THE decision by HMRC to appeal a tax tribunal judgment that found in the favour of the former Rangers Football Club has been described as an "inglorious hat-trick" by those close to the old Ibrox outfit.

Last month, oldco Rangers won its case against a bill from HMRC over its use of Employee Benefit Trusts (EBTs) to pay players and key club figures between 2001 and 2010.

The oldco successfully argued the payments, thought to amount to almost £49 million, were made in the form of a loan and not subject to tax.

Loading article content

HMRC confirmed yesterday it will appeal the tribunal decision, which was made on a two-to-one majority. A statement said "HMRC will seek permission to appeal the tribunal decision."

While financial observers claim the move was to be expected given the majority basis of the ruling, the news has been met with disappointment by those associated with the Ibrox side.

A source close to the Rangers oldco said: "It is one of the most inglorious hat-tricks ever seen. HMRC has actually lost three times previously when it has sought to challenge EBT loan schemes."

Previously, HMRC won its 2002 case against Dextra Accessories Limited over its use of EBTs but ultimately the House of Lords decided in 2005 payments under EBTs did not qualify, in the main, for tax deductions.

In a separate case, HMRC withdrew an appeal to the High Court in 2009 over the ruling of the Special Commissioner in its case against Sempra Metals, which had also used EBTs.

Rangers was under the control of Sir David Murray when it began using EBTs to make payments to club staff in addition to salaries. Sir David earlier told The Herald Rangers was needlessly destroyed by the long-running HMRC case.

A spokesman for Murray International Holdings, a major shareholder in the club until it was sold to Craig Whyte in May last year, declined to comment yesterday on the HMRC appeal.

The role of EBTs at Ibrox will come under further scrutiny by an independent panel set up by the Scottish Premier League, which will be led by Lord Nimmo Smith and two QCs, Nicholas Stewart and Charles Flint.

Andy Kerr, president of the Rangers Supporters' Assembly, said the HMRC appeal was a disappointing decision.

"It will be very interesting to see how the appeal goes and how they distinguish the Rangers case from these rulings."