Three Shakes … and a Twist


Rangerstaxcase says: Monday, October 29, 2012 at 23:06 147 17 Rate …

Comment on Three Shakes … and a Twist by HirsutePursuit.

rangerstaxcase says:
Monday, October 29, 2012 at 23:06
147 17 Rate This

The other biggest factor in determining the bill is whether the FTT contributions are considered net of tax or gross of tax. To explain in detail, Rangers contributed about £49m to staff through EBTs. If this is considered before tax, then the bill would be at most £24.5m (before interest). If considered after tax, the bill would be as high as £49m (before interest)

Justice would require a bill approaching £49m as this was the economic benefit obtained from using the scheme. (If they had paid tax, they would have had to find an extra £49m). However, on some legal technicalities, it is quite possible (even likely) that the payments will be ruled to be pre-tax i.e. we just take roughly half of the amount as the tax bill.

Interest is likely to roughly double the amount of the underpayment. So we can expect to see bills of anywhere from £16-49m plus that again in interest. Any result in this range would be conclusive proof that Rangers were engaged in cheating on a huge scale.

It will be interesting which line is taken.

If what the employees/”service providers” received is taken as being after tax, then the liability (for the missing tax) rests entirely with MIH and Rangers – since they will have been deemed to have deducted the tax but failed to pass it on to HMRC.

If however, the employees/”service providers” are deemed to have received taxable payments with insufficient tax deductions, HMRC will be entitled to send each and every one of those employees/”service providers” a bill for the tax (plus interest) that went unpaid.

Rangers FC’s liability in the BTC is likely to stem from a failure to collect tax – rather than (like CW) failure to pass on collected tax. Whichever way it is decided, the directors of both MIH and Rangers FC will have very, very serious questions to answer.

HirsutePursuit Also Commented

Three Shakes … and a Twist
If Lord Hodge finds that D&P were indeed conflicted – which would appear to be more likely this evening than it was this morning – what realistic options would he have?

In my view, he is likely to do two things:
1. He would almost certainly disqualify D&P’s application for administration fees in their entirety
2. He would appoint BDO, not as liquidators; but (in the first instance at least) as administrators.

I think it unlikely that the noble lord would allow the liquidation to proceed if the integrity of the current administrators is found wanting. If he cannot be sure that D&P acted in the best interest of the creditors, he simply cannot be sure the CVA they presented to the creditors was the best that could have been achieved.

In theory, a better deal for the creditors may have resulted in an approved CVA. Unlikely as this may be (given HMRC’s stated policy) I think Lord Hodge would allow the possibilities to be explored – especially since there will be an additional £3m in the pot.

Now, to be clear, I don’t see Lord Hodge immediately reversing the sale of assets to Sevco; but, I do think that BDO will look, in forensic detail, at the sale. I will not guess what they might find; but, if creditors interests were knowingly prejudiced at the time – and BDO can achieve a significantly better result now – they would be compelled to seek to reclaim those assets. Which would cause absolute carnage.

In the end, I still can’t see an other outcome than RFC being liquidated – simply because HMRC are not going to budge – but it could be another few weeks or even several months before their administration period ends.

In the meantime any chance of a successful Sevco share issue has just gone up…

…actually, on reflection, could they be that stupid??

Three Shakes … and a Twist
Tommy Sheridan was convicted of perjury after the jury were shown a covertly filmed video of him talking to his best man.

There will be no problem whatsoever in presenting this sound recording as evidence in court.

Three Shakes … and a Twist
neepheid says:
Sunday, October 21, 2012 at 23:13
3 0 Rate This
I think there is some room for optimism – but only because I believe HMRC have their eyes on the EPL and want to set a real marker.

BDO will be given a wide-ranging remit to investigate (and challenge where necessary) D&P’s conduct in administration. Normally, what restricts the work of the liquidators is that there is no obvious source of funding for their fees. The appointment of Malcolm Cohen is IMO particularly significant. From that alone I think HMRC really do want BDO to forensically examine what has transpired and are prepared to fund it.

The end-game is still some distance away – because they have a lot of peculiarities to examine; but, I do expect their involvement will open up a significant new chapter in this drama. BDO’s enquiries will, I believe, quickly leave a number of people unable to give to give convincing answers to some fairly straightforward questioning.

How it all eventually pans out, I don’t know; but there are any number of hurdles to overcome before I’d be convinced that the new Rangers will finish this season.

For the avoidance of doubt, I make no allegation of criminal behaviour by any person(s).

Recent Comments by HirsutePursuit

Who Is Conning Whom?
I am with you in most of what you say, but there are some important differences.

SFA Article 6.1 & 6.2 say:

Clubs or associations undertaking to promote Association Football according to the Laws of the Game and these Articles and other rules of the Scottish FA may be admitted as registered members, associate members or full members, subject to the provisions of Articles 6.2 to 6.7 (both inclusive).
6.2 A club or association shall be admitted as a registered member automatically by reason of its being admitted as a member of an Affiliated Association or an Affiliated National Association, or in the case of a club through membership of or participation in an association, league or other combination of clubs formed in terms of Article 18 and in the case of an association by being formed in terms of Article 18, provided it is not already an associate or full member. A registered member shall not be a member of more than one Affiliated Association or more than one Affiliated National Association. A registered member may apply at any time to become an associate member.

We are in complete agreement, I think, that SFA Article 6.2 made Sevco a registered member of the SFA from the date it was accepted by the SFL – 14th July 2012.

But, and I think this is important, the nearest the SFA get to insisting that a club has associate or full SFA membership is Article 6.2 which simply says, ‘A registered member may apply at any time to become an associate member.’
Note: no timescale applies… and no consequences (from an SFA perspective) if a club chooses to not make that application.

So I think we are on common ground that Article 6.2 was applicable as far as the registered membership was concerned – and Sevco did not take the opportunity to apply for associate membership by this method.

If we then go back to what the SFL Rules actually said:

6. REGISTRATION WITH SFA A CONDITION OF MEMBERSHIPA Member or Associate Member who is not already a full or associate member of the Scottish Football Association must make application to become a full or associate member of the Scottish Football Association (as the case may be) within fourteen (14) days of being admitted to membership of the League failing which its membership of the League will lapse, and in the event that the application is unsuccessful, its membership will lapse upon that decision being intimated to the League.

Now, if the SFL was being prescriptive about which SFA Article was to be used (to apply for full or associate membership), and that Article 6 was the only valid route, why mention full membership as an option. If ‘application’ is meant to mean only applications in terms of SFA Article 6, the only relevant option would be to apply as an associate SFA member.

No, the SFL rules are not prescriptive in the manner of that application. I think Rule 16 is clearly written to allow a transfer of associate or full membership from an existing club to a new club or entity under SFA Article 14. 

In fact the only method by which this could be achieved is SFA Article 14

14. Prohibition on Transfer of Membership14.1 It is not permissible for a member to transfer directly or indirectly its membership of the Scottish FA to another member or to any other entity, and any such transfer or attempt to effect such a transfer is prohibited, save as otherwise provided in this Article 14. Any member desirous of transferring its membership to another entity within its own administrative group for the purpose of internal solvent reconstruction must apply to the Board for permission to effect such transfer, such consent not to be unreasonably withheld or delayed. Any other application for transfer of membership will be reviewed by the Board, which will have complete discretion to reject or to grant such application on such terms and conditions as the Board may think fit.

…which allows the board to grant an application for transfer of an existing membership on such terms as it sees fit.

Importantly, the discretion only applies to which terms and conditions to a transfer of a membership that already exists.

Having complete  discretion on how or if that transfer (of full membership) took place is completely within the board’s power via Article 14.

What it doesn’t do is empower the board to create a new type of membership. 

And, even if it does claim to have done so, I still don’t understand how the SFA ‘conditional’ membership would satisfy the SFL requirement for an application for associate or full membership?

Remember, this transfer application was an SFL requirement. The SFA had no interest in whether or not Sevco applied for associate or full membership.

It seems to me that the SFA and SFL approached the Sevco scenario in a similar way as they did when Inverness Caledonian were admitted (as a new club) in 1994.

Difference is ICT, the SFL, SPL and SFA all recognise that that club was founded in 1994.

As I said earlier with regard to the birth of Sevco, the deceit is not so much in what they all did, but in what they said and continue to say.

Who Is Conning Whom?
The new club (Sevco) was issued with written permission to use the name of a club in full membership (Rangers).

This was necessary because both existed as SFA member clubs at the time.

Who Is Conning Whom?
This was the nub of the ‘conditional membership’

10.7 Each club in full membership or associate membership shall in its Official Return register its ground and playing field dimensions and no such club shall remove to another ground without first obtaining the consent of the Board. Any club in full membership or associate membership wishing to make any alteration to its name, its registered ground or its playing field dimensions must first obtain the prior written consent of the Board. No club in registered membership shall adopt in whole or in part the name of a club in full membership or associate membership without the prior written consent of the Board.

Who Is Conning Whom?
The 14 day application deadline was an SFL requirement – not something that the SFA had any locus in considering.

As long as Sevco was a member of the SFL it was a member of the SFA.

It would have been up to the SFL management committee to decide if the application for transfer (rather than application for a new associate membership) met its requirements. If it did not, it would have been within its powers to revoke Sevco’s league membership. It is an arguable point, but there is no suggestion, as far as I’m aware, that the SFL league management committee ever met to even discuss the matter.

Nevertheless, I think you are saying that Sevco was no longer a member of the SFL at the time of the SFA statement – therefore needed this ‘new’ SFA membership category to play Brechin.

But how would any type of membership of the SFA help if it was no longer a member of the SFL? If its membership of the league had already lapsed or been revoked, another SFL EGM would have been required to try and vote the club back in. I’m 100% sure that did not happen.

On 29th July, Sevco must still have been a member of the SFL as the Ramsden Cup was only open to members of that league.

There was simply no mechanism for the club to rejoin the league in the available time. If it did not rejoin (and I’m as certain as I can be that it did not) then it cannot ever have been removed as a member of the SFL.

And as I keep saying, as a member of the SFL, it was also a member of the SFA.

The SFA’s deceit was not in its actions – but was in its words.

Don’t forget that the SFA had to consider the use of the Rangers name. The ‘conditional’ membership squirrel has been particularly useful in covering up the SFA board’s approval for Sevco to play Brechin under the Rangers name.

That, in reality, was the big announcement on that day. The rest was sleight of hand.

Smoke and mirrors.

Who Is Conning Whom?
The golf club analogy has been used before.

Dear old dad is a member of St Andrews (other golf clubs are available). To make best use of the facilities new members must apply to a ‘house’ that will give access to their respective lounges and bars. After 15 years of continuous membership Mon pere was awarded the status of ‘Gold Member’.

Gold Members have their own lounge and gain a range of additional benefits. 

Recently poor old dad has become poorly and suggests that l join the golf club and take over his ‘Gold Membership’.

I join the club and, with a letter of agreement from sickly pater, apply for the transfer of his ‘Gold Membership’ status.

The committee meet and decide that I can only take on the enhanced membership status if old pop dies.

I tell them that father is on his last legs and won’t last the weekend.

As an existing member I can enter the club’s Saturday medal competition. On a conditional basis, they tell me I will be eligible to use the ‘Gold Members’ facilities. They issue me with a letter to confirm this arrangement.

They will reconvene in several weeks to confirm the transfer of membership status – assuming that by then papa will be gone. If he makes a miraculous recovery I must then apply to join one of the standard houses.

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