THE fury and burning sense of injustice that many Rangers supporters have been nursing over the alleged treatment of their club back in 2012 erupted once more yesterday, as a report in The Times accused HMRC of a ‘blunder’ when calculating their potential tax liabilities over the running of an EBT scheme to pay their players.

On the face of it, no wonder they are upset. The accusations seemed damning right enough, with the apparent miscalculation by Hector and his chums leading to a wildly over-inflated estimation of the tax bill Rangers may face. Just the piffling matter of £50m of a difference, in fact.

In the report, former Rangers director John McClelland laid the blame for the liquidation of Rangers squarely at the door of HMRC, hypothesising that the club would have been a wholly more attractive proposition for potential investors had such a millstone not been placed around its neck. Quite the accusation.


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What of the human cost in jobs lost? The loss of potential earnings as Rangers scrambled around the lower leagues rather than gracing the continental stage? Fans being forced to pay good money to watch a strike force of Kevin Kyle and Fran Sandaza? Was it all because of an accounting error?

Well, no, not really.

As a football reporter, the intricacies of tax law (along with many other things) are somewhat beyond me, but a learned colleague explained the situation as thus.

Imagine, if you will, your payslip at the end of the month. In most cases, as you will no doubt be painfully familiar, the money that actually goes into your bank account will be the net amount, with deductions such as PAYE and National Insurance already removed by your employer by the time you reach the bottom line.

Now, let’s say that Rangers had agreed to pay a player take-home pay of £10,000 per week, for argument’s sake, using an EBT scheme. Once it was established that Rangers would have to retrospectively pay tax on these arrangements, the argument then centres upon whether that sum of £10,000 a week was the player’s gross pay (before deductions) or his net pay (after deductions).

In HMRC’s view, for a player to take home £10,000, their gross pay would have to have been £16,670 or thereabouts, minus 40 percent as per their tax bracket. Liquidators BDO argued though that the liabilities would only be on 40 percent of the £10,000 figure. So, instead of owing approximately £6670 for every week of the hypothetical player’s contract, they would owe only £4000. Following?

With the potential dropping of a penalty fee of £24m after HMRC failed to prove fraudulent or negligent activity in the filing of accounts, and a further £2m wiped out that was agreed between the parties to have been overstated, it all adds up to the £50m difference between what may have been owed, to what actually may be owed seven years down the line.


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So, a huge difference in reality to the liabilities supposedly hanging over Rangers when they entered administration, and subsequently, liquidation, but not a mistake, as such. And enough of a difference to suggest that the club may have been saved had these figures been more accurately portrayed at the time? Sadly, for all concerned, we will never know.

Logically, yes, a club with liabilities of around £20m hanging over them is clearly a more attractive proposition than one with £70m plus of liabilities, but that was far from the only problem that Rangers faced in those days.

Sir David Murray, after all, was a motivated seller. Lloyds were breathing down the neck of the Rangers chairman and urging him to offload the club, which owed the bank around £18m. Even had the tax liability on top of that been £20m or thereabouts, would there have been a buyer willing to ride to the rescue and save the club from the ruinous actions of Craig Whyte, who bought the club for a quid and paid off that debt by mortgaging season ticket money? In Scottish football parlance, mibbes aye, mibbes naw. It will prove a great and frustrating intangible for Rangers supporters for years to come.

The only point in this whole catastrophe that can be pinpointed with any certainty as the moment all of this could have been avoided, is the point that Murray decided to embark upon the widespread use of the EBT scheme. Despite the legal advice given to him at the time, in a sporting sense, and in a moral sense, it was the wrong thing to do.

Rangers may have won a few more trophies and saved some money in the short term by their use, but at what cost? The bottom line is that without it, HMRC would never have darkened Ibrox’s marble staircase.

It also lends weight to those who continue to accuse Rangers of cheating their way to honours. Still, the fury from Rangers fans and their thirst for retribution against HMRC and indeed, football’s own governing bodies, will remain strong.


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The problem though is that this technically has nothing much to do with the ‘new company’ in a legal sense, and it would be doubtful and somewhat illogical for Dave King to resurrect the ‘oldco’ and take on even these reduced liabilities.

In a sporting sense too, it is difficult to see how Rangers would have any recourse against the SPFL. While it may feel to Rangers fans as if their club was harshly treated and relegated down the divisions, they technically started again in the Third Division once Charles Green, another paragon of virtue, bought the assets.

Their application to join the top division was rejected by a democratic vote of the remaining 11 clubs by a margin of 10-1. If chief executive Neil Doncaster could have found a way to shoehorn them into the top league straight away, given his own perilous predictions of financial Armageddon at the time, he no doubt would have.

All of which is a rather long-winded way of saying that there isn’t a great deal that Rangers or their fans can do about all of this.

Their club is back in the top-flight and is back at a level they will feel they should be on the pitch under Steven Gerrard. Nobody knows if that journey would have been smoother had it been known in 2012 what is known now over the level of their liabilities, but at least they have that.