Evading Avoidance


We have seen a few old faces and themes emerge overnight in the light of the surprisingly excellent Channel 4 exposé on Rangers. Annoyingly, an old myth has been repeated by some posters: “tax evasion is illegal, tax avoidance is legal”. Another one is that Rangers have not been accused of tax evasion- ergo they have not done anything illegal. This is absolute rubbish on both counts.

This is the sort of ill informed mythology that gets repeated by the idiots who told us Craig Whyte was buying Rangers for £33m. It is a bit like the story about Eskimos having lots of words for snow: just because a piece of untrue nonsense is repeated often does not change its central essence. It is still untrue nonsense.

So by way of a bit of a filler post while we are waiting on events to further unfold, we shall do a bit of revision for those who might have missed this first time around. The laws covering tax evasion and tax avoidance are identical. The only real difference is that in cases of tax evasion, such overwhelming evidence will exist that HMRC believes it can prove that the people involved planned to commit fraud. The perpetrators must also have known that what they were doing was criminal when they did it. (Our lawyers friends will provide a more precise definition, but this will be good enough for most purposes). This is a pretty difficult standard to achieve. In fact, it is so difficult to prove, criminal prosecutions for tax evasion are normally reserved for accountants and lawyers- people whose knowledge of tax law is easier to demonstrate. This explains why several high profile tax fraud cases, such as the recent one involving the canine pet of a football manager, ended in acquittals despite evidence that looked pretty impressive to the general public. In Scotland, this high hurdle is elevated further by the requirement for corroboration.

Tax avoidance can be illegal. It is a term used to describe tax schemes that simply will not be pursued in a criminal court. Some avoidance schemes are illegal, while others have been deemed to be legal if implemented correctly. HMRC even have a tax avoidance scheme registration plan (DOTAS). Tax payers can use DOTAS registered avoidance schemes and be sure that they will not be accused of criminality. Those who are deemed to have breached tax law through an illegal avoidance scheme are pursued through a civil process i.e. a tax tribunal- rather than a criminal court. This is where Rangers are. They are not accused of any criminal action at this point (and it is unlikely that they will), but they have been accused by HMRC of pursuing illegal tax avoidance practices. This resulted in them being sent tax assessments for underpayment, interest, and penalties. Rangers have appealed this determination by HMRC and the First Tier Tribunal (Tax) will decide whether to uphold Rangers’ appeal or not. The First Tier Tribunal will effectively rule on whether Rangers’ tax practices were legal or illegal.

You might wonder why criminal charges would not be pressed if someone was found to have shredded key documents in a tax investigation. Surely this would be criminal? Well, mibbees aye, mibbees naw.

It could be deemed criminal if you could prove that the person who requested the shredding was knowingly destroying a document to subvert an investigation by a government body. Proving this degree of intent will often be impossible. So, tax collectors will settle for collecting taxes- through the civil courts. In the tax tribunal process, interest payments and penalties are used to ensure that tax avoiders (that is ones deemed to have broken the law) do not gain an advantage by paying a smaller amount later. In cases, where there is the possibility of criminal behaviour by ‘minor cogs’ in the machine rather than the ‘big gear’, there would also be a reluctance to prosecute.

Is Channel 4’s report of document shredding relevant to Rangers’ tax cases? I do not know. That would be for Rangers FC and its former directors to comment.

There must be some kind of remedial teaching award available to anyone who is able to explain any of this to a Scottish sports journalist.

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.

743 Responses to Evading Avoidance

  1. resinlabdog says:

    resinlabdog says:
    02/04/2012 at 1:03 pm

    Thought about this and another way of thinking about the same thing is:

    C9S value the ticketus debt at £27M.
    BK value the same debt/agreement at between £1.5 and £8.25m more.

    So if RFC(IA) win the BTC and Ticketus are awared >£28.5M the Blue Knights take the lead.
    If RFC(IA) lose all of the BTC and Ticketus are awarded >£35.25m, the Blue knights also take the lead.
    Anything else pust C9S in the driving seat.
    (Assuming best offers and facts as presented.)

  2. reilly1926 says:

    Mark Dickson says:

    02/04/2012 at 1:00 pm

    These are the estimated debts pre-Big Tax case result.

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

    So does the Big Tax Case not come into the equation ?

  3. Oor Wullie says:

    tenerifetim says:
    02/04/2012 at 12:32 am

    Graham Spiers calls AT a liar on air- pulled out by famous “Terry” – lot of hurt there!

    http://soundcloud.com/celticresearch/ssb-29-3/s-6BbQo
    ================================================================

    Thanks for posting that TT.

    After listening to Spiers on that link it has reinforced my opinion that any good reputation he used to enjoy is now in tatters.

    He has copied Hugh Keevins and others on SSB in accusing a caller when a well made argument is put forward.

    Don’t debate the point.

    Accuse the caller of something, anything will do.

    It’s easier.

    I’m disappointed Britney has stooped to this level, but I suppose if you lay down with dogs you get fleas.

    I notice Spiers’ appearances on Clyde have gone from occasionally, to once a week, to two or three times a week more recently.

    Does he still work for The Times and if not does anybody know why not?

  4. Yarmy says:

    Can I be pedantic and point out that asking former (and current!) RFC employees “Did you have an EBT?” allows them to answer “No” without technically lying.

    The correct question is “Did part of your remuneration come in the form of a loan from an EBT?”

  5. Oor Wullie says:

    merklandroad says:
    02/04/2012 at 1:04 am

    paperbhoy says:
    02/04/2012 at 1:00 am
    —————————-
    Honestly appreciate your sentiments, but most of the posters on here of late are only interested in ‘jelly and ice cream’.
    ===========================================================================

    For the record.

    I hate jelly, really hate it.

    I like pears.

    Pears and ice cream will do just fine.

  6. tigertim says:

    Hugh McEwan says:
    02/04/2012 at 1:13 pm

    It is all as much use as looking at the entrails of a swan.
    =======================================
    Or a very large gorilla, that we do not not know the size of yet!

  7. Mark Dickson says:

    reilly1926 says:
    02/04/2012 at 1:14 pm

    It comes into the Blue Knights equation as they will have to try to get HMRC to agree to a CVA regardless of how much the Big Tax Case finds Rangers owe.

    It doesn’t really affect club-9 sports as they simply want to offer a fixed amount to liquidate the club and take some of it’s assets. How much the big tax case finds against Rangers doesn’t concern them – that will be a bunfight with the other creditors for the liquidator to sort out.

  8. twopanda bears says:

    At the creditors meeting next week when the proposal is tabled these “bidders” sorry “preferred liquidators” will need to give full disclosure of funding, credible lines of credit, plus probably underwritten guarantees – as in forensic. This is in 60m + territory. That`s the real test.

    Plus a few wee questions of why “their backers” should do this.

    Reputations on the line.

  9. reilly1926 says:

    Yarmy says:

    02/04/2012 at 1:21 pm

    Can I be pedantic and point out that asking former (and current!) RFC employees “Did you have an EBT?” allows them to answer “No” without technically lying.

    The correct question is “Did part of your remuneration come in the form of a loan from an EBT?”
    ==================

    “There is a strong possibility that if no side letter was given to you, regarding the EBT, then you are personally liable for Income Tax and NI.”

    That statement would get them running to their filing cabinets.

  10. Hugh McEwan says:

    steviefrom belfast says:
    02/04/2012 at 12:57 pm
    6 0 i
    Rate This

    I see Paul Murray is on the BBC site claiming he doesnt want to see Rangers liquidated – and if only the creditors will accept his CVA everything will be fine.

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

    Well, that’s quite obvious Paul

    However you really need to tell them what that CVA is, how much they will get, over what period, and what proportion of their actual debt it will be.

    You also need to tell them if there are any secured creditors, who they are and how much they got.

    Oh and it would be nice if they were told how much was available, from the various sources, and why the winner was picked. As they might not be happy if their return was minimized to help the club. A reduced CVA payment to allow the club funds to carry on might not go down well.

    Maybe they would like to juxtapose the CVA with what they would get should the business be liquidated (including in a pre-pack)

    Final thing, it’s not you that negotiates the CVA, it’s the administrator. You have no say, or power at all, in this process.

    Fud.

  11. Hugh McEwan says:

    Yarmy says:
    02/04/2012 at 1:21 pm
    0 0 i
    Rate This

    Can I be pedantic and point out that asking former (and current!) RFC employees “Did you have an EBT?” allows them to answer “No” without technically lying.

    The correct question is “Did part of your remuneration come in the form of a loan from an EBT?”

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

    I was under the impression that, in this case, the tax loss occured when the payments were made tax free into the EBT. Certainly basing the loss on the figures from the accounts would suggest that.

    If it was based on loans from the EBT then the tax loss would be at that point, and based on those figures, Shirley.

    I do however agree that unless specific benefit trusts were set up for each player then the wording of the question is not particularly helpful.

  12. resinlabdog says:

    reilly1926 says:
    02/04/2012 at 1:14 pm

    See my earlier post where I have assumed a BTC outcome of between 0 and £50m

    Apologise for the alignment issue, but the basic story is:

    If TU debt is valued at £27m C9S are ahead by between £1.5m and £8.25m (unless anyone improves their offer, assuming all else equal).

    If TU debt was valued at greater than £35.25m, then BK are ahead at present.
    IF TU debt is valued at between £28.5 and £35.25m, then the BTC affects the result: a low figure favouring BK, a large BTC debt favouring C9S.

    My view is that – in reality – C9S are in the driving seat unless BK up their offer, assuming that there aren’t other complicating factors (e.g. if it turned out that TU had some security on RFC(IA) assets, this would mean that other creditors could do better with the BK, where most of the C9S money woud go straight to TU.)

    And if BK are not in bed with TU, they are off the park – since they are too far behind unless the TU debt can be written out of their assessment.

    Liquidation beckons.

  13. Oor Wullie says:
    02/04/2012 at 1:18 pm

    He was made redundant about 6 wks before RFC (IA) started.

  14. Tyke Bhoy says:

    twopanda bears says:
    02/04/2012 at 1:27 pm
    0 0 Rate This
    At the creditors meeting next week
    ===================
    Being a little pedantic but unless I’ve missed an announcement the Creditor’s meeting is still 3 weeks off. Next Tuesday is the deadline for D&P to put their findings and proposals to the creditors. They then have to call a meeting within two weeks. They will need to apply to the court of sessions if they want either deadline extended although the latter would obviously be extended if the former was.

  15. PTD says:

    £23m and £50 are strange numbers.

    Ignoring Ticketus for a moment, we know that HMRC are owed approx £15m by now, but MBB may have a substantial debt too, which Dupe and Duper are disputing.

    This causes a problem in that it means HMRC are in a position to block any CVA and it is nigh on inconceivable that they will accept any deal on a (pre-BTC) tax bill which a company has just brazenly not paid.

    So what do D&D do?
    1. Accept Whyte and Ticketus as creditors and hope that they both want a CVA.
    2. Hope that the BTC appeal is dismissed in time that the amount oweing can be included in the CVA and that HMRC are in a forgiving mood (never mind giving up football if Newco get back into the SPL – If Hector agrees to this, I’m leaving the country).
    3. Give up and accept liquidation.

    Note: Options 1 and 2 pretty much end up at option 3 eventually anyway. D&Ds report will be fascinating reading not just becasuse it will finally open the lid on RFC(IA)s finances, but it will need to contain some persuasive reasoning as to why they have chosen to act as if RFC(IA) can be sold on as a going concern.

  16. tigertim says:

    Oor Wullie says:
    02/04/2012 at 1:18 pm

    Does he still work for The Times and if not does anybody know why not?

    ================================================
    He got a “deal” from the Times and is between jobs at the moment.
    As was disclosed on here yesterday he is full time writing on this site.

  17. Mark Dickson says:

    tigertim says:
    02/04/2012 at 1:39 pm
    0 0 i
    Rate This
    Oor Wullie says:
    02/04/2012 at 1:18 pm

    Does he still work for The Times and if not does anybody know why not?

    ================================================
    He got a “deal” from the Times and is between jobs at the moment.
    As was disclosed on here yesterday he is full time writing on this site.

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

    When & where yesterday?

  18. peterankin says:

    Ballsbustedan’a’tha’ says:
    02/04/2012 at 11:55 am

    …An arrogant cretin of a man.

    ————————————-

    Oh, come on – at least narrow it down a bit!

  19. twopanda bears says:

    Tyke Bhoy says:
    02/04/2012 at 1:36 pm
    0 0 i
    Rate This
    twopanda bears says:
    02/04/2012 at 1:27 pm
    0 0 Rate This
    At the creditors meeting next week
    ===================
    Being a little pedantic but unless I’ve missed an announcement the Creditor’s meeting is still 3 weeks off. Next Tuesday is the deadline for D&P to put their findings and proposals to the creditors. They then have to call a meeting within two weeks. They will need to apply to the court of sessions if they want either deadline extended although the latter would obviously be extended if the former was.
    ——————————-
    a nuance Tyke Bhoy – suggests they won`t need two weeks

  20. tigertim says:
    02/04/2012 at 1:39 pm

    I just remember him saying something on twitter about being paid off and then that other crazy person put it on his site that he was sacked or something. He himself then said that the RFC (IA) had interrupted his sabbatical.

  21. Michael says:

    Hello, am l alone?

  22. Michael says:

    Being the gorilla in room is somewhat lonely

  23. Bryce Curdy says:

    Welcome back (as Jim White used to say).

  24. Michael says:

    l will go for three in a row

  25. Michael says:

    Bryce

    you rotter l was on three in a row there!

  26. Thank you to all who have offered help and advice on getting back on line.

    Without a doubt the rangerstaxcase.com URL is under attack.

    Or course, you can try rangerstaxcase.org or rangerstaxcase.net
    At about £3,000 to organise an attack, you would think that there were more pressing things to do with their money. Mind you, if you were just forced to give up £300k you had ring-fenced to preserve your shredded reputation, you might think another £3k for revenge is small beer!😉

  27. Michael says:

    Rtc

    The wee lambs are delusional, leave them be -)

    Michael

  28. TMWTL says:

    Good to have you back RTC

    You are back just in time for what will be a very interesting week:)

  29. Salad al din says:

    I see Mark Dingwall has announced that the BKs have stitched a deal with Ticketus whereby the latter has agreed to drop £10m of its claim, have the rest paid over 10 years after a 2 year holiday and to give a further £10 m in loan for working capital. This means a CVA is possible now according to GMS. No mention of HMRC.

  30. The Taxman Cometh says:

    Are TBK trying the Leeds model

    “Ticketus are owed £27m by Rangers and have agreed to reduce that to £10m should the Blue Knights gain control of the club.

    This amount would be paid over nine years with no repayments at all in the first two years. Rangers would then pay approx £1.4m per year over the remaining seven years but only if Rangers qualify for European football. There are no repayments in any year that we don’t.

    There is no interest charged on the £10m.

    Additional Working Capital

    To aid the club through the next few years Ticketus will provide a £10m facility to fund operations.

    Legal Proceedings

    Rangers FC will not be pursued by Ticketus over any outstanding monies by they retain the right to pursue other parties regarding any losses they may have incurred.

    It will open the way to the option for the Blue Knights to purchase the club via a CVA and hence avoid liquidation.

    http://www.followfollow.com/news/tmnw/ticketus_debt_smashed_by_17m_in_stunning_paul_murray_deal_737890/ index.shtml

    I have never wanted TBK’s since they mentioned working with Ticketus.

    But IF this info tonight is true, then I would certainly have a serious rethink about Paul Murray and his crew.

    At this point though, I think we are all just praying that someone gets us out of this hole, as quickly as possible”

    I see this as making the club safe under a new owner leaving RFC 1872 to be liquidated when TBC hits – I think P diddy Murray is using clever language it won’t be him who liquidates oldco but HMRC

    Is anyone capable of doing the sums on debt levels for CVA prior to TBC decision would any creditor be able to block it?

  31. Henrik Larsson says:

    RTC – posted on quite a few sites to get the message across that it is rangerstaxcase.com is under attack but there are other working links… hopefully, others will begin to see the message.

  32. salvomontalbano says:

    Rtc, good to see you up and running again.

    You’d think that if they were going to spend £3000 on a birthday present, they’d get you something better than that….
    😉

  33. yarmy says:

    3K for half a day’s work? Was it D & P?

  34. Brenda says:

    Welcome back missed you loads:)

  35. Henrik Larsson says:

    Isn’t it incredible that a ‘blog’ that has been created to solely discuss a particular Scottish football club and, basically, that club’s lack of sporting integrity over the past decade has been subjected to a DoS attack!

    no freedom of speech on the Internet!

  36. Trimm Trab says:

    Welcome back RTC!

    What a strange world – someone wastes a few k putting you offline for a few hours and after 22 deg days last week I’ve snow in my garden, bizarre.

    What happens if old rangers survives and gets hit with multiple 3 points deductions for the games forfeited due to 2nd contracts., Can they be relegated? Or is it just on record they ended up with 0 points?

  37. ELC says:

    Colleagues were giving me compliments yesterday afternoon for the amount of work I was doing… Hmmm… Good to have you back!

  38. General Tilly says:

    The Taxman Cometh @ 6:32 a.m.

    More ‘spin’ swallowed up hook, line and sinker by those who want to believe it.

    So Ticketus ‘owe’ Dead Club Walking (IA) £27 million.

    But are prepared to have that debt ‘smashed’ down to £10m – ‘writing off’ £17million ?

    And, kind souls / masochists that they are, are prepared to ‘provide’ (read ‘loan’) the club a further £10m ? (Standby for said sum being designated by the MSM along the lines of the ‘Bellicose Bag of Bullion’)….

    But hold on, £27m – £17m + £10m = £20m.

    If this is happening at all, Ticketus are ‘taking a hit’ of £7m, tops.

    Oh, and they still have to ‘persuade’ the GEF to sell (threats of violence aside, I would see that involving a substantial sum).

    And then handle the result of the BTC.

  39. Tyke Bhoy says:

    The Taxman Cometh says:
    03/04/2012 at 6:32 am
    0 0 Rate This
    Are TBK trying the Leeds model
    ==========================
    I know rumours are supposed to be a no-no however…………..

    It is rumoured that Ken Bates has sabotaged his own team this season as promotion to the EPL at the end of this season would trigger a higher level payment in the CVA. TblueK would not do that with Dead Team Walking, Shirley?

  40. Some excellent writing again my learned friend!

    The Scottish press have again been shown up as Sir David Murray’s lap dogs. For years they have squabbled and fought for the scraps at his table. Do you now think that they are suffering any for of professional embarrassment?

    http://theshameofrfc.wordpress.com/2012/04/02/from-succulent-lamb-to-humble-pie/

  41. Carntyne says:

    960jeannie960 (@960jeannie) says:
    02/04/2012 at 1:36 pm

    Oor Wullie says:
    02/04/2012 at 1:18 pm

    He was made redundant about 6 wks before RFC (IA) started.
    =================================================

    That might explain the change in his attitude.

    If he is now dependant on Radio Clyde for a living he may think he has to toe the line.

  42. Carntyne says:

    tigertim says:
    02/04/2012 at 1:39 pm

    Oor Wullie says:
    02/04/2012 at 1:18 pm

    Does he still work for The Times and if not does anybody know why not?

    ================================================
    He got a “deal” from the Times and is between jobs at the moment.
    As was disclosed on here yesterday he is full time writing on this site.:-)
    =====================================================

    That wouldn’t be Max B Gold?

    Would it?

  43. Carntyne says:

    Things seem to be working again.

    Is there anybody else out there? :-)

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