HMRC has lodged an appeal in the latest development of its dispute with Rangers over the Scottish football club’s use of Employee Benefit Trusts (EBTs), states Harris & Co chartered accountant
HMRC had claimed the scheme, which was in operation from 2001 to 2010 and saw £47.65m paid to players and staff in the form of tax-free loans, was illegal.
Rangers disputed this and in November 2012 a First Tier Tax Tribunal ruled the scheme did not breach tax law. Two of the three judges hearing the case concluded that the EBT payments were loans, not earnings, and therefore not liable for income tax.
HMRC has now been granted leave to appeal against this decision and the case will be heard at the Upper Tier Tax Tribunal.
Rangers ‘old company’ (‘oldco’) went into administration in February 2012, after action from HMRC over non-payment of tax totalling about £14m. The club’s administrators then negotiated a sale of assets to a consortium led by Charles Green for £5.5m. Green has subsequently re-launched Rangers in the Scottish Third Division.
In a statement on the Rangers website, Green said:
‘As HMRC stated last June when they decided to vote against the proposed “oldco” CVA, no tax liabilities relating to “oldco” would transfer across to the new company. HMRC have also reaffirmed this position to the club"s tax advisers, Deloitte. There is no money to be gained by HMRC as the old company has been liquidated so you have to ask why they are pursuing the matter further when the original EBT enquiry took years to reach a conclusion?’
In a separate case, the Scottish Football League (SFL) is appealing to the Upper Tier Tax Tribunal over a £12,000 tax dispute with HMRC which relates to the VAT the league pays on medals and flags handed to the winners of each division.
The SFL has lodged a claim for recovery of VAT input tax between May 2007 and May 2010 on the 20 gold medals and flags awarded to each team that won the three divisions during that period. It is arguing that the medals, worth £450 each, should not be classed as ‘gifts’ and therefore are not liable to VAT input tax.