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Rangers put into administration over 9m pounds unpaid tax bill

Rangers were forced into administration today over an unpaid tax bill of 9 million pounds, accrued since Craig Whyte's takeover.

Craig Whyte

Rangers appointed corporate financial advisers Duff and Phelps following several hours of legal debate with Her Majesty's Revenue and Customs.

Duff and Phelps later said in a statement: "The appointment follows a petition for administration presented to the Court of Session in Edinburgh today by HMRC following the non-payment of circa 9m pounds PAYE and VAT following the takeover of the club in May 2011."

Mr Whyte on Monday argued there was no reasonable alternative to administration unless an agreement could be reached with HMRC, due to a combination of the club's ongoing financial situation and the impending result of the first tier tax tribunal.

He stressed the importance of the so-called "big tax case", which he claims could cost the club £75million, and Rangers said a final decision would be taken in 10 working days.

But it emerged in court today that Rangers, who have been deducted 10 points by the Scottish Premier League, had lodged their intention moments before HMRC attempted to put them into administration.

And it was later confirmed that HMRC's action had nothing to do with the dispute surrounding payments made to employee benefit trusts from 2001 to 2010, which was heard at a tribunal last month, but on unpaid bills from Whyte's tenure.

An HMRC statement today read: "We can't discuss specific cases for legal reasons but tax that has been deducted at source from the wages of players and support staff such as ground keepers and physios, must be paid over to HMRC.

"Any business that fails to meet that basic legal requirement puts the survival of the business at risk."

Mr Whyte later admitted the club had been running at a loss for some time, resulting in the "regrettable" outcome of administration, which has left Rangers 14 points behind SPL leaders Celtic with only 12 games to play.

In a statement on the club's official website, Mr Whyte said: "Due to its cost structure, the club has been loss making for many months.

"This situation has resulted in increasing liabilities and the club has been in discussion with HMRC regarding these liabilities.

"These liabilities combined with the threat of the outcome of the first-tier tax tribunal left the club no option but to formally restructure its financial affairs."

Paul Clark, who was appointed joint administrator with David Whitehouse, added: "HMRC have been working closely with the club in recent months to achieve a solution to the club's difficulties.

"However this has not been possible due to ongoing losses and increased tax liabilities that cannot be sustained.

"We are working together with management and its major creditors, including HMRC, to achieve a solution to the financial problems which will ensure the ongoing survival of the business, which is of paramount importance to all concerned.

"Rangers has a long and proud sporting tradition - one we all wish to see continue. All stakeholders involved with Rangers are working hard to ensure the long-term future of this national institution."

Mr Whyte stressed the administrators would work in the club's interests at all times and not his own.

He added: "It remains our firm belief that the club's future can be secured and we hope this period of administration will be as short as possible.

"As chairman and a Rangers fan, it is very painful to see the club being deducted 10 league points but I would urge all Rangers supporters to rally round Ally McCoist and the team in these difficult times."

Today's developments prompted former owner Sir David Murray to break his silence on the takeover deal as he expressed "huge disappointment" over the decision.

Sir David sold his stake for £1 in return for assurances from Whyte over investment in the playing squad and the settlement of an £18million debt to Lloyds Banking Group.

Speaking before the revelations over the unpaid 9 million pounds, he said in a statement: "The timing of the appointment of administrators is especially surprising given two facts.

"Firstly, there has been no decision, and there is no present indication as to the timing of a decision, from the first-tier tax tribunal concerning the potential claim from HMRC of £36.5m excluding interest and penalties. Secondly, legal opinion on the strength of the club's case remains favourable."

Sir David also revealed he had sought clarification from Mr Whyte that he had met his obligations, with limited success, and dismissed suggestions he had a legal mechanism to reassume control under the terms of the sale.

Rangers now face a period of huge uncertainty with job cuts likely, including on the playing staff.

The club, who announced a deal to sign Daniel Cousin yesterday subject to international clearance, have also been hit with a signing embargo and have all but lost the league title to Celtic, although they sit nine points above third-placed Motherwell.

They also face a race against time to sort their finances before March 31 or face likely expulsion from Europe next season under UEFA's club licensing criteria.

But the revelation that Rangers owe 9 million pounds in recent tax bills has rocked the club's supporters and left Mr Whyte facing serious questions.

No verdict has been delivered on the major tax case, while Rangers have been involved in another dispute with HMRC over the payment of another bill, for 2.8 million pounds, based on issues before Mr Whyte took control.

The Motherwell-born businessman, who had vowed to invest 25 million pounds in the playing squad over five years, had been under increasing pressure in recent months to clarify a number of financial issues.

The club have still not published audited accounts due before the end of last year or held an AGM as required. That led to trading on their shares being suspended last month by the PLUS Stock Exchange, who are investigating Mr Whyte's admission that he had been disqualified as a director for seven years from 2000, along with the Scottish Football Association.

Mr Whyte also admitted securing funds, believed to be about 24million pounds, from loan company Ticketus in lieu of future season ticket sales, but denied using the cash to fund his takeover.

Meanwhile,  Rangers' Clydesdale Bank Premier League game against Kilmarnock looks set to go ahead as planned at Ibrox on Saturday.

There was an element of doubt over the fixture being played after the Scottish champions went into administration and Strathclyde Police sought assurances they would be paid for policing the event.

However, talks between the police and administrators Duff and Phelps have resulted in assurances that payment for policing will be made.

A Strathclyde Police spokesperson said: "We have had a positive meeting with the administrators and received assurances about payment for the provision of police services at this weekend's match. We are working with the club and planning for the game as normal."

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