HMRC to Investigate the use of Employee Benefit Trusts in Football ...

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Owner of the Scottish Premier League football club, Craig Whyte, confirmed on Monday the 13^th of February that legal papers had been filed at the Court of Session in Edinburgh to appoint Rangers FC with administrators.

Whyte said that his decision to put the club into administration ?secures the long-term future of the club? and that if he ?hadn?t done that then liquidation could have been a possibility?.

On 14 February 2012 BBC News announced that HM Revenue and Customs (HMRC) are also ?set to ask the Court of Session to put Rangers Football Club into administration?.

HMRC?s move to ask the courts to put the club into administration will counter Rangers own legal bid to ?file for protection against creditors?.

HM Revenue and Customs (HMRC) and Rangers Football Club are currently in dispute over a tax bill and penalties totalling up to ?49m.

HMRC argues that Rangers owe the large sum because of their use of the tax avoidance vehicle - Employment Benefit Trusts (EBTs) - to pay staff over a period of 10 years prior to Whyte buying the club in 2011.

The use of Employment Benefit Trusts (EBTs) in the Premiership were a legal tax avoidance device used by clubs to significantly reduce their tax bill and avoid payments of National Insurance on players? payroll; in recent weeks HMRC have decided to investigate tax avoidance loopholes in the Premier and Football leagues and close them down.

The Daily Telegraph said on 14 February 2012 ?that up to eight current or former Premier League clubs are facing a similar [tax] investigation into their use of EBTs, which were considered an efficient ? and legal ? means of reducing tax until relevantly recently?.

Rangers FC disagree with HMRC?s tax enquiry and have taken their claim to the first tier tax tribunal.

As the largest secured creditor of Rangers FC and the majority shareholder, if the tax tribunal ruling goes against the Scottish Premier League football club then the ruling would also have a significant impact on Whyte as well as the club.

The move by Whyte to enter Rangers FC into administration has also issued the football club with ?an immediate 10 point penalty by the Scottish Premier League?, leaving Rangers 14 points behind Celtic, conceding the title.

HMRC would normally be the first in line for repayment of outstanding taxes, but if Rangers go into administration at Whyte?s request then HMRC is not protected and football players and Whyte would get their money back first, forcing HMRC to the sidelines.

If Whyte is granted administration then he could choose to follow legal routes of pre-pack administration or receivership that would find Ranger?s tax liabilities dramatically reduced.

BBC News said that ?these routes would involve Ranger?s assets being transferred to a new company or companies and the old club ? formed in 1873 ? being left behind with the un-payable debts.

It would, almost inevitably, be wound up?.

HMRC have already rejected a proposal from Whyte for a Creditors Voluntary Agreement (CVA) which would allow Rangers to pay off their outstanding debts and materialize from administration within just a matter of four weeks.

HMRC?s new bid to ask the Court of Session to put Rangers football club into administration is seen by the BBC ?as part of ongoing manoeuvres to exert some control over any insolvency process?.

Whyte has reassured Ranger?s fans that he has no intention of leaving the Scottish Premier League club. Outside Ranger?s Ibrox stadium Whyte said: ?I can understand how the fans feel. But I came in to sort out the financial situation and that?s what I will do.?

Kevin Kinsella, of KinsellaTax Investigations, said:

?What happened to Rangers? They are one of the elite. Although I am a Celtic man it is a bad day in football when a glorious club such as Rangers go under, let?s hope they can get back on their feet. For years I have been advocating that these special tax arrangements are only short term solutions, after a few years the cost, when it blows up, is enormous.?

If you have taken part in a tax avoidance scheme or have a tax avoidance enquiry call KinsellaTax Investigations on 0800 999 9980 or visit kinsellatax.co.uk.

Source: http://leisure.ezinemark.com/hmrc-to-investigate-the-use-of-employee-benefit-trusts-in-football-kinsellatax-investigations-7d340ec5fb22.html

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