Comment: Significant conclusion raises serious questions

Richard Wilson

Sports writer

Friday 23 November 2012

The majority decision by the First Tier Tribunal in favour of Rangers should prompt a period of reflection.

Craig Whyte's tenure will be closely examined

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Richard Wilson

So many of the decisions made in the past eight months were shaped by the assumption that the Ibrox club was guilty of mis-administering a tax avoidance scheme on such a grand scale that some people were emboldened to demand that the five league titles won during the club's use of Employee Benefit Trusts should be stripped away.

Rangers were accused of spending money they could not afford, of not paying taxes due on the EBT payments from 2000 to 2010, and of player registration breaches, so that the club became vilified. The FTT verdict has turned most of those assumptions back around again. Questions arise about so many aspects of the club's move into administration then liquidation that Paul Murray, the former Ibrox director, has called for a full inquiry.That will take place, since the liquidators, BDO, have full powers to investigate every aspect of the club and the events that consumed it, reaching right back to Donald Muir joining the board and the chain of events that led to Craig Whyte buying the club from Sir David Murray for £1, while paying the £18m owed to Lloyds Bank with money that he turned out to have borrowed against season ticket sales from Ticketus. David Murray has always denied that he was forced to sell the club to Whyte, but others believe that Lloyds were keen to offload the club.The result of the big tax case remains a deeply significant moment, though, even if there is no material effect on the club, since it is now owned by The Rangers Football Club, which was formerly known as Sevco. Last summer, an early draft of the five-way agreement among the SPL, the SFL, the SFA, oldco Rangers and newco Rangers included the club having to agree to titles being stripped, which Ally McCoist and the directors refused to accept.In light of the FTT verdict, that seems a prejudicial stance for the SPL to have taken, and has rightly prompted anger among Rangers supporters about the independent commission which is to sit early in the new year and judge whether or not the way the club administered the EBTs constitute a breach in player registrations.The commission has, in theory, 18 possible sanctions to choose from if Rangers were to be found guilty, but the club was asked in the summer to accept title stripping, the severest punishment of all. The fact that the FTT ruled that the EBT payments were discretionary loans would point to Rangers being found not to have breached registration rules, but some EBTs were due tax and so there is still no clarity.There are other issues raised, though. Administrators Duff & Phelps admitted Her Majesty's Revenue and Customs on to the creditors' list for the full potential amount of the disputed tax bill, penalties and interest, a figure they estimated at around £75m, before increasing that valuation for the final creditors' report to around £90m. This essentially allowed HMRC to rule on the Company Voluntary Arrangement vote, since they held the majority of the debt, and the tax man rejected the proposal, sending Rangers oldco into liquidation.Yet an experienced insolvency practitioner has told Herald Sport that his view was that "HMRC should have been admitted to vote on the token sum of £1, although in due course they would have ranked for payment in whatever full sum was decided upon by the FTT". This would have left the fate of Rangers oldco in the hands of Ticketus, the other major creditor, who voted in favour of a CVA.In the investigation that follows, it is likely that the work of Whyte and Duff & Phelps will come under the closest scrutiny. Given the cost of the insolvency process, the cost of SPL, SFA, UEFA proceedings and costs related to the SFL application, the losses to creditors, the losses to shareholders, the losses to debenture holders, the loss of transfer fees through players leaving as free agents, the loss of future SPL revenues, the loss of European revenues, and the loss of reputation, the entire process has cost significantly more than £50m.Yet it ought to have been avoidable, and legitimate questions can be asked why it took the FTT so long to come to a judgment on the big tax case, and why HMRC allowed Whyte to remain in charge of Rangers for so long while not paying PAYE. Supporters of the Ibrox club can take comfort from the FTT decision, but it also raises a number of serious questions.

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Comment: Significant conclusion raises serious questions

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