Just when I thought I was out, they pull me back in!

It seemed all was settled in the long running Rangers Tax Case saga. Yet after the Scottish press’ latest embarrassment, we can look forward to months and years of continued arguing over my favourite subject.

The Supreme Court ruled on 5th July 2017 that Rangers’ efforts to “pay for players we could not otherwise afford” had failed. Their disguised remuneration scheme was so badly implemented the court had no hesitation in dismissing this wheeze. When you are trying to pull a disguised remuneration scam, a key component is that the payments are actually disguised. Detailed notes and side-letters explaining what is going on should not fall into the hands of investigators.  Just like with Al Capone, suspicions that a criminal network was operating out of Ibrox led to evidence of deliberate and concealed non-payment of tax being uncovered.

It should have been all over with the Supreme Court decision. Rangers had been liquidated. A new club had been formed to take its place. Most of Scottish football, including the press, had agreed to pretend that nothing had happened. This same rogues gallery locked arms to block any meaningful punishment for the years of blatant cheating. Incriminated by their knowledge and involvement in Rangers’ various violations of the rules, there cannot be an investigation into the events surrounding the last years of that club’s existence.

Such has been the determination to sweep over the past and pretend that nothing traumatic happened, today’s The Times gets tax story wrong tale really took me by surprise.

On one level (or maybe a 5th level?) you have to stand back and admire the artfulness of the spin-doctoring behind this story. Twitter and Rangers’ fansites are ablaze with fantasies: the old club is coming out of liquidation; HMRC made a mistake; or that Rangers have somehow been victims of this process. With Magnus Llewellin’s Scottish version of The Times playing the role of duped conduit or willing participant in a lie, the way this story has been crafted is worthy of a round of applause. In these days of Brexit and Trump propaganda, we see it quite often.  Yet this “Rangers died for nothing” narrative stands out. Devoid of factual references or checkable sources, it is a golden example of the power of the press to inflame and deflect on command.

 

What really happened?

As laid out in the @rangerstaxcase twitter feed last night, HMRC have decided that it is not worth to keep fighting for two side-show elements of the Big Tax Case. The first part was the “net or gross?” question.  There was no dispute that Rangers paid about £49m to players through the EBT scheme. However, was that amount net of tax? i.e. the real taxable wage was about £100m and the tax owed would be about £48m.  Or was that the gross wage? i.e. the taxable wages were £49m and the tax due only about £24m. HMRC had submitted assessments to Rangers over the years on the basis that the amounts were “net”.  However, this was always going to be a contentious issue. My post of 11th November 2011 predicted that HMRC would be forced to back down on this point and to accept the lower number. It is always nice to be proven correct in the course of time.

As none of the courts or tribunals that had looked at the Big Tax Case had ever decided on “Net v Gross”, Rangers’ liquidators argued that the issue remained unresolved. For HMRC to pursue the argument that they were entitled to the higher numbers, they would have had to have initiated a new FTT case. With only a tiny amount of money at stake for HMRC (they will only get a very small percentage regardless of the amount owed), they dropped the claim for the higher amount.  No “shock! horror! error!” involved here.  It was simply not worth HMRC’s time to pursue the higher amounts as there isn’t enough cash in the kitty to pay for more than a few percent of what is due anyway.

Similarly with the penalty amount.  On 10th June of 2019, Rangers’ liquidators, BDO, confirmed that HMRC had been asking for a penalty amount of 65% of the amount of tax underpaid (excluding interest). This too required a new FTT case to confirm as HMRC had agreed to a Rangers’ request back in 2010 to separate the tribunals for underpayment and penalty.  BDO correctly pointed out that the penalty amounts had not been confirmed by any legal process.  HMRC would have to relitigate the whole issue again if they wanted to score a point on Rangers’ fraudulent conduct. However, with no prospect of yielding a worthwhile increase in payment for their efforts, HMRC agreed to drop the claim for penalties.

This was all simply a cost-benefit expediency. There was nothing behind the decisions to drop the claims for net-of-tax payments or the penalties that indicated that HMRC was admitting to any error.  Yet that is how this event has been masterfully spun by the usual Ibrox lackeys in the press.

If RFC 2012 plc had survived and was a going-concern with assets and revenues to be claimed, HMRC would not have given up the claim on the penalties. (Possibly not on the gross v net either- but it is quite likely they would have lost this point). BDO list the revised HMRC tax claim as being £68.3m now.  There was not- and is not- a chance in hell that Rangers could have found the funds to avoid administration. This “sensational” story is creating a false narrative from nothing. Old original Rangers is not coming out of liquidation!

The story of Rangers’ descent into collapse is characterised by fans amassing around polar extremes. There is little rational discussion.  Almost to a man, Rangers fans have shown no interest in learning what was being done in their name. If a Celtic supporter said it, it must be disputed and scorned. Similarly, most Celtic fans have enjoyed this adventure for the many months and years of unrivalled entertainment. In many corners of the Scottish football interwebs there is little concern for accuracy in any story.

Therefore, I write this blog mainly for the record. The facts as currently stated by BDO are here if you want them. I doubt reality will cause many who follow the tribulations of the Ibrox clubs to sway their view much at all.  There are flame wars to fight.  In the press, there are agendas to push and newspapers to sell.

 

To the real story: why now?

BDO have been discussing the debate with HMRC on the two points of contention for over a year. It has been over five months since BDO revealed that HMRC had capitulated and couldn’t be bothered chasing these issues any longer. So why would the Ibrox PR machine suddenly fire up this story now?

It all looks like a well-planned, well-executed distortion of the truth. This far after the events it seems unlikely that the Sevco PR machine would waste such capital without a compelling reason. With going-concern warnings, cash requirements gaps for the coming year, a lawsuit lost over retail, and one more in the works for an Ibrox Disaster memorial plan abandoned, plus massive dilution of supporters’ share investments- there are a lot of issues that could be about to erupt for the seven year old club.

Whatever is going on, the “taxman killed my club by mistake” narrative has to be a distraction from something.  Time will tell us what it is exactly, but with so many loyal and true bluenoses working in the press, this could simply be an in-house hack trying to clear the name of his now departed club.