Rangers broke tax rules over EBT scheme, rules Supreme Court

The longest running financial scandal in Scottish football has finally come to a close with the Supreme Court in London throwing out an appeal by Rangers liquidators BDO.

After two tribunal verdicts and a Court of Session verdict, HM Revenue and Customs (HMRC) has won their battle over Rangers’ use of Employee Benefit Trusts (EBTs) with it being unanimously agreed that the Scottish club broke tax rules. Rangers and their liquidators BDO have no further right to appeal.

Between 2001 and 2010, Rangers paid out around £50 million to 80 players, managers and club officials using the EBT scheme.

Two tax tribunals found in Rangers’ favour but as the battle raged over the tax case, Rangers went into administration and thereafter liquidation in 2012.

HMRC appealed against the tribunal decisions, arguing that the EBTs were not in fact loans but actually earnings and should be taxed accordingly, and won in the Court of Session in 2015.

The decision now means that liquidators BDO are now liable for the tax and will now have to use their creditors’ pot, reportedly to be in the region of £40 million, to pay off the taxman.

Scottish football journalist Graham Speirs, speaking after the judgement, tweeted: “The reputation of Rangers FC has been tarnished over several decades. It has now just been thoroughly trashed.”

While Channel 4 journalist Alex Thomson, stated: “Supreme Court rules unanimously that the Rangers appeal is dismissed. Of it looks like earnings and feels like earnings it is earnings. This now means that Rangers cheated their way to 14 trophies: they cheated the taxman, they cheated us all.

“10 years of cheating the taxman to 14 trophies and all in the watch of Stewart Regan and Neil Doncaster at SFA/SPFL. The governance of Scottish football under Regan and Doncaster is totally exposed by the Supreme Court. The position of both is untenable.

“Rangers cheated the taxman to gain sporting advantage on the pitch. We know this because they have repeatedly said so. Unlawful = cheating. The scale of Rangers’ cheating: £48m paid to 80 people over 10 years to unfairly win 14 trophies.”

HMRC used Rangers as a test case and Wednesday’s victory could open the floodgates on similar action against clubs across the country. They could now issue Follower Notices, demanding payments from clubs and companies who ran similar schemes.

A commission led by Judge Lord Nimmo Smith had previously ruled that Rangers had gained ‘no sporting advantage’ over their use of EBTs, but this was heavily influenced by the first tier tribunal result – which Rangers won.

With the highest court in the land now ruling that Rangers broke tax rules in their use of EBTs, calls for the Ibrox side to be stripped of silverware won between 2001 and 2011 will intensify, with the SPFL and the Scottish FA facing the wrath of Scottish football.

Rangers had to pay a £250,000 fine issued by the SPL in 2013 after the old club were found to have withheld “side letters” detailing EBT payments to players in breach of league rules, in what the organisation claimed amounted to 11 years’ worth of ‘admin errors’.

The Supreme Court ruling comes on the back of the new Rangers club being knocked out of Europe at the first time of asking by Luxembourg minnows Progrès 2-1 on aggregate, in what has been described as the worst defeat for a Scottish Club in the history of European competition.