HMRC win Big Tax Case; title-stripping, here we come

quote:

---

HM Revenue and Customs (HMRC) has won a judgement that Rangers' use of Employee Benefit Trusts (EBTs) broke tax rules.

Rangers used the scheme from 2001 until 2010 to give millions of pounds of tax-free loans to players and other staff.

In what became known as the "big tax case", HMRC claimed these were salary payments and subject to tax.

HMRC lost its appeals at tax tribunals in 2012 and 2014. Now three judges at the Court of Session in Edinburgh have upheld their appeal.

The appeal was heard by Lord Carloway, sitting with Lord Menzies and Lord Drummond Young.

The judges ruled that if income was derived from an employee's services, in their capacity as an employee, it was an emolument or earnings and "thus assessable to income tax".

...

This is because Rangers went into administration in 2012 and later liquidation.

A 'newco' consortium led by Charles Green later completed an asset purchase and the team started season 2012/2013 in the Scottish Third Division.

The tax liability remains with 'oldco' Rangers and will be addressed by liquidators BDO, along with claims from other creditors who were left out of pocket after the club's financial collapse in 2012.

...

Today's court ruling will have no financial impact on Rangers, but questions will be asked about the possibility that the club gained an unfair sporting advantage during the years in question.

Lord Drummond Young himself said in his ruling that if the club hadn't operated the EBT scheme, some players "might well have taken their services elsewhere".

---