How Rangers paid £300,000 EBT fine despite commission saying they are not liable

Confirmation that the club has taken on the payment has came in its annual accounts and follows a dispute over whether the new owners of the club headed by chairman Dave King were liable for the matter.

However despite an EBT commission deciding the newco were not liable to pay, a subsequent Scottish Football Association tribunal found in October, last year, that the club had to cough up.

"The club duly paid the SPFL and the total paid during the year amounted to £286,000 and has been disclosed as a non-recurring cost in the financial statements," Rangers said.

In February, 2013, a commission appointed by the SPFL's predecessor, the SPL - chaired by Lord Nimmo Smith - imposed the fine after finding the Ibrox side guilty of failing to make proper disclosure of side-letter arrangements during 2000-2011.

However, the club avoided the most severe sanction of losing up to five SPL titles won during the period investigated after the commission ruled Rangers "did not gain any unfair competitive advantage".

They found that Rangers, under Sir David Murray's stewardship, entered into side-letter arrangements with a large number of players, with the club making payments to an offshore Employee Benefit Trust (EBT) and payments made to players in the form of loans.

The commission found that those arrangements - which were required to be disclosed under the rules of the SPL and the Scottish Football Association - were not disclosed to the football authorities.

Rangers used the EBT scheme from 2001 until 2010 to give millions of pounds of tax-free loans to players and other staff.

In November, last year, Court of Session judges decided that Rangers' use of Employee Benefit Trusts (EBTs) broke tax rules.

HM Revenue and Customs had claimed the EBT scheme, which was used to make £47.65m in payments to players and staff was illegal.

But the oldco liquidators BDO, has sanction to fight the decision at the highest appeal court in the land, the Supreme Court.

The commission statement read: "Although the payments in this case were not themselves irregular and were not in breach of SPL or SFA Rules, the scale and extent of the proven contraventions of the disclosure rules require a substantial penalty to be imposed.

"Rangers FC did not gain any unfair competitive advantage from the contraventions of the SPL rules in failing to make proper disclosure of the side-letter arrangements, nor did the non-disclosure have the effect that any of the registered players were ineligible to play, and for this and other reasons no sporting sanction or penalty should be imposed upon Rangers FC."

The commision also confirmed an earlier decision that newco Rangers, formed by Charles Green in June, 2012 after the oldco went into liquidation, could not be held responsible for any breach of rules by the oldco.

They added: "In all the circumstances the commission has imposed a fine of £250,000 on oldco."

It went on: "Although we are well aware that, as oldco is in liquidation with an apparently massive deficiency for creditors (even leaving aside a possible reversal of the tax tribunal decision on appeal), in practice any fine is likely to be substantially irrecoverable and to the extent that it is recovered the cost will be borne by the creditors of oldco, we nevertheless think it essential to mark the seriousness of the contraventions with a large financial penalty."

The commission concluded it was clear that the non-disclosure was "at least partly motivated by a wish not to risk prejudicing the tax advantages of the EBT scheme".

But they concluded no sporting advantage was gained, directly or indirectly, partly because of the tax tribunal's findings that the arrangements "did not give rise to payments absolutely or unreservedly held for or to the order of the individual players".

It emerged in March that an independent SFA tribunal, made up of three High Court judges, found the newco Rangers were liable for the fine.

The newco were asked to accept liability for as part of an agreement that led to the award of a licence for Rangers to play in the Third Division in the summer of 2012.

Rangers have said in explaining the payment: "As part of the agreement to allow Rangers to participate in Scottish Football, there was a clause inserted where it was agreed that Rangers would become liable and responsible for the imposition of any sanctions by the SPL for any breach of SPL Rules and or articles by Oldco/Rangers FC (i.e. the £250,000 fine).

"The club believed that the SPFL had, through documents and actions, waived all and any right it may have had to insist upon payment under the clause, thereby holding the vlub harmless in relation to the sanctions. This was disputed by the SPFL.

"Within the current SPFL rules there is a provision (known as the offset rule) whereby if any amounts are due to the SPFL, the board of the SPFL are entitled to withhold amounts due to the club up to the value of the amount outstanding. The board of the SPFL determined that it would impose the offset rule to recover the £250,000 fine from the club.

"As a result of this decision, the club invoked Article 99 of the SFA Articles seeking a determination by an Arbitral Tribunal appointed by the SFA that the sum was not due to the SPFL.

"The tribunal was held in October 2015 and found in favour of the SPFL and as such the club was liable to pay the fine plus associated costs.

"The club duly paid the SPFL and the total paid during the year amounted to £286,000 and has been disclosed..."