty, we will just continue to get more of it.

The task of finding the right balance will not be easy, but I would suggest that a formula based on Rangers (2012) FC starting each new season for a number of years with a points deficit would be along the right lines.

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 for what was (updated) one of the largest football clubs in Britain.

3,553 Responses to Tax Deal “Rumour”: What was the point?

  1. corsica says:

    timtim on 09/01/2012 at 9:52 pm said:
    @Corsica
    the shares are 12.5p not £12.50
    **********
    Merde! Vous en avez bon raison…

  2. yakutsuki says:

    campsiejoe says:
    09/01/2012 at 9:44 pm
    yakutsuki

    I know where you are coming from, and in some ways I agree
    It simply annoys me, when I see some of the abuse Phil gets from Celtic supporters
    Phil isn’t the Oracle, and he gets as much wrong as he does right, but he doesn’t deserve some of the abuse he gets

    *********************************************************************************************************
    Too true. No need for the abuse.

    I still have a glance at his blog now and then, but rarely read the comments these days.

    As for trolls? Just back to ignoring them again I suppose…

  3. the Don Dionisio says:

    corsica@9.44,

    That “someone” was the Don Dionisio@2.50. As someone observed, attribution is everything!

  4. salvomontalbano says:

    If Hugh Keevins thinks that acres of Brazilian Rainforests have been cut down to write about Rangers, then he knows as much about making paper as he does about football!

  5. timtim says:

    not sure of Kings allocation but at 5% it would be around 700k to buy him out
    so just under £2m for a 100% ownership

  6. Justinian says:

    Henry Yves Pirani……………. Source was vague so possibly a red herring
    ____________________________________________________________

    Or a business pirhana even 🙂

    I won’t slam the door on the way oot

  7. Paulsatim says:

  8. corsica says:

    the Don Dionisio on 09/01/2012 at 9:58 pm said:
    corsica@9.44,

    That “someone” was the Don Dionisio@2.50. As someone observed, attribution is everything!
    ************
    Thanks.

    timtim – being sarcastic 😃. The guy wouldn’t pay his milk bill on time what chance of him shelling out anything to buy further shares?

    I know I flip a bit on his motives but I am again thinking he is a chancer who hasn’t got two beans to rub together (didn’t someone post a while ago that castle grant is mortgaged?). If he has borrowed £18m, loaded on fees, salary, etc, gets Ibrox in lieu of debt and can sell for £30m, then I think he could walk away with at least £5m. That is not a bad return for an initial outlay of £1. He’s taken a risk on someone else’s cash and got a 25% ROI! Maybe he is a genius!!!

  9. Hugh McEwan says:

    timtim says:
    09/01/2012 at 10:00 pm

    not sure of Kings allocation but at 5% it would be around 700k to buy him out
    so just under £2m for a 100% ownership

    ===========================================

    I think you will find it would cost exactly “however much Dave King wants” to buy him out. Unless of course there is some facility to buy him out at a fixed price.

  10. the Don Dionisio says:

    Corsica@10.12,
    cheers.
    Milk bill? Orange,more like!!

  11. Auldheid says:

    rangerstaxcase says:

    09/01/2012 at 8:34 pm

    Odear says:
    09/01/2012 at 7:59 pm (Edit)
    ______________________________

    As mentioned several times, if the newco really does start in Div 3, then you are correct. No punishment is merited. I am highly doubtful that this will happen.
    =========================================
    It has become part of the Celtic tradition to be suspicious/skeptical/untrusting of the Celtic Board.
    (a tradition btw that needs looking at but that is a blog on its own)

    However why would they, who have stuck to good governance principles at a cost to how they are perceived (and not trusted) but also financially at the hands of Rangers, who have not adopted the same principle, change that principle just at the very point when Rangers will have to adopt it in whatever form they survive?

    Celtic have much more to lose by abandoning their good governance principles at the altar of manna than they have to gain. The soul of the club.

    Conversly Scottish football has much to gain by adopting good governance principles throughout. I know football is stoopid, but not that stoopid surely?

    Good governance should now be the aim of all the governers, not just the one’s at Celtic.

  12. col says:

    wuggy I sincerely hope you are wrong, surely the time for giving evidece is well past.

  13. TheBlackKnight says:

    I believe this has been mentioned before,

    “The holders of 5% of the shares (or any class of shares) or any 50 members may object to the court within 28 days of the passing of the special resolution, and then the court has a discretion to allow the resolution to proceed or to cancel it, or to adjourn proceedings for a compromise to be attempted, or to order that dissenting shareholders’ shares be bought out.”

    http://www.companylawsolutions.co.uk/conversion_public_to_private.shtml

    At what price is the question? But it is (or will be) irrelevant!

  14. MERIDIAN says:

  15. Paulsatim says:

    Meridian, can you post this one please?

  16. Paulsatim says:

    Meridian, no need, it worked this time!! confused.com

  17. TheBlackKnight says:

    The Whyte Knight has an (albeit worthless as stated in the takeover circular) 85% shareholding in Rangers.

    These shares, for the controlling interest, were bought for 100 new pence. (£1)

    If I recall correctly, the “unaudited” final accounts released to the stock market show the Shareholder Investment as being £70M.

    Can anyone tell me, given the shares are suspended (mid value at 12p):

    1. If ‘valued’ as £70M, would the 15% not held by The Whyte Knight account for £10.5M?
    2. Will the shares be bought at current Market value? Or based on a “revaluation”?
    3. Are the overall shareholdings based on (circa 94million shares) 10p ordinary shares? Are there not lower/ higher value investments?

    Adam/ anyone? input/opinion would be appreciated

  18. Loadofmalarkey says:

    Extract from STV web pages “The delay has been caused as a result of finalising the audit, which the board believe will be complete on or around January 31, 2012. The delay in finalising the audit is principally related to the ongoing HMRC tax tribunal.”

    Does anyone else find the inclusion of the word principally interesting? Perhaps am I reading too much into things.

  19. sorrynocando says:

    TheBlackKnight says:
    09/01/2012 at 10:36 pm

    ————————————————

    When MSL was untangled the Metlika (Dave King) shareholding rose from just under to just over 5% at no cost to Metlika ergo Whyte cannot reach 95% without King.

  20. TheBlackKnight says:

    sorrynocando on 09/01/2012 at 10:56 pm said:
    TheBlackKnight says:
    09/01/2012 at 10:36 pm

    ————————————————

    When MSL was untangled the Metlika (Dave King) shareholding rose from just under to just over 5% at no cost to Metlika ergo Whyte cannot reach just over 90% without King.
    •••••••••••••••••••••••••••••••••••••••

    Edited that for you.

    See my earlier post. I thought 5% or 50 shareholders only needed to block and take to court.

  21. TheBlackKnight says:

    Loadofmalarkey on 09/01/2012 at 10:56 pm

    ••••••••••••••••••••••••••••••••••••••••

    “principally”, the “main” reason, but perhaps not the only one.

  22. the taxman cometh says:

    are king’s assets still frozen by the SA authorities, I was under the impression he can’t sell his shares even if he wanted to.

    also why are they on the plus market anyway, what benefit did it give Murray

  23. TheBlackKnight says:

    Paulsatim on 09/01/2012 at 10:46 pm

    PMSL!!!!!!

    Is there a weblink?

  24. TBK

    No the book value of equity (shareholder claim on the assets) is notional only. It is not connected to actual share value.

    So that calculation cannot be done the way you have- well it cannot make sense anyway.

  25. the Don Dionisio says:

    TBK/Paulsatim,
    ditto !!

  26. droid says:

    Phoenix Phil #1

  27. Darren says:

    Corsica if you had anything to do with that letter thanks 🙂 I’m hoping to be put straight immediately but I remember somebody saying that new airdrie bought clydebanks licence so were able to start again in the 2nd division so if rangers go bust would their licence to play in the spl not be what is available then to any club (including the rangers newco) who meet the minimum criteria for entry?

  28. Lord Wobbly says:

    Paulsatim says:
    09/01/2012 at 10:46 pm
    ~~~~~~~~~~~~~~~~~~
    Utterly soooperb! Genius! FACT!

  29. TheBlackKnight says:

    Darren on 09/01/2012 at 11:13 pm

    Short answer no. Clydebank were not bust, hence they were bought.

    RTC, thanks!

  30. oisin71 says:

    I wonder what news tomorrow will bring regarding the MBB and RFC?

    I suppose if we miss it, we can always catch the omnibus version at the weekend.

  31. Paulsatim says:

    Not mine, just passing it on! It is hilarious, http://www.youtube.com/watch?feature=player_embedded&v=kmdhDf7m8W8

  32. longtimelurker says:

    Lifted from KDS.

    *Starts*

    FUMING St Johnstone manager Steve Lomas has gone on the war path and claimed that SPL champions Rangers have disgraced themselves with the way they have handled the Francisco Sandaza transfer fiasco.

    The straight-talking Ulsterman, who has told the Light Blues to put up or shut up, is furious about the under-hand way that the Ibrox giants have tried to get their top scorer to sign a pre-contract at Ibrox.

    Lomas let rip at chairman Craig Whyte and director of football Gordon Smith for their penny-pinching ways and leaving Spanish star Sandaza in an almost impossible position.

    Lomas, who rates Sandaza at £350,000, said: “If they really want him then Rangers should do a deal where both sides are happy. They shouldn’t be trying to take him on a cheap.

    “There is a way of conducting business and I don’t believe Rangers have gone about things in the proper manner. We have two complaints. Firstly, they have unsettled our player when we are in a great position.

    “Secondly, Rangers have asked Fran to gamble his fitness on a pre-contract between now and the end of the season and that is also pretty poor.”

    “I have spoken to Ally and I have told that I am unhappy with them approaching the player before they got in touch with us. I know that happened because Francisco admitted that was the case.

    Express Sport understands that the Sandaza transfer has caused problems behind the scenes at Murray Park and at one point over the weekend McCoist pulled the plug on the deal.

    It is now back on but on vastly reduced terms than were originally offered to the St Johnstone striker.

    Rangers are also trying to by-pass Sandaza’s representative, Clive Jagger to do the deal with their own agents.

    Despite this a pre-contract is expected to be concluded this week.

    Lomas confirmed: “I have spoken to Gordon Smith myself and told him I was unhappy with how he was operating. I accept they have issues but I have said to them before the transfer window opens that if you want Fran then do it the right way.

    “If Sir David Murray had still been in charge then he wouldn’t have conducted things the way the current regime have. For me, there needs to be some leadership up above at Rangers. Rangers have always had a tradition, under Sir David Murray, of conducting themselves right.

    “I do believe Craig Whyte and Gordon Smith have to back Ally. They are in charge of a great club with a great tradition.

    “Unsettling our player and asking him to gamble on a pre-contract is not good enough for Rangers FC. A lot of Rangers fans would agree with that statement as well.

    The Light Blues are actively trying to add to their squad and even if Sandaza does arrive in this window then they will still be looking to add another striker. David Healy is currently getting a game but he could still be offloaded in the window. He has turned down a lucrative move to China and is also on the wanted list of St Johnstone manager Lomas.

    Manager Ally McCoist has also told Kirk Broadfoot that he is not for sale although other officials have openly said he is available.

    Championship outfit Leeds United are keen on taking the Scotland international on a loan with a view to a permanent £1 million move.

    McCoist has also made it clear top stars like Nikica Jelavic, Steven Davis and Allan McGregor are not for sale. Liverpool, Everton and West Bromwich Albion are all keen on Jelavic while Olympiacos and Malaga want the Ibrox No. 1.

    Sheffield United and Blackpool are also still keen on John Fleck although McCoist has put a temporary halt to any possible loan deal.Other summer signings like Juan Ortiz and Matt McKay have also failed to make an impact and could be moved on if the price is right

  33. A bad day for the laptop loyal says:

    Loadofmalarky @ 10.56pm

    “Principally”, but not “exclusively”.

    Interesting.

  34. Arfurfuxake says:

    longtimelurker says:

    09/01/2012 at 11:20 pm

    How embarrassing

  35. corsica says:

    Darren says:

    09/01/2012 at 11:13 pm

    Corsica if you had anything to do with that letter thanks I’m hoping to be put straight immediately but I remember somebody saying that new airdrie bought clydebanks licence so were able to start again in the 2nd division so if rangers go bust would their licence to play in the spl not be what is available then to any club (including the rangers newco) who meet the minimum criteria for entry?

    ****************************
    I now get to employ my favourite school line: it wisnae me, sir…it wis a big bhoy.

    Was chatting the other day to someone in Fulham, didn’t even get a hint. 😦

  36. TheBlackKnight says:

    longtimelurker on 09/01/2012 at 11:20 pm
    ••••••••••••••••••••••••••••••••••••••••

    Is that a formal accusation of ‘tapping’? Where are the authorities when you need them 😉

    (no laughing at the back!)

  37. Lord Wobbly says:

    TheBlackKnight says:
    09/01/2012 at 11:32 pm
    longtimelurker on 09/01/2012 at 11:20 pm
    ••••••••••••••••••••••••••••••••••••••••
    Is that a formal accusation of ‘tapping’? Where are the authorities when you need them
    (no laughing at the back!)
    ~~~~~~~~~~~~~~~~~~~~~
    It’s the we’ll tap yours and shaft you club

    (one for older readers) 😀

  38. StevieBC says:

    longtimelurker says:
    09/01/2012 at 11:20 pm
    Lifted from KDS.
    *Starts*
    FUMING St Johnstone manager Steve Lomas …
    “… Rangers have always had a tradition, under Sir David Murray, of conducting themselves right.”
    ==================================
    So Steve Lomas is not a reader of the RTC blog then? 🙂

  39. v says:

    I think sandaza is a free agent in the summer so can talk to other clubs without them being accused of tapping up

  40. Arfurfuxake says:

    v says:

    09/01/2012 at 11:42 pm

    I think sandaza is a free agent in the summer so can talk to other clubs without them being accused of tapping up

    he wont have a club to go to in the summer

  41. Loadofmalarkey says:

    TheBlackKnight on 09/01/2012 at 11:07 pm said:
    Loadofmalarkey on 09/01/2012 at 10:56 pm

    ••••••••••••••••••••••••••••••••••••••••

    “principally”, the “main” reason, but perhaps not the only one.

    ————–

    It certainly suggests to me that there are at least two reasons (possibly more) for the delay.

    My point is, delaying the accounts is a serious matter. The FTT could be viewed as an event that justifies (to some extent) a delay. The statement suggest other things are contributing. One would imagine that these other things must have a material impact on the accounts when Rangers are stating that they too, are in part, responsible for the delayed accounts.

  42. A bad day for the laptop loyal says:

    Longtimelurker. It’s nice to see that Whyte/Smith/Rangers are continuing with their ‘Keystone Kops’ strategy in the transfer market!

    ‘McCoist says Broadfoot not for sale, an official (Smith says he is).

    It’s as dignified as Fleck is the new Wayne Rooney!

  43. Lord Wobbly says:

    A bad day for the laptop loyal says:
    09/01/2012 at 11:52 pm
    It’s as dignified as Fleck is the new Wayne Rooney!
    ~~~~~~~~~~~~~~~~~~~
    That’s McShagger, shirley?

  44. timtim says:

    Anyone think there interest in Sandaza will drop after they play
    Saint J this weekend ?

  45. Colm Buddy Clancy says:

    http://www.managementtoday.co.uk/features/1111122/what-alan-sugar-craig-whyte-essex-common/

    What do Alan Sugar, Craig Whyte and The Only Way Is Essex have in common?

    Whyte and Branson are the only business people in the top ten not appearing regularly on the box.

  46. Not The Huddle Malcontent says:

    Sandaza may be free to talk to any clubs

    but it’s very poor form for a club to contact another clubs player without letting them know – especially when the 2 teams are due to play in a few days

    Also, for RFC to suggest he takes it easy and doesn’t risk injury between now and the end of the season – could be interpreted as “don’t try against us and we’ll make it worth your while”

  47. timtim says:

    They’re due to play Aberdeen after St Johnstone
    will they try and upset the whole squad by offering to buy their toaster?

  48. termonabbey says:

    I told my 13 year old son about today’s news and he said ‘Is that not really bad for Scottish football.How will we keep our players (Celtic players)?’ Only a child’s view but I thought i’d post it.

    Not being a lawyer/accountant what is likely to happen to the Rangers players that benefited from the tax avoidance scheme Is there likely to be any form of investigation or sanction?. (Sorry if this has been discussed already but I am new to this blog)

    Thanks

  49. droid says:

    If a man is proud of his wealth, he should not be praised until it is known how he employs it. -Socrates

  50. Justinian says:

    The following comment follows today’s (Tue) Herald piece on the PLUS SX suspension of trading in Rangers Shares. I am unsure whether the contributor’s domicile provides a clue as to team persuasion.
    ____________________________________________________________________________
    Edward Donagher, Blind River,

    It”s sad to see the institutional football club of Scotland in this embarassing disgraceful situation.The first time in their history they produce unaudited accounts. The previous board warned about Whyte but to no avail.Whyte is now under investigation as being “not a fit and proper person” by the SPL. The tax tribunal, supposedly, will make a decision this month on the 49 million tax problem at Ibrox.David Murray where are you andwhere is your boast about for evey fiver Celtic spends I”ll spend ten.What a disgrace to Scotland!

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