As the mess that is the financial collapse of Rangers Football Club continues to play out in the courts, more evidence emerges of financial foul play by the club in the years leading up to the crash. And that evidence confirms the accuracy of what has been reported here, and the critical questions that the Scottish FA continues to refuse to answer.
But that begs a further question: does anyone in the game, be they fan groups or clubs, care enough to do anything about it?
Small tax liabilities: Some background
In our report, Doing SFA for Fair Play, we found that the Lord Nimmo Smith commission had made a serious error of fact. In its findings the commission determined that Rangers Football Club had gained no sporting advantage over its competitors by offering its players a tax avoidance scheme which allowed them to keep more of their wages.
This finding was based on the proposition that the tax avoidance schemes were lawful and so in theory any other club could have offered their players similar incentives. But in fact, it was already known at that time that one of the two tax schemes (the ‘small tax case’) had been found by HMRC to be unlawful, and Rangers had at no point sought to challenge HMRC’s findings. It was our view that the Scottish Football Association had misled the inquiry as to the nature of Rangers’ tax liabilities.
Our report also looked at whether Rangers should have been allowed to play in Europe in the 2011/12 season, as UEFA rules require that clubs have no outstanding tax liability when they enter the European competition. In our report, we took the view that the use of an unlawful tax avoidance scheme, which HMRC had discovered and was seeking payment for by the time Rangers had to submit their application to play in Europe was not properly taken into account when the club was granted permission to play in Europe. This led to other clubs losing out on the opportunity.
Our report provoked considerable debate as to the timing of the tax liability in the small tax case, and whether the tax bill had formally become “a liability” at the time Rangers submitted its papers to play in Europe.
As a defence to our reporting, senior figures at the SFA briefed the Guardian to say that they had access to private correspondence between HMRC and Rangers showing that HMRC had agreed to extend the payment deadline, and this satisfied UEFA rules.
Now, more evidence has emerged from the Whyte trial which confirms what many of us knew all along – that Rangers knew that they had a tax liability to pay well before they submitted their licence application to play in Europe.
The Whyte Trial: Busting the SFA’s alibi
Recently Craig Whyte, the former owner of Rangers Football Club was acquitted on charges of fraud brought over his purchase of the club in 2011. The prosecution alleged that Mr Whyte lied about how much money he had when he agreed to buy the club in 2011. The sale of the club went though for just £1, but with a commitment of substantial funds to meet the club’s large liabilities.
As part of the defence, Donald Findlay, Mr Whyte’s barrister, got Ranger’s previous owner, Sir David Murray to put on the record the financial state of the club in 2011. Crucially Sir David told the court that the club had an outstanding tax liability of £2.8m (the amount due in the small tax case) and that HMRC were demanding payment. According to Mr Findlay the board of Rangers knew about the small tax case liability from January, and Mr McIntyre, the former finance director put on record that the club had “no defence” in the tax case.
McIntyre agrees Rangers “had no defence” over HMRC “small tax case”
— James Doleman (@jamesdoleman) April 25, 2017
The significance of this, and multiple confirmatory pieces of evidence in the Whyte trial, is that it puts beyond any possible doubt that Rangers knew they had an outstanding tax liability, and one which they were not going to challenge, at the time that they submitted their licence application to play in Europe in 2011.
A case to answer
Previously when questioned on this issue, Stewart Regan, the Chief Executive of the SFA held to the line that Rangers were challenging the bill. That is clearly not an accurate account of events.
So how did the SFA get it so wrong?
Here at the Offshore Game, we find it difficult to understand why there isn’t a queue of clubs, fan groups and journalists, beating a path to Hampden to demand to know which of these is the case.
Is the SFA interested in running a fair competition for all clubs in Scotland? Is it capable?
We asked the SFA whether the evidence in the Whyte trial had compelled them to rethink their position, they did not answer our request for comment.
The next shoe dropping
Finally, we note that the Supreme Court judgment over Rangers’ appeal of the much bigger tax avoidance scheme (the imaginatively named ‘big tax case’) is due any time now.
The other aspect of our report, Doing SFA for Fair Play, relates to the Nimmo Smith commission’s decision not to consider sporting sanctions against Rangers – despite the evidence of having hidden side letters and the full payments to many of their players for a decade. This rested crucially on the elision of the big and small tax cases, with the erroneous assumption that both were considered valid avoidance schemes by HMRC.
That assumption was untrue at the time of the small tax case. In either case, a pivotal decision rested on a position that the SFA knew at the time to be wrong – because the small tax case scheme was already known to have failed as avoidance.
That the SFA allowed the commission to dismiss the possibilities of docking points, on the basis of information they knew to be wrong, raises serious questions over the SFA’s competence and probity. It also shows the decisions of the commission must be revisited – even if is to consider sporting sanctions and decide against them if they consider the offences to be sporting but not serious.
The pressure on the SFA to act will surely become irresistible if Rangers’ appeal to the Supreme Court is not upheld, since with that the Nimmo Smith commission’s assessment of the big tax case would be finally and definitively overturned. Even setting aside the existing error around the small tax case, it would be impossible for the SFA to maintain support for a decision based solely on a now-overturned legal position.
The equivalent would be for the IOC, for example, to argue that a failed drugs test carried out using new testing technology some years after an Olympic 100m final, on the winner’s stored sample, was somehow irrelevant information in respect of a previous decision not to strip the title because the drug test at the time appeared clean.