A short note on tax law for Rangers and Celtic fans

I write to explain a point of law that has occupied much of my twitter feed for the last couple of days. It may help to say that I am a Queen’s Counsel specialising in tax law. And I have no commercial or personal connection to Rangers (I use that name in a vernaculous rather than a legal sense) or its successor entities or (as far as I am aware) anyone connected with the club or those entities.

I have said that it is not accurate to describe Rangers’ use of EBTs as “illegal” or “unlawful”. And here is why.

You might think about the purpose of tax law as being to draw lines in the sand: fall on one side of the line and your liability will be (lower) x; fall on the other side and it will be (higher) y. Rangers entered into certain transactions which they hoped and (I understand) expected would attract liability x but which the Supreme Court decided attracted liability y. It is not “illegal” or “unlawful” to attract a higher liability than you want. And nor is it illegal or unlawful to transact to try and attract liability x but to fail and, nevertheless, to attract liability y.

We self-assess our liability to tax. Putting it another way, HMRC ask us questions in a self-assessment form, we answer them, and those answers have as their consequence that we owe a particular sum in tax. We also promise HMRC that we believe the answers are right.

If we give HMRC answers that lead to the conclusion that we owe x in tax and a court later says that our answers were wrong and we owe y in tax that does not establish, on its own, that we have behaved unlawfully or illegally. It is not unlawful or illegal to make an honest mistake.

If, in completing the self-assessment form, we gave answers that we did not believe to be right, we would have behaved unlawfully or illegally. But I am not aware of any evidence that Rangers gave answers in its self-assessment form that it did not believe to be right. And nor, so far as I am aware, is this an allegation that HMRC has advanced.

What about a situation where Rangers gave misleading answers to HMRC outside the self-assessment form? Certainly it would be very poor behaviour. And I can imagine circumstances in which this might be unlawful. But, on its own, this fact – if fact it is – does not enable the conclusion to be drawn that Rangers has broken any law.

18 thoughts on “A short note on tax law for Rangers and Celtic fans

  1. RANGERS WERE A TEST CASE
    SO WATCH THE DOMINO’S START TO FALL.
    WITH ALL THE OTHER FOOTBALL TEAMS IN THE UK…

  2. The administration of a trust is part of our code of law; it also forms part of the Jersey code (I use deliberately non legal wording here). The scheme was only able to work because as Lord Hodge said, (para 63),
    ‘It was necessary for the operation of the scheme as the parties intended that
    the trust administration was lax’.
    Where does that fit in with your analysis?

  3. If documents (side letters) were not revealed to HMRC when they requested all documentation would that alter things?
    If documents were shredded to prevent them being revealed would that alter things?
    “Honest mistake”? You’ve got to be trolling.

  4. Thank you for clearing the issue up. Unfortunately there is some very delusional people out there what can’t accept that they are wrong🇬🇧🇬🇧🇬🇧🇬🇧

  5. the ongoing events in scotland will never end its a case of one club who can not accept the success of the other club being RANGERS it would appear that not only one club but a host of all other clubs seem to have an agenda towards the rangers iam only assuming this however it would appear that these clubs are demonstrating an element of resentment i have followed the events of this case with interest and it is now beginning to manifest itself on utter hatred for this club whether its roots lies in the fan base or the directors of other clubs is somehow scketchy it does though put a shady light on the whole of scottish football and the mentality of its fans as far as iam aware rangers at the time believed they were acting well within the law as ebts were widely used not only in football but in other industries also overseas workers in the oil industry in particular it was a legal form of payment at the time so why was this club hounded for overdue tax when it was legal at the time the real shame of it all is those other scottish clubs should think shame of themselves their behaviour is embarrassing to say the least

  6. If they hoped and expected a lower liability, why did they also find it necessary to hide the side letters?

  7. I don’t know. Perhaps they wanted HMRC to accept the treatment without a fight? Obviously it’s ugly behaviour. And may also indicate what you suggest.

  8. The reason Rangers didn’t lodge the documentation with the SPL – and Lord Nimmo Smith helped us establish this – was that they didn’t believe they had to because they weren’t making those payments to the players and, therefore, they didn’t believe they were under obligation under the rules to lodge those documents.
    “It had nothing to do with disclosure to HMRC because the SPL and the SFA were not in the business of disclosing documents to HMRC.
    “The reason Rangers did not give that documentation to the SFA and the SPL was not to hide it from the tax authorities.”

  9. Reasoned balanced understandable. 3 words that don’t apply to tribalism.

  10. How old is the tax system?? We all know if you work you pay tax. If you make profit then you pay tax. The system is for everyone, we learn that when we first start work we get tax deducted, it runs our country our public services police blah blah. Come on a Director of a company knows he should pay tax simple. Enough said Murray is a Robin Hood and his fans he let down are now paying for it.

  11. Are you serious?what about the players they bought with x and y and z.you can use the hole alphabet if you want.cheating is cheating on and off the park.next you’ll be saying that there the same club.

  12. I don’t think the EBT payments being legal or not is the question. The real question is why were side letter hidden from the authorities and why ?

  13. Nice to hear a fair comment rather than all the bigotry garbash floating about take note celtic aberdeen watp

  14. Will HMRC be investigating players, directors, owners of clubs who invested in FILMS. Which we all know was a legal ish way of tax avoidance???

  15. The word here is “ineffective”. The tax planning was not effective to achieve the tax result that was hoped for.
    The club hoped that the payments into the EBT and the loans out of the EBT would not be taxed as earnings. As the Supreme Court has finally ruled (as did the Court of Session) that hope was ill-founded.
    (Notably, the earlier decisions of the two tax tribunals, first-tier and upper, both agreed with Rangers that employment taxes were not due on the payments out: HMRC only won by changing its argument to focus on the payments into the EBT.)
    There may be illegal or unlawful behavior here – someone lying or concealing or breaching a duty – but the use of the EBT is not it.

  16. Bottom line is if they didn’t use the ebt scam they could not have afforded the team they put together therefore……they cheated.

  17. Can someone explain to me then, that as the Supreme court has ruled that EBT’s are illegal, and cant be classed as loans to the players, why aren’t the players who were paid these “loans” be required to pay them back, or at least be liable for the tax due on these “loans” as earnings.

  18. I can see that for a self-assessment form, but doesn’t the employer have an obligation to deduct PAYE, etc. at source? As far as I understand it, the SC said that at the moment the money was paid to the EBT it was liable for tax so the nature of EBTs are neither here nor there in the case. I guess I’m asking if an employer failing to carry out it’s obligation to deduct tax constitute breaking the law or is it described in some other way?

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