Big Rangers Administration/Liquidation Thread - All chat here!

[WeeHectorPar]

http://www.contractoruk.com/ebt/

I suppose that I like many others have no real idea about what EBTs really are and have accepted the positions put forward on this and other threads that EBTs are tax-free loans made to players and officials that were never intended to be paid back. However what I read in the above link paints a totally different picture to the one we have been given.

An EBT is simply a discretionary trust – with “offshore” trustees - designed to act as a “money box” for those high earning employees who do not need immediate access to their full remuneration package. In other words, those who are prepared to defer access to remuneration in the form of bonuses and perhaps share options.

The employer establishes the trust making contributions of an equivalent value to the deferred remuneration and the trustees will – at a later date – distribute the trust funds to employees or ex-employees. The basic idea is that the trustees can distribute the trust fund when it is tax advantageous to do so – perhaps when the employee is retired or non-UK resident.

This is a million light-years away from a tax-free loan which may not be paid back but is instead a deferment of a percentage of bonuses (not salary) which becomes liable for tax at the time of payment. The point of having such a scheme is that when the money is paid it is subject to taxation depending on the tax regime at the time of payment, the personal situation of the benefactor and the tax regime of his domicile. This would mean that any funds paid to benefactors resident in Britain at the time of payment would be due for British income tax at the current rate. The reason Rangers are being held responsible for the tax bills is that big clubs are generally willing to pay the tax for their high-salary stars.

If my reading of this is correct, and it logically explains why such a scheme exists rather than the wishy-washy free loan scheme others have suggested, then this is why HMRC correctly consider that Rangers are liable for the tax which is due on these payments. HMRC quite correctly consider that the payment of a bonus in the form of a non-refundable loan constitutes the payment of a bonus and is therefore subject to income tax.

[DuntoiRab]

Our wait may be a long one if it's appropriate punishment we're looking for.

It baffles me how a club can approach the football authorities and are accommodated in the form of negotiations about sanctions that will be applied when contravention of the rules are being considered. Rangers Football Club should have no part in the decision on sanctions that are to be applied.

The argument appears to be that Rangers are in such a mess that it will require a new owner to take the helm and tthe club's misdemeanours should therefore be overlooked. So, liquidation suits the American as it will give him a healthier business and the creditors, tax authorities, tax payers, creditors, rival clubs, rival fans should all rally round losing substantial sums of money, to ensure that a strong Rangers emerges from this shambles of business management.

If all this is allowed to happen the upside (sarcasm alert) for everyone in Scotland will be a competitive Rangers improving the co-efficient in Europe so that Rangers and their friends, Celtic, can enjoy the improved income generation that European football will bring thus allowing them to dominate scottish football for the foreseeable future.

It is, of course, also important that the current voting structure is maintained for the good of scottish football (another sarcasm alert ) as creating an equitable decision making structure would interfere with the aspirations of Rangers and Celtic so the bottom line is that we need to get back to the way things were as soon as possible. Remember, the only reason Kilmarnock, Ayr United, Arbroath and East Stirling exist is to make it look like we have a football infrastructure for the two real football teams to 'represent'

The various surveys showing the disaffection, with the current set up, of football fans in general can easily be disregarded by people with a vested interest in keeping the majority of the money (Old Firm) or the scraps from the table of the big two (other SPL teams). We have been patronised by chairmen, managers and players for so many years now when they proclaim " The fans are the most important part of the game" We know better of course.

If ever there was a time for football fans to stand up and be counted it is now. We can make threats like these ever-so intelligent Rangers supporters who made demands of the administrators to take action by a certain time and as we all realised it was a laughable threat.

No amount of shouting and bawling at matches or on the internet will make a jot of difference. A strategy needs to be employed by football fans that will have an impact on the decision making of the football authorities in particular whilst also influencing our individual clubs.

A boycott of games is a worry as it can have an adverse effect on the clubs we love but there is no doubt it would reap long term benefits in the shape of a more competitive, equitible, fair football environment for everyone. Stopping short of boycotts, the only action that I can think of to exert influence from our perspective would be a supporters' rally where all scottish football fans converge at a central point in a display of unity to protest at the state of our national sport, the corruption that exists and the discrimination of the masses by the few.

Just a thought.

Somebody slap me!

I agree with my fellow Ayrshire football fan. A very good post that seems to have slipped under the radar.

[WeeHectorPar]

Ermm, no hysteria over here.

I know EBTs are a tax planning device.

I know many companies use them.

I know HMRC believe they were misused, and are therefore about to rip your club a new one.

Also:

I know that no current or former rangers employee has stated that they were not beneficiaries of this "planning".

I know that rangers are appealing for help from their support, the vast majority of whom can ill-afford to bail them out in these economic times.

I know that these "planning devices" are theoretically loans.

I know that no current or former employee of rangers has made any public declaration of willingness to repay their "loan".

I know that rangers publicly stated they wanted to leave Scottish football to play in an English league.

I know that since rangers went into administration, four employees have left the payroll. They would need to be on 250k/month each to cover Duff & Duffer's costs, before any other savings were made. No such savings have become apparent.

I know that two players have left rangers, NINE WEEKS into the administration process. Portsmouth got rid of nine within five days.

I know that rangers are so financially bereft that they have NO credit credibility() within the Scottish game.

I know that rangers are now desperate to survive.

I know that the vast majority of Scottish fans want them to die.

KTID

And why should they pay these "loans" back? It is money that was due to them, paid under the disguise of "bonuses" by Rangers. Why would you "borrow" money from your own bank account and then pay it back. Since the money has been paid to these people income tax is due on it or will be if they decide to pay it back and then use it again sometime in the future.

Edited April 22, 2012 by WeeHectorPar

[Cutty Old]

Somebody slap me!

I agree with my fellow Ayrshire football fan. A very good post that seems to have slipped under the radar.

Who would believe it, Ayr and Killie fans agreeing. Whatever next ? Before we know it Ayr United will be winning something.

Sorry............too far !

[Dundee Hibernian]

I watch this thread develop on a daily basis, as obviously do many other football fans. It appears there is a consensus among fans of most clubs that they do not wish to see Rangers in a different guise being allowed access to the spl.

But what to do about this? Boycotts and marches might bring attention to concerns, but would a simple threat to respective chairmen not have a positive effect?

Perhaps emailing something along the following lines (adapted for example if you aren't a season ticket holder):

To whom it may concern,

I am presently season ticket no xxxx stand yyy seat zz.

The reason for this communication is to clearly inform the board of directors that, should it come to pass that a liquidated Rangers newco be allowed direct access to the spl, (there is a strong likelihood that) I willnot be renewing my season ticket for season 2012-13.

Thank you for your attention.

I am undecided about the bit in brackets - (there is a strong likelihood that)

Certainly, I've spent thousands following my club, and visiting other Scottish games while Rangers have allegedly been breaking the rules. I don't feel like spending more money watching cheating.

Edited April 22, 2012 by Dundee Hibernian

[AND180Y]

If you believe that you're a bigger mug than I originally thought. Craig Whyte has run up debts owed to HMRC of around £15M, whilst the previous regime has potential debts of £75M. Looking at the figures, and forgetting the media hysteria and spin, Whyte is relatively insignificant. Even without the Whyte saga, it is hard to see a way in which The Rangers could have avoided liquidation should they lose the FTT (which I'm confident they will).

Eh, happy to discuss my opinion with you but you can cut the personal insults!!

They went into admin for tax debts of £9million, the point is that whilst they (HMRC) may (probably would have) cut a deal with the previous incumbents there wasn't a hope in hell that they would negotiate with Whyte, even his own lawyer is on record as saying that there was a strange hostility towards Whyte from HMRC. There isn't a million quid of assets in all the companies put together that he is a director of (quite why those carrying out due dilligence failed to notice this beggars belief).

In your scenario above an insolvency event would not have happened unless and until a final demand for the tax figure and interest/penalties arrived on the doormat of Ibrox/Charlotte Square and an installment plan was refused. (quite why the revenue would refuse it I don't know? Their duty is maximisation of tax collection).

Oh and lets not forget that if the FTT goes against them, there is the right of appeal to the Upper Tribunal. So quite a way to go yet!

[LovaMan Bairn]

Eh, happy to discuss my opinion with you but you can cut the personal insults!!

They went into admin for tax debts of £9million, the point is that whilst they (HMRC) may (probably would have) cut a deal with the previous incumbents there wasn't a hope in hell that they would negotiate with Whyte, even his own lawyer is on record as saying that there was a strange hostility towards Whyte from HMRC. There isn't a million quid of assets in all the companies put together that he is a director of (quite why those carrying out due dilligence failed to notice this beggars belief).

In your scenario above an insolvency event would not have happened unless and until a final demand for the tax figure and interest/penalties arrived on the doormat of Ibrox/Charlotte Square and an installment plan was refused. (quite why the revenue would refuse it I don't know? Their duty is maximisation of tax collection).

Oh and lets not forget that if the FTT goes against them, there is the right of appeal to the Upper Tribunal. So quite a way to go yet!

Does the tax bill not become liable for payment immediately if they lose the FTT? They can appeal that decision and if successful they would get the money back it would likely take some time.

Whyte didn't pay PAYE or NIC from the outset, I personally think it was always his intention to manufacture an insolvency event.

[Tommy1967]

Some loon on Rangersmedia has posted this:

http://forum.rangers...pic=217616& st=0

[barrysnotter]

Eh, happy to discuss my opinion with you but you can cut the personal insults!!

They went into admin for tax debts of £9million, the point is that whilst they (HMRC) may (probably would have) cut a deal with the previous incumbents there wasn't a hope in hell that they would negotiate with Whyte, even his own lawyer is on record as saying that there was a strange hostility towards Whyte from HMRC. There isn't a million quid of assets in all the companies put together that he is a director of (quite why those carrying out due dilligence failed to notice this beggars belief).

In your scenario above an insolvency event would not have happened unless and until a final demand for the tax figure and interest/penalties arrived on the doormat of Ibrox/Charlotte Square and an installment plan was refused. (quite why the revenue would refuse it I don't know? Their duty is maximisation of tax collection).

Oh and lets not forget that if the FTT goes against them, there is the right of appeal to the Upper Tribunal. So quite a way to go yet!

Insults, boy are you not one sensitive soul? Anyway, read the post again, there were no insults.

You're getting all worked up about timings, I never counted on timings. As I said I can't see any way, even without Craig Whyte, that they could have avoided liquidation. You suggestion that CW will be the reason for not "doing a deal" is yet more spin. Are you really suggesting that they would rather play ball with a company who had allegedly knowingly run up liabilities on £75M over a period of 10 years? Why would they want to do that?

The emotive language used and suggestion that the Rangers case is a big deal to the HMRC is laughable. The are a small fish, just another company and as such they will be treated like any normal company.

Edited April 22, 2012 by barrysnotter

[AND180Y]

Does the tax bill not become liable for payment immediately if they lose the FTT? They can appeal that decision and if successful they would get the money back it would likely take some time.

Whyte didn't pay PAYE or NIC from the outset, I personally think it was always his intention to manufacture an insolvency event.

Not as I understand it. It is payable at the exhaustion of the appeals process.

Was it not VAT, PAYE and NIC (The biggest part being the missing VAT on the Ticketus deal, (circa £5.5million?))

Thats the weird thing about the EBT, the tax due is meant to be £20million plus penalties and interest taking it to £45million. It ran for 10 years so that's £2million a year

(assuming it was being paid at the time) hardly a massive saving in the big scheme of Rangers finances, indeed they could probably have earned that in interest on the money in the trust.

[DuntoiRab]

Who would believe it, Ayr and Killie fans agreeing. Whatever next ? Before we know it Ayr United will be winning something.

Sorry............too far !

TBF, your lot did win the oldest trophy in Scotland from time to time, but it's ours now and you'll never get it back!!

[AND180Y]

Insults, boy are you not one sensitive soul? Anyway, read the post again, there were no insults.

You're getting all worked up about timings, I never counted on timings. As I said I can't see any way, even without Craig Whyte, that they could have avoided liquidation. You suggestion that CW will be the reason for not "doing a deal" is yet more spin. Are you really suggesting that they would rather play ball with a company who had allegedly knowingly run up liabilities on £75M over a period of 10 years? Why would they want to do that?

The emotive language used and suggestion that the Rangers case is a big deal to the HMRC is laughable. The are a small fish, just another company and as such they will be treated like any normal company.

In my opinion calling someone you know nothing about a mug is an insult.

They allegedly ran up liabilities of £20million (then got penalties and interest added) Why would HMRC play ball? To maximise tax recovery of course. (given the purposes of administration enshrined in the 2002 act and the expectation that companies will exit administration therein, it would make an interesting challenge in court were HMRC to (totally)block the mechanism as provided for by parliment).

Given that one of the first things said to new recruits to the department used to be "protect the Revenue at all costs" can you tell me the precedent set where they would write-off, by your assertion, £75 million of our money by forcing a company into liquidation? As you say, with the protection of the 2002 act they will be treated like any other company that is found to have an outstanding debt. (someone once said "Owe the bank a thousand, you've got a problem. Owe the bank a million, they have a problem),

[AND180Y]

<br /><br /><br /><br /><br />Are you serious? Surely this must be an alias at the wind up? Your argument isn't even coherent, other than, "We r ra peepul, it's aw Craig Whyte's fault".<br /><br />You are correct, one of HMRC's primary roles is to protect the revenue at all costs (the cost likely to be RFC in this case). Their long term reputation and ability to retrieve monies in future is more important than say £75M from Rangers. Like I said, Rangers are a small fish, the money owed by Rangers is minuscule in the grand scheme of things. I doubt they would be bothered about losing some spare change. In fact it's probably a fantastic advertising campaign for them. They've already had 2 months of wall to wall coverage in Scotland and even a fair few UK wide reports. I'm sure there are aready wannabe chancers out there that have been put off trying to beat the tax man. £75m well lost.

Glad we agree on one thing, HMRC will protect the revenue at all costs. Just remember that statement in the next few weeks.

Less of the Rangers and watp pish!

If you want to have a serious adult conversation about business, fine, if not don't bother with an apology!

So the facts;

1. Craig Whyte bought a company

2. Craig Whyte whilst running said company neglected to pay taxes as due.

3. HMRC demanded payment of the arrears for the fiscal year 2011/12.

4. Whyte tried to do a deal.

5. HMRC refused and threatened Admin

6. Whyte keen to avoid another director ban tried to call their bluff.

7. HMRC trumped him, but ultimately backed down by allowing Duff and Phelps to become admin. (this is another reason why I don't see an end game of liquidation)

8. Under the 2002 enterprise act the admin has wide ranging powers with the primary focus to save the company or alternatively to maximise return for all creditors, not for one at the expense of others!

Perhaps that's a bit more coherent?

[weirdcal]

<br /><br /><br /><br /><br />Are you serious? Surely this must be an alias at the wind up? Your argument isn't even coherent,

just for the code quoted

[Chuckinho]

We wait even longer with baited breath - my goodnesss 528 pages now...

[p&b is a disgrace]

Not as I understand it. It is payable at the exhaustion of the appeals process.

Was it not VAT, PAYE and NIC (The biggest part being the missing VAT on the Ticketus deal, (circa £5.5million?))

Thats the weird thing about the EBT, the tax due is meant to be £20million plus penalties and interest taking it to £45million. It ran for 10 years so that's £2million a year

(assuming it was being paid at the time) hardly a massive saving in the big scheme of Rangers finances, indeed they could probably have earned that in interest on the money in the trust.

Depending upon the scale of the offense - penalties can be as high as 105% of the underpayment.

[~~~]

http://forum.rangersmedia.co.uk/index.php?showtopic=217644

If HMRC block the CVA, I'm going to consider a small route for my own little protest. It may be a drop in the ocean, but I'd like to deny them, legally, of revenue, where possible.

In order to do this, should they be obstructive in relation to our future well-being, I will buy as much as I can from my purchases via EU sources outside the UK, thus avoiding VAT and duty. I propose an informal protest where we buy our cigarettes, alcohol and clothing from EU online providers or shops when on holiday. We can exploit the common market as some small revenge.

Any thoughts, criticisms?

[barrysnotter]

<br />Less of the Rangers and watp pish!<br /><br />If you want to have a serious adult conversation about business, fine, if not don't bother with an apology! <br /><br />So the facts;<br /><br />1. Craig Whyte bought a company<br /><br />2. Craig Whyte whilst running said company neglected to pay taxes as due.<br /><br />3. HMRC demanded payment of the arrears for the fiscal year 2011/12.<br /><br />4. Whyte tried to do a deal.<br /><br />5. HMRC refused and threatened Admin<br /><br />6. Whyte keen to avoid another director ban tried to call their bluff.<br /><br />7. HMRC trumped him, but ultimately backed down by allowing Duff and Phelps to become admin. (this is another reason why I don't see an end game of liquidation)<br /> <br />8. Under the 2002 enterprise act the admin has wide ranging powers with the primary focus to save the company or alternatively to maximise return for <b>all </b>creditors, not for one at the expense of others!<br /><br />Perhaps that's a bit more coherent?<br />

<br /><br /><br />

I was never going to bother with an apology but thanks for the olive branch anyway. The majority of points seem factually correct, but I'd say 6 & 7 are pure speculation. That aside, I've not posted anything to contradict any of those points. You took exception to my suggestion that with or without Whyte Rangers would have been liquidated. In defence of the Murray regime why do you continue to point out events that occurred after their reign?

Do you seriously believe that in context Whyte's actions alone were responsible for the current position? Would you not say the people responsible for the biggest liability (on completion of the FTT) should be where the majority of blame should be directed. Do you honestly believe that Rangers, under Murray, could have coped with a £75m bill?

[ArabianKnight]

Just noticed on the latest Bbc piece about the blue knights putting another bid in tomorrow that although Rangers missed the deadline for accounts to be eligible for europe, they still applied?

[AND180Y]

Lets try again?

Where have I uttered a word in defense of the Murray regime? The facts are as I stated above and are further illustrated in the opinion of the judge in the Martin Bain case, ie that there was a risk of insolvency, not that they were insolvent! Subsequently and on Whytes watch HMRC issued a demand for £9million which has now grown and it was this demand that led to the business being "unable to pay it's debts as they fell due" and seeking protection from the creditors nothing whatsoever to do with the big tax case.

If there is a liability then of course it is the culpability of the previous board, and their advisors. I for one have never argued differently.

Could Rangers have paid £75million under Murray? Well first off lets not forget that the potential exposure from the big case is £45-50 million, the rest is Whytes watch. Mibbie Murray could have got £24million for some season tickets and paid the rest off over 5 years. We will never know.