SIR David Murray is celebrating a "comprehensive victory" after judges threw out a claim by the taxman that Rangers were liable for a £50 million tax bill over the use of Employee Benefit Trusts (EBTs) to make payments to players, managers and other staff.

The 'oldco' club, which is now in liquidation, paid out £47.6m between 2001 and 2010 to players and staff in the form of tax-free loans, resulting in the so-called "Big Tax Case" with HM Revenue & Customs (HMRC), which believes they are illegal.

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However, Rangers' appeal against the bill was upheld in a majority ruling by a First Tier Tax Tribunal, with two judges voting in the club's favour and a third siding with HMRC.

The tribunal ruled EBTs should be considered legal loans which can be repaid, though HMRC has indicated it will consider appealing against the verdict.

The decision was welcomed by Sir David, the former chairman, in a statement issued by his company, Murray International Holdings. It held Sir David's majority stake in Rangers until he sold out for a nominal £1 to Craig Whyte in May 2011.

A source said Sir David had always been confident the club would be exonerated of any wrongdoing in its use of EBTs. He said: "Sir David, from day one and all along ... was confident the company had not breached tax law, and that ... if it did go to tribunal [it] would find in the company's favour.

"Two highly respected, highly experienced judges have found conclusively in the club's favour. This is not a partial victory, this is comprehensive."

An EBT is a discretionary trust set up for the benefit of employees. Sir David is believed to have been the major recipient of the scheme, reportedly banking £6.3m of tax-free income over nine years, while managers Alex McLeish and Dick Advocaat received £1.7m and £1.5m respectively.

Other beneficiaries are thought to have included former club captain Barry Ferguson, goalkeeper Stefan Klos, and players Tore Andre Flo and Ronald de Boer.

The source added that there was a feeling among those at Murray International Holdings, including Sir David, that the lengthy legal battle could have been avoided if HMRC had been willing to settle earlier, when the company offered a compromise agreement of £10.5m.

He said: "Two years ago, almost to the week, Mike McGill – who is, and continues to be, the group finance director for Murray International Holdings – met in London the permanent secretary for tax at HMRC and at that time sought to reach an out-of-court settlement.

"When you see the comprehensive manner of the tribunal's judgment, it's difficult to understand exactly why they've chosen to pursue this particular case with such vigour and aggressiveness, particularly when the company was two years ago trying to reach a reasonable settlement."

The MIH statement read: "We are pleased with the judgement which leaves minimal tax liability and overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH itself.

"This has been an exceptionally long, difficult and expensive process involving not just the Tax Tribunal but also significant efforts to resolve the matter with senior HMRC officials on a commercially sensible basis for all parties.

"We will therefore review the detailed content of the decision with our advisers and legal counsel to ascertain what action, if any, is now required by MIH.

"While MIH has at all times respected the privacy of the Tax Tribunal proceedings, a substantial quantity of confidential information relating to the case has become available for public consumption, stimulating considerable discussion and often ill-informed debate.

"This has been wholly inappropriate and outwith the fundamental principles of natural justice.

"We therefore formally request that the relevant authorities investigate how these sensitive details have been released so widely.

"We have instructed our lawyers to retrospectively review online and printed publications relating to the case to identify whether legal redress is either appropriate or necessary."

A spokesman for HMRC could not comment on the specifics of the case with the prospect of an appeal. It has around 50 days to lodge a challenge.
He said: "We are disappointed that we have lost this stage of the court process and are considering an appeal. The decision was not unanimous and the diligence of HMRC investigators was acknowledged by the whole tribunal.

"HMRC is committed to tackling avoidance and it is right we challenge the type of avoidance seen in this case."

Andy Kerr, of the Rangers Supporters' Assembly, said: "It's removed the notion that we achieved some of our successes at a time when we were doing something illegal, which we obviously weren't."

Rangers chief executive Charles Green said the verdict "undermines the validity" of a Scottish Premier League investigation into alleged undisclosed payments to players.

One of the possible sanctions, should Rangers be found guilty, is the stripping of titles.

The three-man panel, chaired by Lord Nimmo Smith, was due to begin hearing evidence last week but the case was postponed with no new date set.

A statement from Green read: "The judgment serves to further undermine the validity of the SPL commission into the use of EBTs.

"As we have said all along the SPL decision to press ahead with a commission was ill-timed and fundamentally misconceived."

Green's consortium purchased the business and assets of Rangers after they were consigned to liquidation in the summer. The Ibrox side were subsequently relaunched as a newco in the bottom tier of Scottish football.

Green added: "I am sure that all Rangers fans will welcome that a judgment has been reached on this case at last.

"That said, the judgment will not affect the operations of the club nor the proposed flotation of the business as a public company.

"This case is historic and was a matter for The Rangers Football Club plc ('oldco') which is in liquidation.

"The Rangers Football Club Ltd is a corporate entity formed following the acquisition in June this year, by a consortium led by me, of the business and assets of Rangers, including the club and its honours.

"As HMRC stated in June when they decided to vote against the proposed oldco CVA, no tax liabilities relating to 'oldco' would transfer across to the new company. HMRC have recently reaffirmed this position to the club's tax advisers, Deloitte. The Rangers Football Club Ltd is a company free of external debt."

Former chairman Alastair Johnston agreed with Green's assertion that Rangers should have no case to answer in relation to the SPL probe in light of the tribunal's verdict.

He said: "If indeed there was any culpability, it would have been not furnishing the information pertaining to a second contract, if indeed there was one.

"What this decision does, it totally removes any obligation that the club would have had to submit these contracts to the SFA or the SPL because they would not have been considered contracts for participation at football.

"The whole concept of Rangers being stripped of titles should go away - and go away quickly."

Johnston also believes the painful process of administration and liquidation could have been avoided had the tax case verdict been known before Sir David Murray sold his majority shareholding to Craig Whyte for £1 in May 2011.

He said: "We would not have gone through the administration and liquidation process, for sure.

"If you will actually wind the clock back to the alternatives that the bank (Lloyds) and Murray Holdings had with respect to alternatives, the big hang-up was the contingent liability with this massive tax liability hanging over our heads."