Rangers stars of their last 15 years face personal tax demands if their beloved institution lose out to HMRC in next week’s Supreme Court appeal.
BDO, acting for the Murray Group, will make one final appeal that the controversial EBT payments were loans and not part of the players terms of employment.
With side letters in existence for the majority of EBTs the case seems cut and dried but if the appeal is successful then stars like Barry Ferguson, Neil McCann, Alex Rae, Billy Dodds, Alex Rae, Steven Thompson and Alex McLeish will have to cough up massive sums by 2019 to repay Her Majesty.
Dozens of English clubs have owned up to using the tax scam and are in negotiations with Her Majesty to settle their bill but Rangers have contested their use of EBTs at every stage.
Previewing the Supreme Court appeal Sky Sports explained:
A legal test case, scheduled for the Supreme Court in March, will see Scottish Premiership club Rangers and HM Revenue and Customs lock horns on March 15.
Victory for HMRC is expected to prompt a wave of aggressive tax demands to professional football clubs across the UK, while rugby union and rugby league clubs may also be affected.
The case centres on the use of Employment Benefit Trusts (EBTs), which the Revenue suggests have allowed clubs and players to avoid paying tax on wages, dating as far back as 1999.
If HMRC win the case they will demand income tax, PAYE and National Insurance payments, plus interest – and demands are expected to reach close to £100m.
There is no upper limit on the sums sought by HMRC; clubs could be hit with Accelerated Payment Notices (APNs) immediately and would have 90 days to either contest the demands or pay up.
The scale of the crisis is difficult to judge as the use of EBTs is often not made public.
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How next month’s Supreme Court case between Rangers’ liquidators & HMRC could have a wider impact on football. https://t.co/dHCFFNV7Qd— Sky Sports Scotland (@ScotlandSky) March 9, 2017
Andy Wood, a tax expert and director at Enterprise Tax Consultants has told Sky Sports News HQ that EBTs were widely used, with some players receiving as much as 50 per cent of their wages via the schemes.
He said: “EBTs were a staple diet in professional football for more than a decade; in particular between 1999 and 2010.
“The vast majority of Premier League clubs, plus more than half of clubs in the Championship, were using EBTs to help pay their players. Most of those loans are still outstanding.”
Some of football’s leading clubs have already paid HMRC officials in order to avoid being hit with large income tax demands, and several clubs are understood to have reached private settlements with HMRC in recent months due to concerns about its investigations into EBTs.
Wood has been involved in helping one club reach a six-figure agreement with HMRC in relation to the affairs of one senior official and was aware of “five or six” other such deals being struck.
Other Premier League clubs are understood to have recently received hefty tax demands after disclosing their own use of EBTs between 1999 and the present day.
If HMRC lose the Supreme Court battle in March, however, it is understood the clubs will escape further investigation, with attentions turning instead to the players themselves.
This is likely to cause exaggerated problems for retired players who benefited from EBTs but are no longer able to generate funds needed to pay.
The EBT payments were unconnected with Rangers Football Club going into liquidation in 2012 with no outcome known at that time.
A bill for £2.8m plus penalties as well as six months of unpaid Income Tax and National Insurance were included in HMRC’s claim against the club.
With no wealthy bluenoses coming forward to settle up with Her Majesty through a CVA the club was placed in liquidation.
If the players are forced to repay their loans they will be able to keep the medals that ‘they won oan the pitch’ but the SPL and SFA will be expected to remove honours won through illegal payments made to players that weren’t registered with the authorities.