Rangers put into liquidation by HMRC

HMRC has refused Charles Green’s proposed company voluntary arrangement (CVA), which means the Ibrox club will go into liquidation within the next few days.

HMRC is reportedly owed more than £21m by the club, thus ensuring the liquidation of Rangers.

The Revenue issued the following statement: “Liquidation provides the best opportunity to protect taxpayers, by allowing the potential investigation and pursuit of possible claims against those responsible for the company’s financial affairs in recent years.”

Placing the club in the hands of the liquidators is also expected to kick off a detailed investigation into the financial affairs of Rangers over the past two decades.

Green had hoped his £8.5m offer would be enough, but with 38% of the current £55m debt belonging to HMRC and 75% creditor approval required, the department's approval was central to his plans.

Last night Green attacked HMRC for misleading him, saying: “It’s massively disappointing and I think to some extent we have been misled by HMRC.

“Duff & Phelps have consistently said to me that they were in dialogue with HMRC and that they hadn’t rejected the CVA route.”

He will now complete his purchase of Rangers’ assets, including Ibrox Stadium, Murray Park and the Albion Car Park, for £5.5m at the end of this week.

Last month administrators Duff & Phelps gave Green preferred bidder status and last night joint administrator Paul Clark closed the door on any rival bid for the club’s assets being considered, claiming the agreement was binding.

Green and Duff & Phelps remain adamant the contracts of players will transfer over to the new company, an issue disputed by the players’ union and PFA Scotland.

* * *

14 May - Rangers FC has been rescued by the "Green Knight" in the form of Charles Green, former chief executive of Sheffield United FC. Backed by international venture capital funding, he has successfully concluded an £8.5m deal with administrators Paul Clark and David Whitehouse of Duff & Phelps.

Although the Green consortium has been involved for a number of weeks, there was considerable uncertainty as to the developments.

"I don't know if they are going to do due diligence or if they are just going to buy the club," manager Ally McCoist was quoted as saying.

Green now is reported to have promised to bring “governance and compliance” to the club, that will this week appeal against a 12-month transfer embargo and the £160,000 fine imposed by the Scottish Football Association for “bringing the game into disrepute” under current owner Craig Whyte’s tenure.

Green, with a 20-member consortium from UK and Asia, hopes to take Rangers out of administration with a company voluntary arrangement (CVA) with creditors on 6 June.
The consortium emerged publicly as the third contender in the wake of American millionaire Bill Miller’s withdrawal as preferred bidder, and failure of Scottish businessman Brian Kennedy and former Ibrox director Paul Murray of the Blue Knights consortium, to have their offer for the club accepted by Duff and Phelps.

* * *

8 May - Turmoil returns to Rangers after Bill Miller withdrew his bid. According to the BBC, the US trucking tycoon blamed fan opposition and fresh information that revealed the seriousness of the club's finances.

The administrators, however, said they still had options remaining, with bids from three other parties on the table. 

* * *

4 May - The £11m bid for Rangers FC from US trucking tycoon Bill Miller will be taken forward by the administrators as the preferred bid. After a week of deliberations, administrators Duff & Phelps confirmed last week that they had chosen a preferred bid from the two offers received for the football club.

"we have received an unconditional bid for the business and assets of Rangers Football Club plc from Mr Bill Miller which has been accepted and he is now the preferred bidder. Mr Miller now proposes to complete his transaction by the end of the season," administrators Duff & Phelps said in an official statement. "After many weeks of negotiation and deliberation we believe that the structure of the bid from Mr Miller provides not only the most deliverable outcome but preserves the history of the Club. Rangers Football Club will continue as the football club it has been for 140 years...

"Mr Miller's proposal involves the use of a specially created newco in addition to the retention of the Rangers Football Club plc. The business and assets he proposes to purchase will be sheltered in a newco and returned to the plc once the plc has been 'cleaned up'."

There was some surprise that Miller was selected ahead of the higher profile bid put together by "Blue Knights" Brian Kennedy and Paul Murray, but Duff & Phelps commented: ""The bid submitted by Mr Miller is substantially greater than any other proposal and provides the best return to creditors."

* * *

27 April - Joint administrator David Whitehouse confirmed that they had received two formal bids for control of Rangers Football Club. Both bids at this stage remain conditional.

“We are in receipt of a bid from Bill Miller whose bid is conditional on securing greater comfort and clarity from the football authorities in relation to sanctions against Rangers. Clearly, the events of last Monday night when the SFA’s judicial panel imposed severe and, in our view, unwarranted penalties on the Club had a destabilising effect on the sale process.”

Nevertheless, Miller and his team have adjusted the structure of their bid to ensure the club can go forward to meet the football authorities' requriements.

On behalf of the so-called "Blue Knights", Brian Kennedy and Paul Murray also submitted a bid conditional on a CVA being approved by creditors and the acquisition of Craig Whyte's shares in club. Ticketus, which owns some of the revenue streams from future season ticket sales, withdrew as a potential partner from the Blue Knights bid, Whitehouse added.

“What should be clarified is that neither bid involves liquidation of the football club. In terms of quantum, there are significant differences between the two offers in terms of a prospective return to creditors and approach to future funding and these have to be evaluated. We will provide a further update as soon as possible.”

* * *

24 April - Rangers owner Craig Whyte was given a lifetime ban from involvement in Scottish football along with a 12-month transfer embargo for the club. The transfer embargo prohibits Rangers from signing any players aged over 19 years and is a major obstacle for the two remaining bidders in rebuilding the side.

The process of identifying a preferred bidder for the club continues to be unresolved with US magnate Bill Miller and the Blue Knights consortium still in the running.

The Scottish Football Association (SFA) judicial panel has also fined the club £160,000 for five breaches of their Articles of Association and fined Whyte £200,000 for two offences.

The panel found that Rangers:

  • failed to observe statutes and directives - £10,000 fine
  • had undergone an insolvency event - £50,000 fine
  • had brought the game into disrepute - £100,000 fine.

Whyte dismissed his personal ban, but told The Telegraph it was very harsh on Rangers:  “I am surprised at how harsh the SFA have been on a club which is going through tough times at the moment.

"The SFA want to kick Rangers when they are down and I hope people remember that. They are playing to the media."

The club’s administrators, Duff & Phelps, also complained about the severity of the sanctions amid fears that the prospective buyers, Bill Miller and the Blue Knights consortium, may withdraw their interest as a result.

In a statement it condemned the sanctions, Paul Clark, joint administrator, said: "All of us working on behalf of the club are utterly shocked and dismayed by the draconian sanctions imposed on Rangers in respect of these charges.

"It appears that on one hand the disciplinary panel accepted our central argument that responsibility for bringing the club into disrepute lay with the actions of one individual - Craig Whyte - as is evident from the unprecedented punishment meted out to him.”

Meanwhile, speculation continues over the outcome of Rangers' tax tribunal involving their implementation of an EBT scheme where up to £50m is at stake.

* * *

20 April - Duff & Phelps, the administrators of Rangers, issued the following statement on the bidding process, reiterating that no unconditional bid had been tabled by any party:

“There have been a number of complicating factors in recent weeks, not least the cloud of possible further SPL sanctions against the Club and the withdrawal of one of the parties last week when it emerged they had no formal agreements in place with their partners .

This, combined with uncertainty regarding the role of Ticketus in any future ownership, has led to delays that we and all Rangers supporters would prefer not to have occurred.

Let me be clear - we could not have moved more quickly during the past week as there was not a bid capable of acceptance.

Despite suggestions to the contrary, it is not a case of the administrators refusing to nail down their choice - we can only accept a bid that is unequivocal.

Today, we have seen the Singapore consortium led by Mr Bill Ng issue a statement announcing withdrawal from the process whilst indicating the possibility of launching a bid again at a later time.

This has been reflective of the changing position of bidders.

We have also read the statement by Mr Bill Miller that sets out a vision for the Club, but acknowledges it as being dependent on possible SPL sanctions. We can however say that if these issues could be addressed the structure of the bid has potential.

As things stand tonight, the Blue Knights have informed us they are in discussion with Ticketus. We will consider what progress they are making with a view to making a final decision at the beginning of next week.

We realise the frustrations of the Rangers fans who want this process to come to a swift conclusion.”

Duff & Phelps then gave Blue Knights, led by former Ibrox director Paul Murray, 48 hours to submit a bid strong enough to take the club out of administration through a Company Voluntary Arrangement (CVA).

Administrator Paul Clark confirmed that if the Blue Knights consortium – which has the backing of Ticketus – did not make a new offer, then Mr Miller would be given preferred bidder status.

The previous week Duff & Phelps had detailed its case for "consequential losses" in legal documents now lodged with Collyer Bristow, the firm which led the negotiations that saw Whyte buy the club for just £1.

The administrators are understood to have made allegations of professional negligence and a breach of rights and obligations against the firm.

The legal move was the latest attempt by Duff & Phelps to reclaim money owed to Rangers, however Collyer Bristow said the claims would be contested "in the strongest possible terms".

* * *

5 March - As the administrators from Duff and Phelps seek £1m a month savings, the highest-paid players at Rangers reportedly offered to take a 75% wage cut, with less well paid squad members taking smaller reductions. The offer was sanctioned by the players' union, but no agreement was reached.

As the team slumped to a 2-1 defeat to Hearts on Saturday joint administrator David Whitehouse said job losses were likely and that PFA Scotland's offer for wage deferrals was unacceptable.

* * *

2 March - The administrators for Rangers FC confirmed they had secured a court order to seize £3.6m from Craig Whyte’s solicitors.  Law firm Collyer Bristow, holding the funds, has now paid the amount into an account held by the administrators' lawyers Taylor Wessing, reported STV Scotland. Collyer Bristow will disclose details of all payments made by it on behalf of Rangers since Whyte's takeover in May 2011.

The £3.6m will be frozen in Taylor Wessing's account until the court decides on whether Rangers is entitled to the proceeds. Joint administrator Paul Clark said: "We made this week an emergency application to the High Court in London to secure money held in the client account of solicitors, Collyer Bristow, who had acted for the purchaser of the Club in May 2011 and the decision on redundancies at Ibrox is postponed to this coming week.”

Money from the sale of season tickets to Ticketus, thought to be around £24m, was transferred to solicitors Collyer Bristow before Whyte’s takeover. Of that, £18m was used to pay off debts owed to Lloyds Banking Group.

* * *

2 March - Former club director Hugh Adam alleged that some players at Rangers have "hidden" contracts where the full paperwork was not been submitted to the Scottish Football Association. 

The latest allegation of impropriety has been referred by the SFA to an independent inquiry led by Lord William Nimmo Smith. The panel also includes Professor Niall Lothian, a past president of the Institute of Chartered Accountants, and Bob Downes, deputy chairman of the Scottish Environmental Protection Agency. 

With talk of redundancy among the playing and coaching staff becoming rife, the BBC reported Rangers players rejected a proposal to play for the rest of the season for free. 

* * *

1 March - Thomas Docherty, the MSP for Dunfermline and West Fife called into question the actions of Rangers FC administrator Duff and Phelps in a Commons debate on Scottish football tax liabilities last night.

“Rangers entering administration has had a devastating impact on Rangers staff; companies owed money by Rangers; and the [Scottish] Premier League 11 members,” he said.

Two clubs in the SPL claimed to be owed ticket sales money by Rangers. SFA and SPL rules dictate total gate receipts for a league game belongs to the home club, but revenues are shared for cup games. The nature of Scottish football means that the impact on other clubs of the Rangers crisis is severe. The annual wage of a Dunfermline player is less than the weekly salary of a Manchester City, Chelsea, or Manchester United squad player, the MSP added.

When Rangers went into administration, Duff and Phelps refused to hand gate receipts money to Dundee United or Dunfermline, arguing it should go into the pot of creditors’ money.

“The message to Rangers administrators is: that money does not belong, and has never belonged, to Rangers. Holding on to it is… nothing short of theft,” Docherty argued. For the two clubs involved, despite the support of the SPL and the SFA, it will probably take months to recover money to which they are legally and morally entitled from Duff and Phelps.”

Edinburgh-based Heart of Midlothian, meanwhile, said it is owed close to £1m for the transfer of a player to Rangers. 

* * *

28 February - Rangers FC was fined £50,000 by the PLUS Stock Exchange for failing to disclose Craig Whyte's previous disqualification as a director when the takeover of the club was completed in May last year. Whyte was disqualified in 2000 for seven years, but the Ibrox club did not confirm this to the regulator until November 30 – six weeks after the Insolvency Service had done so.

If the club does not file its audited accounts by 31 March, it is likely to lose European football next season under UEFA rules. Strathclyde Police also warned Rangers that it would not be able to provide policing for matches at Ibrox, unless it was paid up front. Whyte, meanwhile, is due to return to UK from his Monaco home today to meet with the administrators.

* * *

22 February - As they pore over the books of Rangers Football Club, administrators from Duff and Phelps, are considering a couple of key questions.

The first question, since they were called in as a result of non-payment of £9m in VAT and PAYE, revolves around whether this money was being used to fund day-to-day activities, which could indicate that the club was trading while insolvent. For current owner Craig Whyte and his fellow directors, this is the more serious question as it could result in further legal action against them.

But much of the attention around the administration is focusing on what happened to the £24m or so that Whyte raised by taking out a loan against future season ticket revenues with the agency Ticketus.

A spokesman for the administrators said they could not comment on any point of law. Investigations were still continuing about why the tax went unpaid and what identifiable assets the club retained. “At this stage it is far too early to identify what long term reasons exist other than to say all football clubs need to get into a position that income exceeds expenditure,” the spokesman said.

Joint administrator David Whitehouse released a written statement to answer concerns about agreement between the Rangers and Ticketus.

“Following information received, it is now apparent that the proceeds from the Ticketus arrangements amounted initially to a sum in the region of £20m plus VAT. Subsequently, £18m was transferred to the Lloyds Banking Group,” he said.

“The application of the remainder of these proceeds is subject to further examination.

“We are now investigating all the circumstances surrounding both the purchase of the majority shareholding in Rangers Football Club plc and the flow of funds which stemmed from the transaction and were intended to fulfil the purchasers’ obligations at the time of the sale.”

* * *

17 February - HMRC’s decision to petition the Court of Session in Edinburgh to appoint an administrator at Rangers FC on Tuesday has triggered a wave of soul-searching and speculation north of the border and on AccountingWEB.

On Monday 14 February, Rangers owner Craig Whyte filed a notice of intention to appoint administrators, explaining in a public statement that the potential £50m+ cost of losing the club’s appeal against HMRC’s assessments on payments made to players through employee benefit trusts.

But Whyte made no reference to the £9m of unpaid PAYE and VAT which HMRC cited as grounds to send in the administrators the following day.

According to Tom English in The Scotsman the notice of intention was a tactic on Whyte’s part to ensure that his favoured administrators were appointed. In English’s view, the non-payments of VAT and PAYE were not entirely accidental.

This assertion was confirmed by administrator David Whitehouse at a press conference on Thursday, when he described the withheld tax money was used as a “funding tool” for the club. “Insolvency came about because of the consequences of losses since the takeover,” he said.

The administrators met with the first team and coach Ally McCoist during the week to confirm that the league match against Kilmarnock would take place as scheduled on Saturday. Although there will be no immediate cuts in the playing staff, they will consult the manager to draw up longer term redundancy plans. The administrators also revealed that they had revealed several expressions of interest from potential buyers.

* * *

15 February - Paul Clark and David Whitehouse of Duff & Phelps were appointed joint administrators of Rangers FC on Tuesday 14 February.

In response to financial difficulties caused in part by its £50m+ tax dispute with HMRC over payments to employee benefit trusts for its players, the club filed a notice of intention to appoint administrators on Monday. But this was swiftly followed by petition for administration from HMRC to the Court of Session in Edinburgh today over the non-payment of around £9m in PAYE and VAT since current owner Paul Whyte took over the club in May 2011.

“HMRC have been working closely with the Club in recent months to achieve a solution to the club’s difficulties.  However this has not been possible due to ongoing losses and increased tax liabilities that cannot be sustained,” said the administrators after their appointment.

“We are working together with management and its major creditors including HMRC to achieve a solution to the financial problems which will ensure the ongoing survival of the business, which is of paramount importance to all concerned,” he added.

Clark thanks fans for their past and present support and added that all the stakeholders at Rangers were working hard to “ensure the long-term future of this national institution”.

Comments
Craigie_Bhoy's picture

On the plus side.........    1 thanks

Craigie_Bhoy | | Permalink

I think credit needs to given to the likes of Celtic, Aberdeen and the countless other football clubs across Britain who have remained sane during a period where football has proved anything but.

Chairmen, club boards etc are often criticised by their own supporters for not making funds available for players, for increased wages and the two clubs mentioned (Celtic and Aberdeen) have remained particularly defiant, often facing crazy abuse and ever increasing unpopularity amongst their own "fans".

Time and time again they have stated, defiantly, that the future/survival of the club must come first.  Hopefully some of the fans calling for the heads of their own clubs owners will perhaps think twice and be thankful their club still exists. 

Rather than continually attacking, perhaps a time to thank the people in charge for keeping the club alive, particularly in Sctotland where very little or no money exists.

PS just to clarify, I am a Celtic fan and take no pleasure from seeing Rangers in a hole this deep.

memyself-eye's picture

not that deep    1 thanks

memyself-eye | | Permalink

Thy're still third in the league despite losing 10 points and brought this on themselves. what is it about Scottish institutions (and individuals) that they seem destined to inflict huge losses on the UK taxpayer?

Some revenge for Culloden eh!

Craigie_Bhoy's picture

I think more Scots fought    1 thanks

Craigie_Bhoy | | Permalink

I think more Scots fought against Bonnie Prince Charlie at Culloden than were actually in the "Scottish army".

Slightly off point, but historically accurate :)

Rangers    1 thanks

helenmbrowntax.... | | Permalink

The last time I checked Portsmouth hadn't moved to Scotland.

frustratedwithhmrc's picture

We are going to see a lot more of this sort of thing

frustratedwithhmrc | | Permalink

Since HMRC is no longer a preferred creditor, they have been much more likely to push firms up against the wall pre-emptively to ensure their VAT, PAYE and NIC debts are paid.

Due to the very high salaries of football players (not quite so sure about Rangers though), HMRC has plenty of incentive to deal with the situation proactively.

Given that the players contracts are pretty difficult to renegotiate, it looks as though Rangers just overextended themselves.

Albasas's picture

We Don't Need No Glasgow Rangers?

Albasas | | Permalink

Craigie_Bhoy wrote:

I think credit needs to given to the likes of Celtic, Aberdeen and the countless other football clubs across Britain who have remained sane during a period where football has proved anything but.

Chairmen, club boards etc are often criticised by their own supporters for not making funds available for players, for increased wages and the two clubs mentioned (Celtic and Aberdeen) have remained particularly defiant, often facing crazy abuse and ever increasing unpopularity amongst their own "fans".

Time and time again they have stated, defiantly, that the future/survival of the club must come first.  Hopefully some of the fans calling for the heads of their own clubs owners will perhaps think twice and be thankful their club still exists. 

Rather than continually attacking, perhaps a time to thank the people in charge for keeping the club alive, particularly in Sctotland where very little or no money exists.

PS just to clarify, I am a Celtic fan and take no pleasure from seeing Rangers in a hole this deep.

 

Why do Celtic supporters always have to comment, (off topic), on Rangers stories? It comes from above that's why.

BBC: Administrator Paul Clark confirms February's wages will be fully paid but there will be a review of staffing at the club, including players

Celtic manager Neil Lennon indicated that he was less than impressed with the media conference, writing on his Twitter account: "Well that press conference was clear as mud. Every question body-swerved."  On Administrators Duff & Phelps.

After all as Peter Lawwell says today:

http://www.bbc.co.uk/news/uk-scotland-glasgow-west-17067135

So recently, both Neil Lennon and Lawwell are now on the record as having no sympathy for Rangers plc's current plight and its all part of their clubs business plan? LOL!. Nothing political alluded to there then. Its like 1994 never happened when the old Celtic Athletic Club was repackaged into Celtic PLC by Fergus McCann, an earlier but albeit more ethical version of Craig Whyte allegedly.  

No Rangers means no Sky TV deal for starters. Check the contract guys. Also the other clubs in the SPL might just need the gate money from the blue half of Glasgow/Scotland to survive.  

I probably lose a few clients for posting this, but then again I'll gain a few more, from people expecting objective professional advice, with no hidden agenda.

Nb. "Scottish army". That'll be The Jacobites side. Edit: Post since corrected above. The attempted restoration of now French Italian Young Pretender of the House of Stuart to the British throne was in fact an issue that divided both Highland and Lowland Scotland and the north of England, especially Lancashire. So The Jacobite cause was not exclusively a 'Scottish' one. European politics, what can you do? 

To the EBT's then which haven't forced Rangers into admin but seem to be the crux of the problem. Speaking on Radio 5 Live yesterday former Rangers chairman Alistair Johnston said:

AJ: He's been on BBC 5Live, giving an explanation of the larger tax bill which I had only heard portions of before. This is the £49m or so, which HM Revenue and Customs say they're owed for player payments paid through an offshore Employee Benefit Trust.

Asked if HMRC had said in the past that such an arrangement was OK with them, he made it clear that the tax authorities had not approved it. Instead, this was an arrangement strictly between Sir David Murray and the top players.

It was "orchestrated by Murray, all negotiations and interfacing was by Murray. Even after I became chairman, all negotiations came from Murray, with his advisers and financial people".

Mr Johnston said Sir David appeared to be taking the very best advice, from barristers and lawyers, and was confident the offshore payment arrangement would stand up to scrutiny.

You can conclude two things from this. The former directors are clearly pinning the blame for the 'big tax bill' on Sir David, but conversely, it looks like they were failing in their duty to protect the interests of the club and those who own the remaining 15% of shares.

 

Mmmmmmmmmmm. No HMRCs clearance......

 

Time for Johnston to STFU...

markfd | | Permalink

...and look in the mirror, instead of constantly whining to the media about Craig Whyte, who's actually taken the only feasible course of action.

OK, I hear you, but ...    1 thanks

bryce.weir | | Permalink

I think there is a lot of stuff being said re the institution that is Rangers, etc.  Unfortunately, such commentary misses out the fact that the club was a quoted limited company run by people whose responsibilities as directors are laid down in statute.

It would appear that there were 2 periods where such people could be deemed culpable. 

First, when a majority shareholder entered into a payment scheme which would appear to have been an abuse of the tax laws.

Second, when the latest majority shareholder appears to have failed to remit deductions from wages & salaries on or about the due date to HMRC & further failled to pay VAT on or about the due date.

In addition, there appear to be other issues surrounding the allegations whether this latter majority shareholder had conducted his past business affairs in an honorable & leegitimate fashion.

All this is, of course, compounded with allegations that the money from advanced ticket sales may have been paid into the incorrect company bank account.

The impact on football in Scotland is a side issue.  We cannot allow sentiment to cloud our judgement.

 

 

Albasas's picture

A Case Of Catch Me If You Can

Albasas | | Permalink

Murray hit the buffers when Murray International Holdings, RFC's controlling parent company, lost £700-800m in the current recession at the same time as Lloyds Bank took over his banking post 2008. Lloyds bank also took over the shares which the bank they acquired via the UK government owned in MIH. Alistair Johnston had being trying to get MIH to take Rangers debt (then only 3% of the total MIH debt) off their books as recently as October 2010. This debt was nothing to MIH. However Lloyds refused to facilitate any of this. Murray then met Craig Whyte and he produced 18m to pay off the RFC overdraft and Llloyds bit his hand off.

The sales purchase agreement between Murray & Whyte is now crucial. We know from AJ that Murray did not seek clearance from HMRCs for the MIH EBT's that he set up on that group of companies behalf back in 2001. It appears Murray accepted legal advice as being correct back in 2001 and that's that. By 2010 HMRCs said tit wasn't.t. Craig Whyte appears to have accepted to buy RFC for the princely sum of £1 as a secured creditor for his £30 odd million capital that he allegedly intoduced at the risk of landing MIH's £49 - 75m EBT plus RFC's other debts.

If Lloyds were unwilling to accept RFC's debts then what chance the potential liabilities MIH's had run up in illegally operated EBT's? Very little imo. So they got packaged off to RFC and Craig Whyte, (a bent but intelligent version of Harry Enfield's 'Nice but dim' character)  duly obliged.

 

Proving any wrong doing will be another matter though.

       

Daniel Cousin

jockblue | | Permalink

Strange developments...
The transfer of Cousin has been rejected by the SPL as I expected...however, this part caught my eye....

And a statement from the SPL says they were "presented with a contract between Daniel Cousin ("the Player") and Rangers FC dated 17 February 2012, signed by the Player and by Paul Clark, the Joint Administrator of The Rangers Football Club plc (in Administration)". 

http://www.bbc.co.uk/sport/0/football/17034037

I'm not sure any administrator should be adding to the workforce of any business under their administration. Perhaps if say Rangers only had 10 players on their books and needed an extra employee, but adding to the wage bill unnecessarily seems a very peculiar move to me

 

Can anyone with experience comment on this? At face value, it adds fuel to the "friendly administrator" accusation.

hitheflag's picture

No HMRC clearance but advice

hitheflag | | Permalink

No HMRC clearance but advice taken from legal and financial advisors.  If HMRC do finally find against the most successful club team in the world will we see a PI claim flying in from the Broomloan Road??

I have heard nothing at all about the advisors have I missed something here?

Footballers' pay scheme    2 thanks

mikewhit | | Permalink

I don't expect this to be taken up - but since "we are all in this together", would it not make sense from a financial point of view, to require football clubs to reduce footballers' basic pay to a less crippling level so they could actually budget for tax properly, then allow the players to earn a bonus out of profits like the bankers, say on a "match won" plus "points earned" basis.

But what do I know about football ...

Albasas's picture

Michel Platini Implementing Financial Fair Play?

Albasas | | Permalink

http://www.uefa.com/uefa/video/videoid=1744944.html?autoplay=true

The implementation of ‘Financial Fair Play’, a bold new initiative aimed at creating economic stability within the game, threatens to ruffle more than a few feathers across Europe during the next few years.

Financial Fair Play (FFP) states that all clubs must balance their football-related expenditure against income by the start of the 2014/15 season. This campaign is the first which counts towards that assessment.

Read More http://www.liverpooldailypost.co.uk/sport/liverpool-football/2012/02/09/football-how-uefa-s-financial-fair-play-rules-could-change-football-for-ever-99623-30292719/#ixzz1mpf07d9y “Until a fortnight ago, it was widely reported that Rangers’ chances of winning the tribunal were 50-50, now it is said they will lose,” the source said. “Yet nothing can have changed in that intervening period, with the tribunal ending last month [18 January]. It has been said Whyte must have got wind of the outcome ahead of the club being placed in administration, but he can’t have done so. The opinion of the judges must remain strictly confidential until they make public their decision. If Rangers won the EBT case, their future should have been secure. Now it won’t be and, in that scenario, serious questions must be asked of Whyte.”  EBTs are believed to have been run by around 5,000 businesses in the UK, including football clubs south of the Border. They became illegal in December 2010 but, until then, firms had been able to exploit the tax laws to provide sums to employees without PAYE or National Insurance as long as these were in the form of discretionary, repayable loans. At the tax tribunal, HMRC argued Rangers’ use of them for nine years was, in fact, a way to help mostly foreign players evade tax on salaries and bonuses. The source, who is not connected to Rangers but had clients who benefited from EBTs, claims that this entirely misrepresents the scheme in operation at Ibrox. “It was totally and absolutely correctly administered, and the club met all their legal responsibilities and complied with all tax laws,” said the source. “They took advice from top-notch lawyers and a whole battalion of the best accountants on a global level. http://www.scotsman.com/sport/football/spl/rangers_administration_key_wi...

What changed...    1 thanks

markfd | | Permalink

Albasas wrote:

 “Until a fortnight ago, it was widely reported that Rangers’ chances of winning the tribunal were 50-50, now it is said they will lose,” the source said. “Yet nothing can have changed in that intervening period, with the tribunal ending last month [18 January]. It has been said Whyte must have got wind of the outcome ahead of the club being placed in administration, but he can’t have done so. 

 

...apparently was HMRC saying they would appeal, appeal and appeal if they lost...so even if Rangers won the case, it wouldn't be over.

In that (uncertain) situation nobody in their right mind would put the large amounts of money required into the club.

Albasas's picture

HMRC Website Branding Is Not Green & Whyte For Nothing? LOL!

Albasas | | Permalink

I agree above. I have been following this case for some time, (brilliant CPD), and it appears that if Lloyds Bank didn't try to finish off the cosy RFC and MIH relationship then HMRC surely trumped them all to it.

Whyte today:

'Given that HMRC had seen fit to reach agreements with huge corporations owing far more than Rangers – Vodafone, for example – it was difficult to understand why they were being so inflexible unless, of course, they were simply determined to make an example of Rangers.

‘In these circumstances it would have been far too risky to pump further funds into the club while the result of the EBT tax case remained unresolved.

Statement in full:

http://sport.stv.tv/football/scottish-premier/rangers/298342-craig-whyte...

 

So to summarise here. MIH sell 85% of RFC shares to Wavetower or some other renamed entity now operating as the parent company of RFC, to  Whyte for £1. Whyte uses this to get a £24m loan from Ticketus for 25%? of next 3 seasons, season ticket revenue, (unsecured), but "personally guaranteed " by Whyte, (whatever that rhetoric means, legally, we are still not sure), and then uses some of this money to pay off the RFC company's Lloyds Bank £ 18m overdraft. No sign of the other £6m but some of it is VAT on the Ticketus sale. All this as part of the sales purchase agreement? Furthermore, he controversially, agrees with MIH to transfer full liability for the £49m EBT scheme outlawed by HMRC since December 2010, 'the big tax bill' (result still pending) to RFC. All a win-win situation for Sir David Murray, Lloyds Bank both as interested shareholders in MIH Ltd. Whyte, falls out with HMRC over time to pay negotiations about all outstanding VAT and PAYE since he took over May 2011, and alleges that 'the big tax bill' if lost was non-negotiable by HMRC also.Tactically (?), Whyte, takes RFC into administration for 'the wee tax bill'.....    

 

 

 

 

Quote -    1 thanks

asking | | Permalink

Quote -

On the big tax case – and, of course, no one yet knows whether that has been won or lost or how much the liability would be – we wanted HMRC to confirm that they would accept repayments of £2.5 million a year if we lost. But again they said, “No”’.

'Given that HMRC had seen fit to reach agreements with huge corporations owing far more than Rangers – Vodafone, for example – it was difficult to understand why they were being so inflexible unless, of course, they were simply determined to make an example of Rangers. 

So they wanted HMRC to confirm they could pay off a potential £50m+ tax liability at the rate of £2.5m a year. The interest alone on the outstanding amount equates to £2.5m per year. Its not suprising HMRC said no is it - What would a bank say to those sort of repayment terms?

There is no comparison with deals done with other 'huge' corporations due to the fact they actually pay up.

Rangers appear to have been using HMRC as a way of providing cheap finance - with the fallback of administration to ensure they dont even have to pay the debts anyway. The £50m tax bill is a smoke screen in any case as the decision hasnt even been made - lots of other EBT cases are also hanging in the balance, and if HMRC win, there will be a lot more company's in trouble than little old Rangers. 

Most of the EPL teams have been using EBT's for players to avoid income tax.

I would suggest Rangers were simply running a business that was unsustainable without huge (non repayable) investment from the owners - and obviously that was not forthcoming, all he has done is create debt (Ticketus deal) and personally guarantee it - Not quite the same as putting the money into the company in the first place.

 

Albasas's picture

RFC; Now A High Profile Corporate Soap Opera

Albasas | | Permalink

"all he has done is create debt (Ticketus deal) and personally guarantee it - Not quite the same as putting the money into the company in the first place."

Has he though? If the current collective of best media minds can't say then we cant be sure of any of Craig Whyte's rhetoric. I guess he means something different wearing his complex corporate venture capitalist hat here and not that of Director of the distressed Rangers FC PLC business. Certainly Whyte or his corporate structure becoming a RFC PLC secured creditor used most of this money to pay off the Lloyds Bank, RFC PLC Ltd business account overdraft. Ticketus' £24m being assumed banked, (if media reports are correct) in The Rangers FC Group Ltd business formerly known as Wavetower. Big assumption here by me, I'd say though- without visibility. No doubt a legal  twist or two exists in there too.  

So is the 85% of SDM's MIH RFC shares, as purchased for a £1 by Whyte, not now owned by the parent company (The Rangers FC Group Ltd), and so not Whyte himself? Where Ticketus doing a deal with Whyte as Director of this company possibly now owning all the Murray shares and not him personally as majority RFC shareholder and/or Director? Is there any corporate link between Whyte & the Ticketus organisation? Remember, he is only for sure the Director of the Rangers FC PLC currently in administration. However, whatever, he has a lot of control over the 85% majority shareholding, I assume, which is quite possibly owned now by The Rangers FC Group Ltd. 

Take a look at this handy Craig Whyte group of companies corporate structure:

http://scotslawthoughts.files.wordpress.com/2012/02/cw-corporate-structu...

Thanks to scotslawthoughts here.

All I can say, is why did Ticketus enter into such a deal? Could Ticketus now acquire the shares if Whyte reneges on his flimsy possibly verbal "personal guarantee"?  On paper it would appear Whyte is not short of a 'few bob' either if he ever needed to raise the capital.

Is Craig Whyte (or even Sir David Murray), JR Ewing, in this whole affair and the haplessly in love with Sir David Murray, Alistair Johnston, the Cliff Barnes, in this whole Dallas type real life soap opera? Will Bobby Ewing and his "Blue Knights" ride in and save a considerably now debt cleaned Rangers FC PLC from the IRS and the Feds?  LOL! Tune in soon.....

Yes EBT's are or where used by more than RFC. However that result is still pending and a soap opera for another day soon. The public scrutiny here will guarantee it.     

Finally, here's a thought: What if  the parent The Rangers FC Group Ltd rather than Rangers FC PLC in admin actually took over liability for the MIH Group's EBT scheme? Do we actually have full visibility on that yet? Or is it just a media assumption that RFC PLC has the liability?

07/03/12. Various sources have reported recently that RFC PLC are not responsible for the Ticketus monies used by Whyte to purchase aprox 85% of RFC PLC. From BBC today:

King also said:

  • Craig Whyte confirmed to him that Ticketus has no recourse to the football club with regards to the money provided for future sales of season tickets.

 

Payment to Dunfermline FC

bryce.weir | | Permalink

Can someone explain whether the administrators, having paid Dunfermline the £80k+ they were due from a pre-administration fixture, have prejudiced the positions of other creditors?

Albasas's picture

SPL Rulebook?

Albasas | | Permalink

bryce.weir wrote:

Can someone explain whether the administrators, having paid Dunfermline the £80k+ they were due from a pre-administration fixture, have prejudiced the positions of other creditors?

 

Looks like it. I guess, reading between the lines here, that the administrators are probably pandering to some important technicality in the SPL rule book by circumventing it ahead of any derailment it may pose for RFC to move on? For instance, Hearts are owed money contractually for a transfer fee, Dundee Utd a Scottish Cup (SFA) tie. So the many different governing bodies in Scottish football, the SPL, SFA, and SFL, complete with different rule books and jurisdictions in the game, on and off the park may be the reason etc. Ironically, the administrators could well be complying with the SPL rulebook here in order to protect creditors interests. No RFC or newco from liquidation then no CVA payments.     

 

09-03-11 Craig Whyte now not fit to run a football club given his chequered career to date, (disqualified director etc), - SFA Lord Nimmo Review. Same association charge RFC with bringing the game into disrepute for non-payment of Scottish Cup tie monies still due to Dundee Utd. Whyte is still the owner of RFC but not a secured creditor due to the way he funded the takeover by selling 'mortgaged' season ticket sales rights to Ticketus. The latter having a claim on the debt here on either Whyte personally or his Rangers Group company which owns approx 85% of RFC's shares   

According to the administrators offers are now piling in for the club. Looks like the Blue Knights consortium isn't seriously one of them. No surprise here.Surely the administrators will go with an offer which demonstrates proven business acumen and the experience to move the stricken club forward commercially? Like Fergus McCann did for the Celtic Football & Athletic Company Ltd in 1994. Then the Blue Knights proposal might be an issue should the next owner want to sell. They don't want to be like Portsmouth and bringing in the administrators every year; or; by selling the club to some experimental committee running the club like some Junior league social works committee do. So I just can't see the whole Blue Knights package happening.

Missing the point on the EBT

colinhigginson | | Permalink

It is no secret that Murray was pressured by players agents into emailing clarification on the tax arrangement. In it he explained that the loans were 'not really loans and would never require repayment'

This correspondence alone caused the scheme to fail.

 

Albasas's picture

Minty (SDM), Has Given Some Reaassurance On EBT's Today    1 thanks

Albasas | | Permalink

colinhigginson wrote:

It is no secret that Murray was pressured by players agents into emailing clarification on the tax arrangement. In it he explained that the loans were 'not really loans and would never require repayment'

This correspondence alone caused the scheme to fail.

 

 

The Daily Record has the exclusive but basically Minty thinks there will be no problem with this 'Big' tax case.

http://www.dailyrecord.co.uk/football/spl/rangers/2012/03/14/rangers-in-crisis-sir-david-murray-denies-any-use-of-dual-contracts-during-his-time-at-ibrox-86908-23787536/

 

 

SDM was only interested in doing the deal with Whyte if he took on liability for both the 'wee' and the 'big' tax case. Although according to Minty the 'big' case wont be much of a problem even though the small one is to the tune of £2.8m. Reassuring... So we now know, for sure, Lloyds Bank put him under pressure for their RFC overdraft money back. Lloyds are also shareholders in Murray International Holdings, as inherited from the previous 'friendly' bank they took over having converted MIH previous debts into MIH shares. Coincidently...MIH were also suffering huge loses at the time due to competition from overseas particularly from India. Recently Alistair Johnston has stated that MIH operated these EBTs on behalf of RFC.. I'm sure both MIH and Lloyds focused their due diligence where it mattered. Strangely a guy like Craig Whyte slipped through the net of all the top lawyers agreeing the deal and the always wise in retrospect SFA.. They all ought to get out more then...LOL!

Why do I get the impression that Craig Whyte is the pantomime villain here? Job well done Craig? More twists and turns to come for sure.

BKD's picture

Just to clarify

BKD | | Permalink

bryce.weir wrote:

Can someone explain whether the administrators, having paid Dunfermline the £80k+ they were due from a pre-administration fixture, have prejudiced the positions of other creditors?

Rangers did not pay the full sum due to Dunfermline FC - their supporters coughed up about one-quarter of the debt

carnmores's picture

Rangers should be dumped from the SPL

carnmores | | Permalink

as i understand it D&P have sold the business and assets to newco leaving behind the tax and other debts in the old co approx ~100m+. the oldco has the right to play in SPL are they allowing the oldco totransfer this right to the newco , this is a recipe for disaster

Albasas's picture

But ...SPL Instead Rethink Their Intended Sucide Note

Albasas | | Permalink

Well, a CVA is still not in the bag.The EBT Case is still not settled yet. (Announcement soon?) The Ticketus & Whyte debacle rumbles on. The Duff & Phelps, Bristow Collier advice damages claim too. Strathclyde Police Fraud Squad are in the mix as well.  All old co issues. What a toxic mess! It will surely take years to sort it all out RFC don't have years to get out of Admin and only until the end of this season. If they don't and get kicked out the SPL then the unsigned TV deal is dead, along with the numerous local economies and football clubs dependent on 2 RFC matches per year. I'm sure their bank managers will have that sucide note ripped up and redrafted into a more measured don't bite the hand that feeds you punishment.  

The Blue Knights, (Barren Knights), whatever,  only wanted Craig Whyte's Liberty Capital's 85.3% old co shares and could get behind Ticketus in the queue with that idea. Only The latter put in £27m while the former Blue Knights next to zilch. Worth mentioning that Paul Murray was a an old board member of RFC rubber stamping some of the reckless spending that went on. Brian Kennedy was quite frankly too much of an opportunist in the whole preferred bidder auction, only whoring himself about marginally less than Ticketus did. But then the latter had  £27m  reasons to know what all bidders were intending. Then the Blue Knights at the eleventh hour go and copy B. Miller's successful preferred bidders idea of an incubator / hybrid company but with Rangers Bondholders taken out of the CVA and LESS money for the creditor pot.  

So a newco in the SPL reunited with an incubated and toxic free oldco sometime in the future is the given preferred option. Not a problem either down in nearby England where Leeds United, Charlton, and Crystal Palace have done something similar already  If you don't know it already- football is a very risky investment but then Rangers and Celtic are much more than that.

Update 10/05/2012

From Daily Record:

Last night, Rangers’ administrators said three new bidders had come forward with offers to buy the stricken club – and two of them would be popular with fans.

Duff & Phelps said of the four bidders now hoping to buy Rangers, two had the club’s interests at heart and are well known in Scottish football.

They refused to name the two but said more details will emerge in the coming days.

Don't know how accurate the quote is but I'm confused if Brian Kennedy isn't back in with his offer of last resort. LOL.

Bill Miller is no longer interested Aweb.  And; Ticketus are now suing Whyte and his Administrators Duff & Phelps his lawyers Collier Bristow. The former for their £27m loaned to Whyte and the latter for Whyte's lawyers damages against RFC in the whole takeover debacle again for about £25m. 

Whyte is seemingly now willing to deal in his shares to make the CVA possible. If The Scottish Sun is to believed. End game expected soon.

 

"Rangers has been rescued by the Green Knight in the form of Charles Green, former chief executive of Sheffield United."

Well, rescued is naively optimistic. There is still much work to be done with creditors before June 6th, Scottish football regulators, playing staff, the HMRC EBT Case, Bristow Collier, and Ticketus. Oh! And a Strathclyde Police enquiry into the conduct of Craig Whyte and the sale of RFC to him in the first place. 

 

"failure of Scottish businessman Brian Kennedy and former Ibrox director Paul Murray of the Blue Knights consortium, to have their offer for the club accepted by Duff and Phelps."

AKA the we'll take it for free if no one else will bid.

 

 

 

 

CIS -> FCS ?    2 thanks

mikewhit | | Permalink

Maybe time to set up a Football Clubs Scheme to parallel the Construction Industry Scheme, to help enforce tax compliance ?

Where to now for Rangers

Abacjm | | Permalink

SFA have this evening refused Rangers appeal against sanctions imposed on the Club by way of signing over 18 y.o players for 12 months and the £160,000 fine.

If a newco was formed, would the above be null and void as the sanctions were against the Company and not the team?

I suppose if the company was re-formed as a newco with the simple addition of  The Rangers (1873) Football Club plc, the team would retain its identity and history as it was formed in 1873.

 

Albasas's picture

If a newco was formed, would

Albasas | | Permalink

If a newco was formed, would the above be null and void as the sanctions were against the Company and not the team?

No, but I understand your reasoning. However in the world of the SFA committees anything is politically possible from one day to the next. Many think RFC have got off lightly here too as it is.

I suppose the Court of arbitration for Sport might well look at it this, the latest in a long line of Scottish Football Association decisions in terms of sporting integrity? Its a knotty one. Their SPL cousins are on the one hand trying to stave off the now perennial Scottish footballing recession to keep RFC in the league for cynical commercial reasons; then on the other hand; be seen to be punishing them to appease the angry mob outraged by all the bad management / or as they see it cheating and cultural favouritism. The SPL are already willing, (through the media), to let RFC stay in their league as a newco then it looks like they (the SFA) want to make them pay on the pitch. The TV deal is still unsigned and maybe at the end of the day this will bring the SFA round to a more cynical / pragmatic way of thinking like their SPL cousins. The Scottish football product is weak as it is so will they pay to see a team of RFC rookie reserve and youth players struggle to avoid the drop all big marque signing sold off in a fire sale?   

Instead an RFC newco or otherwise could start the badly needed rationalisation of the Scottish football product, (too many clubs chasing too few fans) by relegating itself down to the lower league Scottish Division 3 by applying to join them. Lower league England no longer an option it seems. Increasingly adopting this 'moral high ground' is seen as a better option by the people who count- the paying fans.    

 

Edit: Surprise! Surprise!  The Court of arbitration for Sport is not an option for member clubs under the SFA's constitution. Rangers instead went to The Scottish Court Of Session and won yesterday, 29th May 2012. The court held that the 1 year transfer embargo punishment handed down by the SFA is not available to them as a punishment under the SFA's own rule book no less. FIFA prefer/insist that clubs go down The Court of arbitration for Sport route but this appeal route was barred by the SFA. Rangers now face being kicked out of Scottish football altogether by the SFA and an appeal, ironically to FIFA would probably follow that,. CVA not withstanding. Stewart Regan, the Chief Executive at the SFA, is a known to be a business acquaintance of Celtic Chairman Peter Lawell no less.    

 

 

 

BSKYB

david5541 | | Permalink

EVER SINCE BSKYB STARTED DOING DEALS WITH THE FA AND ITS CLUBS THE GAME HAS DESCENDED INTO A BUSINESS LIKE ALL OTHER ASPECTS OF LIFE IN THE EU.

tax compliance

david5541 | | Permalink

"Maybe time to set up a Football Clubs Scheme to parallel the Construction Industry Scheme, to help enforce tax compliance ?" ""

Bearing in mind the standard of education of most footballers they probably remain clueless as individuals about how to complete their self assessment return and rely on the clubs to protect their wages in offshore employee benefit trusts, using a "talent Ltd company" in the same way as so many civil servants and broadcasters/presenters working for the BBC

culloden

david5541 | | Permalink

Craigie_Bhoy wrote:

"I think more Scots fought against Bonnie Prince Charlie at Culloden than were actually in the "Scottish army".

Slightly off point, but historically accurate :)

Yeah we should thank alot of the "borderers" from dumfries .......and the lowalands for winning the battle against bonnie prince charlie, so I just try to turn  a blind eye to the moans of the current SNP scottish premier because opinion polls are not in his favour.

Albasas's picture

The BBC

Albasas | | Permalink

Apart from emails and documents that somehow 'very handily' arrived in their possession its a case of move along here nothing to see. 

So hasn't the saturation media coverage actually prejudiced any chance of a fair Hearing / Trial for those involved in any of the ongoing tax and legal issues?

A real basket case indeed.

 

HMRC got it right

taylorag | | Permalink

Not often that will be a subject heading on this site, but I fully believe that HMRC are right to take this route as no-one else was willing to do so.

I do think that HMRC are

esimps | | Permalink

I do think that HMRC are right to take a stand here, otherwise they'll be seen as a soft touch in the eyes of others. With this playing out in the public domain HMRC have to take a tough stance.

Emma // Cheap Accountant

Albasas's picture

HMRC might have saved a lot

Albasas | | Permalink

HMRC might have saved a lot of Duff & Phelps time here, and no small amount of angst, had they announced closer to February last, that it was their policy not to allow CVA's when the company has deliberately withheld payment of its tax.

I'm no expert but it appears that Craig Whyte's Liberty Capital by securing the major assets against the shareholding acquired from David Murray's MIM Ltd for £1, (conditional on him paying off the bank overdraft which he did with Ticketus money!) has now placed these well out of reach of HMRCs Liquidator BDO. At least the liquidators latest press statements confirmed as much. This being so then Ibrox Stadium and Murray Park and the Albion Street car park (?) willl belong to a Rangers newco wherever it ends up playing football. Valued at around £100m Charles Green has a binding contract to pick them up for £5.5m from Duff & Phelps. Nice.

The unemotional truth of the matter here is that Rangers as a football club continuing in existence appears to be safe albeit as a newco. This is still to sink in with the majority of fans. Still to be settled though is where do they play their football? Given the pettiness and incompetencies of Scottish football regulators in general this could all play out as a very ironic piece of karma.

The controversial Craig Whyte has taken the biggest gamble of his venture capitalist career here. Not only did he, it seems, put the main assets beyond the reach of HMRCs liquidators, he has perhaps potentially saved MIM Ltd around £49- £75m in back taxes interest and penalties, as claimed due in the press, for EBT advice given to MIM Ltd the former Rangers owners by Paul Baxendale Walker. Whyte accepted the EBT's were Rangers' liability whilst Alistair Johnson  of the old Murray Rangers board would not have it.

Craig Whyte and David Murray still have a lot of explaining to do here under caution to HMRCs liquidators.

 

    

 

 

First cut the deepest ?

mikewhit | | Permalink

Why don't HMRC just take a cut (say 20%) of the recent £3bn Premier League deal, then waive all the rest of the PL football clubs' taxes. Save them going into liquidation ...

Albasas's picture

Rangers Win EBT Case

Albasas | | Permalink

Not unexpected it was taking too long and in such cases HMRC are usually losing.

 

http://www.bbc.co.uk/news/uk-scotland-glasgow-west-20414804