THE taxman had a secret gameplan to push Rangers towards liquidation weeks before its financial implosion so there could be a full investigation over the non-payment of millions of pounds in tax, it has emerged.

Details of HM Revenue & Customs's role as the club financially collapsed show how they wanted to avoid having the business remain under the control of Craig Whyte, whose nine month tenure of the club led to it falling into administration in 2012.

While fans were anxious to prevent a liquidation - fearing it meant the end of the club, behind the scenes, the taxman believed it was the way forward concerned about a wider strategy over the use of Employment Benefit Trusts (EBTs) to pay staff and avoid tax.

HMRC was concerned that the administration could be driven by Craig Whyte - if they did not push their own financial experts in to take control and they wanted Deloitte.

They were worried about a 'risk of conflict' if MCR Partners, who had advised Craig Whyte on his purchase of Rangers from Sir David Murray in May, 2011 for a nominal sum of £1 ended up in control of the administration.

David Whitehouse and Paul Clark of Duff and Phelps ended up being the Craig Whyte-appointed administrators. Both had previously been employed by MCR, prior to its acquisition by Duff and Phelps in October 2011, with Mr Clark a founding partner.

Details of the taxman's secret strategy over Rangers emerged for the first time, as BDO, the liquidators of the Rangers oldco sue the joint administrators of the club Mr Clark and Mr Whitehouse for £56.8m saying a flawed cost-cutting strategy meant creditors lost millions from the handling of the club’s financial implosion.

READ MORE: Rangers administrator insists valuing club brand was 'waste of money' after 'being worth' £16m

Mr Whitehouse and Clark are defending the action in the Court of Session claiming the liquidators expected a “bonkers” strategy of a ‘fire sale’ of Rangers which would have “effectively shut the club down for good”.

The case comes nine years after the Craig Whyte-controlled Rangers business fell into administration and then liquidation leaving thousands of unsecured creditors out of pocket, including more than 6000 loyal fans who bought £7.7m worth of debenture seats at Ibrox.

Creditors ranged from giants such as Coca-Cola to a picture framer in Bearsden and a lady called Susan Thomson who runs a face-painting business and was owed £40.

When Mr Whyte took on the club he agreed to take on Rangers' financial obligations, which included a potential £94m 'big tax case' bill, a £2.8m "small tax case" liability, £18m bank debt, £1.7m for stadium repairs, £5m for players and £5m in working capital.

But he controversially helped fund his takeover by setting up a loan in advance from London-based investment firm Ticketus against rights to three to four years of future club season ticket sales in a bid to raise £24 million and pay off bank debt as part of a share purchase agreement with Sir David.

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Rangers Football Club Plc went into adminstration owing £9m in unpaid tax, but the potential big tax case payment had proved a stumbling block in attempts to sell.

At the end of 2019, the HMRC claim against the oldco had dropped to just over £67m - following an alleged decision to drop penalties totalling £24m, relating to the company's use of EBTs.

Rangers chairman John McClelland had said that ambiguity over the tax burden repelled genuine investors and paved the way for Rangers' collapse.

The dispute involved the way some players were being paid from 2001 to 2009 by the company that then owned Rangers, and the tax that was not being paid on that income.

Money was put into Employee Benefit Trusts (EBTs), located in offshore tax havens.

The taxman said the scheme was tax avoidance and hit Rangers with a bill to pay back the money while the club was under the ownership of Sir David Murray.

HMRC, oldco Rangers' largest creditor effectively blocked a CVA proposal which would have allowed the club to trade its way out of administration worth £8.5m. Preventing the business from being plunged into liquidation, would have kept the club within lucrative UEFA competitions.

A CVA enables companies to reach an agreement with creditors about how debts could be repaid and provides for partial or full repayment, depending on what the company can reasonably afford to pay. But the Rangers CVA proposal offered less than 10p in the pound to creditors.

READ MORE: Rangers liquidators sue former administrators in £28.9 million claim

Mike Baird, who had been the head of the finance professionals unit in HMRC's specialist investigations directorate and was authorised to talk about the strategy of the taxman which has previously been undisclosed due to strict confidentiality rules.

He said the EBT tax case was a key element of their thinking and and that from the end of 2011 through to early February 2012, HMRC wanted a Rangers entity, both to investigate what had happened in terms of debt and one they could take legal action against going forward.HeraldScotland:

"The worry with a Company Voluntary Arrangement (CVA) was that it would negate our ability to pursue this strategy," he told the Court of Session. "At that stage, the EBT case against the company was a crucial lead case for us because we had a number of other cases across the country that were falling in behind it. Therefore there was a wider strategic issue in play."

Six days before the club's business went into administration he emailed a colleague to say he was not sure that concerns over a need for an independent review of matters had been fully appreciated, and that HMRC had to "act quickly".

"I said that any administration driven by Craig Whyte, and bearing in mind the advice he had taken from MCR ran the risk of said administrators looking to exit administration via a CVA and the survival of the company as a corporate entity."

Mr Baird said he made it clear that route would preclude HMRC from having a liquidator investigate the company.

READ MORE: Rangers administrator denies Craig Whyte was 'calling the shots' in £5.5m Sevco sale

"I said that I was very concerned about the possibility of MCR being appointed as administrators. My reason for saying so was also that I believed an independent review by a liquidator maximised our chance of securing greater recovery for creditors," he said.

"I also highlighted the risk of HMRC being perceived to be seen as inconsistent as historically it had taken more forceful action in respect of other Scottish football clubs."

He said he was aware that other clubs has been put into liquidation for non-payment of debts and was concerned that there'd be a "perception that Rangers would be perceived to have been treated differently because of the scale of the club". "I didn't think that was right," he said.

"I thought that we should maintain a consistent line there, and the perception of what HMRC was doing is something that needed to factor into any decision making."

The same day in a call with Deloitte, who HMRC were lining up to act as joint administrators, Mr Baird said he reiterated the taxman's "wish for the administration to lead to a liquidation of the company and the sale of the trade and assets to a new company (newco) so that an investigation could be carried out by a liquidator of events in the company leading up to the rise in HMRC debt".

Mr Baird in evidence to the case which is continuing said they had in mind "a connection between MCR and Craig Whyte prior to administration and that there was a "risk" that CVA would be the desired outcome for Mr Whyte and "possibly members of MCR".

"I think the concern we had was a risk of conflict and therefore whether that make a CVA more likely. I think that that was the risk that we were seeking to address After Duff and Phelps began running the administration, Mr Baird said he had "repeatedly informed the joint administrators" that the preferred exit from administration for the company was into a CVL [Creditor Voluntary Liquidation].

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A fortnight after the administration, Mr Clark told colleagues that HMRC's key aims were to get their money back, exercise full powers of prosecution and where appropriate against company officers, and did not want adverse PR or security issues.

"Liquidation was noted as a perferred outcome to allow for full investigation," he wrote.

Mr Baird did accept that there were eventually some "differences of opinion" among the different teams within HMRC about whether a CVA might be an outcome that would suit them.

He said that on February 16, 2012, David Grier of the Duff and Phelps administration team had met with Craig Whyte who still thought a rescue package was "a possibility".

Mr Grier told HMRC on March 8, 2012 that he had shared their view that there needed to be a full and proper investigation of the circumstances that led to insolvency of the company and that "no stone is left unturned".

The following day Mr Baird said HMRC colleagues stressed the need for an exit from the administration into liquidation to "allow an investigation into how the company had been run and HMRC's debt build up".

He added: "I stated that I was concerned by comments made by Paul Clark in the press that suggested a CVA was his preferred option to ensure the survival of the company."

READ MORE: Rangers FC brand was not valued before being sold for nothing

On May 11, an email from David Grier of notes of a meeting between Duff and Phelps and HMRC representatives revealed that Mr Baird said that should an offer of circa £50m be received versus an offer for liquidation at circa £5m then this would need to be given consideration "but at this time the preferred route is liquidation".

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When an offer was made for £8m from the Charles Green-fronted Sevco with a CVA exit, it was swiftly rejected. The oldco was placed into liquidation on June 14, 2012 as Sevco bought the assets, including Ibrox and the training ground Murray Park for £5.5m and placed into a new company.

Mr Baird said the debate was "do we take the money up front via a CVA on the premise that there may be no recovery by a liquidator after costs etc, or do we go for a CVL [liquidation] and hope that the recoveries were higher?"

He said that with the prospect of potential claims against people advising Craig Whyte and Rangers and potential legal action against directors, liquidation remained the "better option".

Mr Baird was asked why HMRC had not said at a very early stage that they would not back a CVA under any circumstances.

"We could have done that, but I guess it depends on the terms of the CVA, you know, just to rule it out is not an option. I cannot recall another approach where we we will do that because if a CVA put forward met a lot of our concerns in terms of recovery of debt, etc, then, yeah, it would be difficult for us to rule it out. It's something that administrators would have to look at.

READ MORE: 'No f***ing clue': Craig Whyte's 'end game' was for Rangers to go bust, says adviser in secret email

"I think a lot of this concern came with the scale of what we saw to be the non-compliance [over tax] across the club that was the non-payment of the debt and the way that had been building up, and at the same time our concerns about the Employee Benefit Trust arrangements, and again the non compliance there. I think that was the driving factor.

"It was non-compliance on a level that I haven't seen from other football clubs. And so I think that was the thinking, trying to get behind that and that's why I personally thought an exit liquidation would be the better route to try to understand what was going on."