The U.K. Supreme Court on Wednesday ruled in favor of tax authority HMRC in a "long-running dispute" over offshore trusts used by Scottish Premiership side Rangers, in a case expected to have "wide-ranging implications" for similar tax avoidance schemes, according to Vanessa Houlder of the FINANCIAL TIMES. Five judges "unanimously dismissed an appeal by the liquidators of RFC 2012," the company formerly known as Rangers football club before its financial collapse in '12. The dispute -- known as the "big tax case" -- centered on the club’s use of structures known as employee benefit trusts to pay players and staff in loans between '01 and '09. HMRC said that it missed out on £46.2M because the club used payments to EBTs in Jersey to fund tax-free loans to Rangers’ employees. The Supreme Court ruled that Rangers’ payments into its EBTs "were subject to income tax under pay-as-you-earn rules." Enterprise Tax Consultants Technical Dir Andy Wood said that the Supreme Court's ruling would "allow HMRC to pursue other football clubs that had used EBTs -- as well as companies not connected with the sport that had also used the structures -- without the need for further legal action." He added that some of the clubs that used EBTs in the past "may well have been in the top tier of British football at the time, but could now be in the lower levels" (FT, 7/5). The BBC reported two tribunals in '12 and '14 previously ruled in Rangers' favor, but the Court of Session ruled in favor of HMRC after an appeal in '15. Former Rangers Chair David Murray said that he was "hugely disappointed" with the verdict, which he said "ran counter" to the legal advice which was consistently provided to Rangers. He said, "It should be emphasized that there have been no allegations made by HMRC or any of the courts that the club was involved in tax evasion, which is a criminal offense." Rangers liquidator BDO said that it believed taking the case to the Supreme Court had been the correct course of action "given the significance of the matter." It said, "We will now engage with HMRC on adjudicating its claim" (BBC, 7/5).
CELTIC REACTS: The Scotland DAILY RECORD reported Scottish Premiership side Celtic is "calling for Scottish football authorities to reopen" its investigation into whether Rangers gained "competitive advantage" using EBTs. The "clamour for fresh sanctions in some quarters has intensified" after the Supreme Court ruling strengthened arguments that Rangers won titles and other trophies with players it would not have been able to afford if the club had been paying the correct tax. A statement from Celtic said, "In 2013, we expressed surprise -- shared by many observers and supporters of the game -- over the findings of the SPL Commission that no competitive or sporting advantage had resulted. Today's decision only re-affirms that view. We are sure now that the footballing authorities in Scotland will wish to review this matter. Celtic awaits the outcome of their review" (DAILY RECORD, 7/5).
