Eddiegoldtop says: July 9, 2015 at 6:32 pm On another …

Comment on HMRC vs MGH by easyJambo.

Eddiegoldtop says: July 9, 2015 at 6:32 pm

On another pedantic note :

Is there any merit to now changing the name of this post to HMRC v RANGERS , given John’s information from the first day which states that MHG are not being represented ?

Just a thought , and it would be a truer reflection of the overall picture ?
That info was only mentioned yesterday. More accurately it should be HMRC v RFC 2012(IL)

easyJambo Also Commented

John Clark says: July 10, 2015 at 1:35 am
Thanks for you update on the summing up.

Once again I think the decision will depend on their Lordships willingness to set precedents. The usual cases quoted in EBT type tribunals, Sempra, Dextra, Garforth, Edwards, AAM and now Forde & McHugh were raised by Mr Dunlop, all of which helped his arguments, while Ramsay which seems to be the only case to counter those listed above was barely mentioned.

I believe that HMRC’s position was not helped by Mr Thomson’s performance in the original FTT, who appears to have missed an open goal, while Mr Thornhill was able to appeal to two of the three judges using arguments based on nuances of the aforementioned case precedents.

I don’t know how Lords Carloway, Menzies and Drummond Young will approach their decision. Drummond Young, while appearing to be sympathetic to Mr Ghosh’s arguments, also appeared to be extremely knowledgeable about the finer details of the case precedents, while the other two appeared to have a more practical approach and interpretation that would probably be closer to a common sense interpretation of the facts.

I do hope that the common sense view of the purpose of EBTs and how they are operated does prevail and that the appeal is ultimately successful. My fear however is that it is far easier for the Murray Group companies to defend a two goal lead with the decisions of the FTTT and the rubber stamp of the UTTT behind them, rather that what HMRC have to do to overturn the weight of the previous decisions.

In general terms, I think HMRC does badly needs a victory in one of these cases, otherwise they are going to continue to struggle against the weight of previous case precedents.

Note: The minority decision (Dr Poon’s) was mentioned briefly during Mr Gosh’s submission on Wednesday. I think it was related to Mr Ghosh’s request for the Lords to consider the transcripts from the FTTT (which was turned down).

I’m afraid that I couldn’t make it this morning so we will just have to wait for JC’s account of today’s proceedings.

I went along to the CoS today and an interesting day it eventually turned out to be.

I’ll leave JC to do his usual transcript from his copious notes, but I will give brief summary.

The morning started with a adjournment to fix an IT problem, but we were soon underway with (the almost inaudible) Mr Ghosh following on from where he finished last night.

He reaffirmed his belief that the FTTT and UTTT had failed to consider remuneration and entitlement adequately and thus failed on a critical finding in Law.

He focussed on the transfer of money from the employer to the main trust as being taxable at that point.

He asked to Lords if they would consider some transcripts from the FTTT. After a 30 second discussion, the Lords decided not to, but would rely on the “Decisions” of the FTTT and UTTT.

He then moved onto the jurisdiction of the CoS re English Trusts vis a vis tax law which is UK wide. I wasn’t clear on what point he was trying to make but he didn’t get any dissention from the Lords.

His final arguments were about the roles, responsibilities and actions of the trusts’ Protectors, Trustees and beneficiaries. The main thrust of the argument was that both SDM and ultimately the employees could do what they wanted. The powers of SDM in particular were questioned and deemed to be in excess of what he should be allowed.

Mr Dunlop opened with a little nugget saying that he was only acting on behalf of respondent 5 (I assume that to be Rangers). If I’ve understood what he said correctly, it could be that the other Murray group companies have abandoned the appeal now that they have been liquidated and dissolved.

Dunlop then outlined the four areas that he would address during his submission.
1. The Scope of the appeal
2. Arguments against HMRC’s belief that the FTTT and UTTT had judged the case on the wrong test (funds unreservedly available to the employee)
3. Redirected Payments
4. The role of Protectors (SDM?)

1) He argued that the court should not consider arguments from HMRC relating to matters that were not presented to the FTTT, e.g. the transfer on money from the employer to the main trust.
He also argued that the FTTT and UTTT couldn’t be held responsible for their failing to respond to evidence that wasn’t presented to them
He belied that the Lords should focus more on the UTTT decision than the FTTT.

The three Lords pulled him up about the scope saying that it was agreed by both parties at a pre hearing in May and that Mr Ghosh had only raised issues that had been agreed at that meeting.

2) Mr Dunlop then got himself into difficulty when arguing when payments or entitlements became taxable and what constituted an entitlement.

There were some quizzical looks from the Law Lords and the HMRC representatives. Dunlop was questioned on various aspects of what he was claiming and I didn’t think he got his point across very well.

However, his performance improved a little towards the end of the day when he started quoting from previous case judgements that appeared to support his position.

Mr Dunlop expects to finish his submission around tomorrow lunchtime and it is possible we will get closing arguments completed by the end of the day.

The appeal will be starting at 10am tomorrow to try and get it completed a day early.

I’d give HMRC a win on points today, but I don’t know how positively the Lords will have taken Ghosh’s submission.

Ghosh came across better than Thomson for HMRC at the UTTT, but I felt Dunlop was pretty poor compared to Thornhill.

I’m sure that JC will correct me if I have interpreted or recalled things incorrectly.

Recent Comments by easyJambo

It Is Better To Offer No Excuse Than A Bad One
Allyjambo January 2, 2018 at 14:38
My one overriding memory of the Ibrox disaster was that of the five schoolkids aged between 13 and 15, all from the village of Markinch in Fife, who lost their lives.  I lived just a few miles away and was only 15 myself, at the time.

I remember those losses having a huge impact on the local Fife schools and communities.   

It Is Better To Offer No Excuse Than A Bad One
HOMUNCULUS DECEMBER 28, 2017 at 15:38
It doesn’t matter if it is paid to a trust or your aunt Agatha, you still have to pay the tax. I have no idea why they use the name Agatha, but they do. 
“Aunt Agatha” was used by the RFC QC Andrew Thornhill during the appeals process when discussing the redirection of earnings to a third party.

On a separate point about the share price.  The sale of Ashley’s shares to Club 1872 and Julian Wolhardt was used by King’s QC at the CoS, as an example of shares trading above the 20p price.

The TOP’s QC, however, countered that by claiming that Ashley wasn’t interested in the share price, but was insistent that he received £2m for his shares. To that end, it was pointed out that the price per share paid wasn’t 27p, 27.5p or 28p, but something to the second or third decimal place that ensured that the sum received was not £1,999,999 but a fraction over the £2m figure.  I can’t recall the exact fraction used, but the counter argument put forward seemed entirely plausible.

It Is Better To Offer No Excuse Than A Bad One
Homunculus December 27, 2017 at 22:39
EASYJAMBO DECEMBER 27, 2017 at 22:32
Is there a way of calculating how the issue of new shares reduces the value of the existing ones, or is it not as simple as that. I don’t imagine for a second it is. 
I cannot believe that the sale of new shares does not effect the value of those held by existing shareholders. That would surely be market capitalisation gone mad. 
It’s not as simple as the share price being reduced inversely proportionate to the number of additional shares issued.

The capital value (no of shares x share price) of the club is presently around £16m at 20p a share (80m x 20p), but given that the club also has £16m of debts, you could argue that a debt free club would be worth £32m (or 40p a share).

The value of the shares going forward would depend of the amount of debt written off and the number of shares issued in order to achieve that. e.g. if they double the number of shares to 160m in exchange for writing off half the debt.  The capital value of the club might go up to £24m, as it only has £8m debt, but the value of each shares would probably fall to 15p. (160m x 15p = £24m)

If however, they manage to double the share numbers, write off half the debt, but also raise £4m in new money, then the capital value of the club should go up by £4m (the new money). So you could see the capital value rise to £28m, but still with £8m debt. The share price might then be 17.5p (160m x 17.5p = £28m)

I hope that makes sense. It does to me, but the nuances of share numbers, to debt, to capital raised can easily be lost, if you don’t have an appreciation of where they are at just now, and where they might end up.

It Is Better To Offer No Excuse Than A Bad One
shug December 27, 2017 at 22:05
Great hard fought match tonight.
Sadly, that was two hours of my life I won’t get back.  There was nothing great about it and it was more of a borefest akin to many derbies of yesteryear.  Tom English described it perfectly as “Thud and Blunder”

It Is Better To Offer No Excuse Than A Bad One
Homunculus December 27, 2017 at 18:21
I take it all that has happened is that they passed the resolution allowing them to issue new shares. Those new shares have now been created.
This is them simply notifying Companies House that they have done that, Companies House records show how many shares have been issued.
That has to be done before they can actually sell them to anyone.
Purely a procedural matter I would have though. 
It’s not got as far as creating the shares. It’s merely confirmation that the Board has the authority to issue shares up to the specified limit.  That authority expires on the date of the next AGM.

The allotment of up to a nominal value of £1,086,376.01, means that new shares equivalent to 1.333 times those currently available can now be issued.  I’m sure that there will be a good reason for the number of new shares being set at that specific level, but I can’t think of one. 

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