The departing chairman of Scottish football team Rangers, Dave King, will consider taking legal action against HM Revenue and Customs (HMRC) if it is proven there were errors that contributed to the collapse of the club.
Newspaper The Times reported in early November that £26m ($33.5m, €30.4m) of charges had been wiped off the £74m bill owed by the oldco Rangers, RFC 2012, in relation to its use of the offshore trusts, known as employee benefit trusts (EBTs).
Appeals over other elements of the bill have been launched, which could potentially result in a total reduction of up to £50m in the amount due.
This sparked claims that, if the tax liability would have been in the region of £20m, Rangers may have found a buyer other than Craig Whyte, who led the football club into insolvency in 2012 as a result of not paying PAYE and VAT.
Robust defence
Barbara Bento, associate director of tax investigations and dispute resolution at Buzzacott, told International Adviser: “The matter at issue is whether HMRC failed to follow procedure and exercise its best judgment when assessing what it considered was the liability arising from the use of offshore structures.
“Whilst we have experienced on cases HMRC acting disproportionately and unfairly when raising assessments, in our experience, in a case such as this involving offshore structures to gain a financial advantage at a loss to the Exchequer, it will be difficult to demonstrate HMRC may have made errors of best judgement.
“I would certainly expect HMRC to robustly contest any such allegation to avoid any precedents being set,” Bento said.
When asked by IA about King’s statement, HMRC said it “won against Rangers’ tax avoidance in the Supreme Court and did not miscalculate anything”.
Personal legal action
According to various media reports, King said during a Rangers’ annual general meeting on 26 November: “It’s not really a club issue.
“From a legal point of view, if it turns out the information is correct, [the newco The Rangers Football Club Ltd] would have no claim.
“The real victims are supporters and shareholders, who could raise an action but it’s not for the club.
“I have no idea if HMRC have done anything wrong, but my view is that there are allegations out there and if they turn out to be substantially true, as much as the club is not affected by that, as a shareholder I would be willing to file an action against HMRC and then donate the money to the club.”
Historical events
In July 2017, the UK Supreme Court ruled in favour of HMRC in its seven-year pursuit of Rangers for aiding and abetting tax avoidance using EBTs.
More than £47m was paid to players, managers and directors between 2001 and 2010 in tax-free loans using EBTs in Jersey.
These debts forced the club to enter liquidation. But it resurrected itself after the administrators completed a sale of the business and assets to a new company called Sevco Scotland Ltd.
