HMRC wins “big tax” case against Rangers
HM Revenue and Customs (HMRC) has won a judgement ruling that Rangers broke tax rules with its use of Employee Benefit Trusts (EBTs) between 2001 and 2010.
Three judges at the Court of Session in Edinburgh upheld HMRC's second appeal and ruled that under former owner Sir David Murray Rangers used now-outlawed EBTs to pay employees tax-free.
Lord Carloway, Lord Menzies and Lord Drummond Young agreed with HMRC's contention that Rangers' use of EBTs amounted to "a mere redirection of earnings which did not remove the liability of employees to income tax".
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Murray had argued that the payments – which amounted to almost £49m – were loans and not taxable income.
The tax liability is likely to lie with the liquidated company RFC 2012 and not the "newco" consortium who purchased the club's assets three years ago – however that is yet to be confirmed.
However, the ruling could call into question the validity of the five league titles Rangers won during the period.
Lord Drummond Young said in his ruling: "As the footballers are concerned, at least, it seems to us that if bonuses had not been paid they might well have taken their services elsewhere."
The cash-strapped club could also face an outstanding £400,000 fine from the Scottish Professional Football League breaching the league's rules.
Even though the fine was issued against the Rangers "oldco", the "newco" agreed to be responsible for any sanctions imposed against the former regime when it joined the Scottish football league in 2012.