Time for Scots Government to Take Bull by the Horns

HomunculusPosted on8:34 pm - Jul 6, 2017

From the actual ruling, they worked on the basis that the EBTs were lawful, or at least didn’t question it, and decided on sporting advantage based on hiding the side letters (contracts). 

This is taken from the material below. 

The SPL presented no argument to challenge the decision of the majority of the Tax Tribunal and Mr McKenzie stated expressly that for all purposes of this Commission’s Inquiry and Determination the SPL accepted that decision as it stood, without regard to any possible appeal by HMRC. Accordingly weproceed on the basis that the EBT arrangements were lawful.

Issues 1 to 3

[104] As we have already explained, in our view the purpose of the Rules applicable to Issues 1to 3 is to promote the sporting integrity of the game. These rules are not designed as any form offinancial regulation of football, analogous to the UEFA Financial Fair Play Regulations. Thus itis not the purpose of the Rules to regulate how one football club may seek to gain financial andsporting advantage over others. Obviously, a successful club is able to generate more incomefrom gate money, sponsorship, advertising, sale of branded goods and so on, and is consequentlyable to offer greater financial rewards to its manager and players, in the hope of even moresuccess. Nor is it a breach of SPL or SFA Rules for a club to arrange its affairs – within the law– so as to minimise its tax liabilities. The Tax Tribunal has held (subject to appeal) that Oldcowas acting within the law in setting up and operating the EBT scheme. The SPL presented noargument to challenge the decision of the majority of the Tax Tribunal and Mr McKenzie statedexpressly that for all purposes of this Commission’s Inquiry and Determination the SPL acceptedthat decision as it stood, without regard to any possible appeal by HMRC. Accordingly weproceed on the basis that the EBT arrangements were lawful. What we are concerned with is thefact that the side-letters issued to the Specified Players, in the course of the operation of the EBTscheme, were not disclosed to the SPL and the SFA as required by their respective Rules.

[105] It seems appropriate in the first place to consider whether such breach by non-disclosureconferred any competitive advantage on Rangers FC. Given that we have held that Rangers FCdid not breach Rule D1.11 by playing ineligible players, it did not secure any direct competitiveadvantage in that respect. If the breach of the rules by non-disclosure of the side-lettersconferred any competitive advantage, that could only have been an indirect one. Although it isclear to us from Mr Odam’s evidence that Oldco’s failure to disclose the side-letters to the SPLand the SFA was at least partly motivated by a wish not to risk prejudicing the tax advantages ofthe EBT scheme, we are unable to reach the conclusion that this led to any competitiveadvantage. There was no evidence before us as to whether any other members of the SPL usedsimilar EBT schemes, or the effect of their doing so. Moreover, we have received no evidencefrom which we could possibly say that Oldco could not or would not have entered into the EBTarrangements with players if it had been required to comply with the requirement to disclose thearrangements as part of the players’ full financial entitlement or as giving rise to payment toplayers. It is entirely possible that the EBT arrangements could have been disclosed to the SPLand SFA without prejudicing the argument – accepted by the majority of the Tax Tribunal atparagraph 232 of their decision – that such arrangements, resulting in loans made to the players,did not give rise to payments absolutely or unreservedly held for or to the order of the individualplayers. On that basis, the EBT arrangements could have been disclosed as contractualarrangements giving rise to a facility for the player to receive loans, and there would have beenno breach of the disclosure rules.

[106] We therefore proceed on the basis that the breach of the rules relating to disclosure didnot give rise to any sporting advantage, direct or indirect. We do not therefore propose toconsider those sanctions which are of a sporting nature

HomunculusPosted on9:26 pm - Jul 6, 2017

UPTHEHOOPS
JULY 6, 2017 at 20:14
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Not disagreeing with your point at all, quite the reverse. It is well made.

I just want to point out that Rangers owe HMRC a total of £92m, all told.

If it’s the same club I’m sure Her Majesty and her Government would be more than happy if they paid it. Think of what could be done with that much money.

HomunculusPosted on2:35 pm - Jul 7, 2017

I know there is a lot of talk about avoidance and evasion, about the difference between the two about what is legal and not.

The five Supreme Court Judges have rather helpfully cleared that point up as far as it relates to Rangers’ EBT case.

LORD HODGE: (with whom Lord Neuberger, Lady Hale, Lord Reed and Lord Carnwath agree)

1. This appeal concerns a tax avoidance scheme by which employers paid remuneration to their employees through an employees’ remuneration trust in the hope that the scheme would avoid liability to income tax and Class 1 national insurance contributions (“NICs”).

In a 27 page ruling the word “avoidance” appears on numerous occasions. The word “evasion” does not appear at all.

The unpaid EBTs were tax avoidance, no matter how exclusively people may argue otherwise.