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Claims of a witch hunt after taxman loses Rangers case

ANGRY Rangers fans are preparing a legal claim over damage caused to the club after the taxman's so-called Big Tax Case was dismissed.

Her Majesty's Revenue and Customs (HMRC) lost its latest legal fight over a claim Rangers were liable for a £46.2 million bill over the use of Employee Benefit Trusts (EBTs) to make payments to players, managers and other staff.

The upper tier judge Lord Doherty yesterday dismissed the appeal against a first-tier tax tribunal (FTT) decision in the so-called Big Tax Case. But he has referred several issues back to the original panel.

HMRC argued the payments should be taxable but Sir David Murray's Murray International Holdings (MIH), which formerly owned Rangers, argued they were loans and therefore exempt.

Sir David said he was pleased with a judgment that left a negligible tax liability.

HMRC is considering another appeal, which could potentially end up at the UK Supreme Court, a process that may take years to resolve.

Enraged Rangers fans maintain the case was the catalyst for the club's disastrous sale to disgraced venture capitalist Craig Whyte and subsequent liquidation and demotion to the third division.

The Union of Fans, which is a leading supporters group, said the reason for the pursuit of a "phantom tax debt" by HMRC, which it had now been proved had no foundation, should be investigated at the highest levels of government.

It said it was examining legal action to right "the wrongs done to Rangers".

The fans said it was made clear to the football authorities and their legal advisers that the club was being unfairly punished, "but various vested interests were determined to take advantage of the situation and do as much damage to the club as possible".

The group said it would liaise with oldco company shareholders and all other interested parties "to see what civil action can be taken against HMRC and the Scottish Football Association in particular".

"HMRC's baseless witch hunt kicked off a chain of events which has done huge damage to Rangers and which the club has done well to survive," it said.

"Various parties have since taken advantage of that witch hunt to benefit personally or to further twist the knife due to their own bigotry and jealousy of our club.

"Rangers fans have suffered greatly over the past four years. We deserve answers on why this was done to our club, we deserve the most robust action possible to be taken against the perpetrators and we deserve every assistance in returning our club to its hard and honestly earned position as the pre-eminent club in Scottish football."

Sir David is believed to have been the major recipient of the EBT discretionary trust 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.

Lord Doherty dismissed the HMRC appeal against a first-tier tax tribunal majority verdict in November 2012 that decreed a £46.2m tax demand on Sir David's company, most of which referred to oldco Rangers, should be reduced substantially.

Yesterday's victory was qualified as Lord Doherty referred an unknown number of termination payments and five "guaranteed bonus" payments back to the original tribunal.

The judge agreed with the argument put forward at the upper-tier tribunal (UTT) that several other payments, including to Sir David, were not special cases and fell under the first-tier tribunal's contention they were loans and not earnings.

But, like the earlier ruling, the latest decision has no bearing on the Rangers of today, as a Charles Green-led consortium bought the liquidated assets of the club in June 2012 following the disastrous reign of Craig Whyte.

MIH said the investigation into the near-decade-long use of EBTs, which stopped before they were outlawed in 2010, had effectively put off respected potential buyers as the firm called for an ongoing police probe into Whyte's takeover to be stepped up.

An MIH spokesman said: "While we have been successful in both the FTT and UTT, there are, as we have stated previously, no victors.

"It is obvious that the much publicised existence of these proceedings overshadowed Rangers Football Club for many years and tarnished the external perception of its value. Notwithstanding all of this, it is abundantly clear that Rangers Football Club would not have gone into administration or liquidation had the purchaser fulfilled its contractual obligations and responsibilities.

"Similar to the resolution of the UTT appeal, we hope that the relevant authorities conclude their investigations and commence proceedings at the earliest opportunity."

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