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SBD Global/November 21, 2012/Franchises

Rangers FC Win Tax Case Appeal Over Use Of Employee Benefit Trusts

Scottish Third Division side Rangers FC "has won its appeal over a near £49M ($78M) tax bill for the use of Employee Benefit Trusts," according to the Scotland DAILY RECORD. The first tier tax tribunal, which heard the appeal Tuesday, "delivered a majority verdict, which ruled the EBT payments were loans that can be repaid." The club, which is now in liquidation, used EBTs from '01-10 "to make almost £49M in payments to players and staff in the form of tax-free loans." The club "had argued that the payments had been loans rather than wages and not subject to tax" (DAILY RECORD, 11/20). A statement from the three-person tribunal said: "The majority view reflects the argument that the controversial monies received by the employees were not paid to them as their absolute entitlement. The legal effect of the trust/loan structure is sufficient to preclude this. Thus the payments are loans, not earnings, and so are recoverable from the employee or his estate" (SCOTSMAN, 11/20).

RANGERS SATISFIED: The LONDON TIMES reported Murray International Holdings, "which was the majority shareholder of the oldco club until Craig Whyte's takeover in May '11," declared in a statement: "We are satisfied that the Tax Tribunal has now published its widely awaited decision and note the contents thereof." The decision "does not affect the current football club at Ibrox" (LONDON TIMES, 11/20). In London, Vanessa Houlder reported the judges did not reach a unanimous verdict, and Revenue & Customs said that it was "considering an appeal." In her dissenting opinion, Judge Heidi Poon ruled that payments from the trust should be construed as “emoluments” for the purposes of tax. She said there appeared to be a layer of “camouflaged clothing” over the real arrangements in the case (FINANCIAL TIMES, 11/20).
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