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.

 

Thank you- all of you!

If last night was presented in a script, I would have thrown it back at the writers as being too contrived and corny for words.  Just minutes before the BBC broadcast “Rangers- The Men Who Sold The Jerseys” the @rangerstaxcase twitter feed exploded with activity: this blog had won the 2012 Orwell Blog Prize.

I had been asked to prepare a statement in the event of winning and the following was read out by the writer Sean Dodson:

Winning the Orwell Blog Prize is both a tremendous surprise and a great honour. The quality of writing from the other short-listed candidates was just so high that I did not really think that my blog stood much of a chance.That rangerstaxcase would win a prize named for George Orwell is particularly apt. Orwell created the lexicon for fighting back against the interests of powerful individuals and a co-opted media. Over the last decade, prominence and wealth were able to silence the story of what was really happening within Rangers FC. The story of how a single businessman could bend the banking, football, and newspaper businesses in a small country to his will is a microcosm of the dangers lurking within all free societies.

The blog answered a need for the facts when it was obvious that the Scottish media had no interest in taking on the vested interests who wanted this story kept under wraps. I would like to thank all of those people who have contributed to the debates on the blog and I am especially grateful to those brave individuals who have made it possible for me to tell the truth about this story.

Tonight is important for the Rangers tax case in two major respects. In addition to the Orwell Blog Prize, BBC Scotland will broadcast a documentary tonight entitled: “Rangers- The Men Who Sold The Jerseys”.

 

A project that was born out of frustration at the Scottish media’s refusal to investigate this story comes to an end with the finest investigative journalist in the country, Mark Daly, laying out the facts on television for the whole country to see. To watch this project achieve its primary goal and to receive this award on the same night is truly something special.

Thank you to the judges, to the other entrants and shortlisters, to Alex Thompson at Channel 4 News, and to my long-suffering family who have provided tremendous support while working on this project.

 

Speak up: individuals can make a difference.

I want to start naming names and thanking the best contributors to this site. However, there are just too many of you and I dread the idea that I would leave someone out. As most of you write on here under pseudonyms anyway, it is best to avoid a long Oscar-style list of names. You all know who you are.  This blog would not have had any impact without the debates and discussion that you all contributed so much towards. Thank you.

Time For Leadership at SFA & SPL

Scotland has a seven hundred year history of asking for help from south of the border in times of trouble and internal squabbling. It has rarely gone well. When King Alexander III died in 1286 without an heir, Scottish nobles asked Edward I of England to referee. Things went so badly, Mel Gibson made a film about it.

More recently, both the Scottish Football Association (SFA) and the Scottish Premier League (SPL) have reached across the border to find executives who could breathe new life into the moribund bureaucracies that were strangling our national game. It seemed a good idea at the time. There were no natural candidates within the Scottish game and the sectarian divide leaves any executive with a history with either of the Glasgow giants facing immediate accusations of bias. Casting the net for executive vision beyond the Solway Firth just made sense.

However, both Stewart Regan at the SFA and Neil Doncaster at the SPL have been major disappointments. In the face of repeated warnings about the greatest crisis in the history of Scottish football, both have been found asleep “on stag”. Stewart Regan’s petulant and immature responses to legitimate questions on his twitter feed have done nothing to suggest that he is a man braced for action. Neil Doncaster just seems to have gone missing altogether. Both men seem to be intent on giving the impression that they came to Scotland to enjoy some good golf and our peerless fishing.

The Daily Mail today quotes former Rangers director, Hugh Adam, as confirming that Rangers had operated with players routinely being issued with secret second contracts going back to the mid-1990s in direct violation of SFA regulations. Despite many warnings that a crisis was brewing, both Regan and Doncaster seem to have shown determination only in burying their heads deeper in the sand. They have had ample opportunity to investigate and to get out ahead of these issues. In my opinion, both have failed, thus far, to lead their organisations in their hour of greatest crisis.

I even tried to alert Stewart Regan.  All I got in return were impertinent and insulting replies as the following Twitter dialog shows from 23 January 2012 (including original typos):

RTC:                    @Stewartregan What penalty would apply to an SPL club that failed to provide SFA with accurate player contracts?

StewartRegan: @rangerstaxcase more ifs buts and mayes

RTC:                    @Stewartregan ?? You have me confused with others on other subjects. Now can you answer the question?

RTC:                    @Stewartregan Darrell King, a respected journalist, says he has seen side contracts for RFC players. Did SFA get copies?

RTC:                    @Stewartregan if / WHEN 😉 it becomes a matter of public record that side contracts existed, do you have a plan if action?

StewartRegan: @rangerstaxcase you have me confused with the SPL. Why not ask them?

RTC:                    @Stewartregan So the governing body of football in Scotland would abdicate its role in the face of falsification of player contracts?

StewartRegan: @rangerstaxcase inappropriate to speculate on such matters.

RTC:                    @Stewartregan It would be wrong to speculate on specific clubs, but you can clarify the rules for the people who pay your wage- fans.

RTC:                    @Stewartregan does SFA get copies of player contracts as part of UEFA licensing process?

StewartRegan: @rangerstaxcase there is no point in answering hypothetical questions and I’m certainly not going to speculate on it.

RTC:                    @Stewartregan fair enough Stewart, but I would get ready to answer this for real if I was you.

We now have two ex-Rangers employees: Darrell King and Hugh Adam confirming the existence of these second contracts. The Sun has published a redacted version of a player’s second contract. For the avoidance of doubt, let me assure the SFA and the SPL that there is more to come in this story- much more.

If Messrs. Regan and Doncaster are to salvage their reputations they need to get out in front of the seemingly never-ending series of revelations about flagrant rule breaking and illegality at Rangers FC. Their organisations are implicated in these scandals: inaction and failure to investigate over a period spanning decades undermines confidence in the SFA and the SPL. Many will say that this was part of an institutional bias that favoured Rangers. Others will say that this was more a fear of challenging the mighty David Murray and his expensively procured media lackeys. I am prepared to believe that it was just rank incompetence.

So far, all we have in the way of an inquiry is an investigation by Lord Nimmo-Smith of the Rangers takeover. The parameters of this work have not been made public to my knowledge.  However, its timeline is too short to include any of the accusations about rule breaking before the Craig Whyte era. The odour emanating from Ibrox in recent months would cause any neutral observer to fear foul play. If Regan and Doncaster have not seen and heard enough to suspect that Rangers FC, by far the most successful Scottish club in the last 25 years, has been operated as a corrupt enterprise during that period then they are unfit for their posts. The integrity of football as a fair competition is in their hands. If these questions are not addressed, we lose any reason to continue to spend our time and money on the Scottish game.

Let me help them in case they have been listening to the wrong people: this story is not going away. There is a lot more to come out. They can choose to lead their respective organisations in cutting out the cancer or they can become infected by it.

Apologia

Just in case some of you do not follow my Twitter account (imaginatively named: @rangerstaxcase), I realised yesterday that I had made a mistake. A few days ago, I tweeted, and posted, that two (2) additional directors of Rangers FC had benefited from the Employee Benefit Trust (EBT) scam that so gravely imperils one of Scotland’s great institutions. This statement followed Craig Whyte’s interview with The Sun newspaper where he named ex-Chairman John McClelland and ex-Chief Executive Martin Bain as having participated in the scheme.

My statement  was issued in error. A more accurate statement would be to say: “At least two (2) additional directors of Rangers FC used the EBT scam that makes insolvency virtually inevitable“. (I hope that my statement did not cause any inconvenience to anyone).

This is important because as company directors they had a responsibility to check that the correct amount of tax, VAT, and National Insurance contributions were paid- and on time. Company directors are required to act in good faith– in the interests of the company as a whole. This includes not having (or declaring) conflicts of interest. Rangers’ accounts for the periods covering EBT use do not mention any directors declaring a conflict of interest. (It is possible that they have declared this in non-public board meeting minutes, but shareholders would not have been aware of this). Their obligation to avoid, where possible, conflicts of interest would have been best served by simply not having any personal benefit from Rangers’ tax strategy. Sticking their own snouts in the trough rendered them “conflicted”. How can you assess the suitability of a high risk tax strategy for a company, when you have a personal incentive (and believed at the time, no personal liability)? Not a single Rangers director is known to have resigned over the issue of tax strategy.

Sir David Murray is beloved by many former employees and associates. He is renowned for his personal generosity to those who do right by him. The question that must be asked: Did David Murray effectively buy off Rangers’ directors opposition by allowing them to participate in the scam?

On other matters, I have been deluged for weeks with questions about “the wee tax case”- has the bill for £2.8m been cleared?, the status of Rangers’ failure to keep up with PAYE & NIC remittances, and the nature of my claim that the club had fallen behind on VAT payments. All that I can safely say just now is that all of these matters are intertwined. To explain more on the complexities of the situation just now would be to get too deeply involved in some delicate issues. It is best that I just leave this subject alone for now. However, rest assured that these topics have not been forgotten by any of the interested parties.