After Sherriff Officers called in August 2011 to collect the £2.8m tax owed in respect of Rangers use of Discount Option Scheme EBTs from 2000 to 2001/02 to pay Ronald De Boer and Tor Andre Flo all sorts of explanations emerged to explain how the tax in question was not overdue at the time a UEFA licence for season 2011/12 was granted in April 2011 by the SFA. Explanations given public air time since August 2011 were:
- The liability had not “crystallised” at 31st
- It was under discussion/dispute or
- It was under appeal.
As the SFA Compliance Officer investigates the first two reasons, here is the story in Timeline form of the third and how that appeal narrative became part of the UEFA Licence Application for 2012/13 by Rangers. An application that ultimately failed because no ratified accounts were available to allow it and of course Rangers entering administration on 14th February 2012. The exchanges between Rangers and SFA and internally at Rangers are highlighted in red text.
The Wee Tax Case Appeal 2011 Timeline.
26th August 2011. Withey to HMRC stating Wee tax case letter of 20th May not seen by Rangers as McIntyre the addressee suspended soon thereafter. Withey not aware that David Grier had acknowledged receipt of that letter in his letter to HMRC of June 6th. File 1
4th Oct 2011. Olverman informs Sharp at SFA that Rangers have put in an appeal – letter not available but date taken from later communication of 31 Jan when Rangers start application process for 2012 Licence. In fact, the normal time scale for appeal has elapsed (30 days from 20th May) so Rangers had to seek leave to appeal and as it transpires it was only the penalty and not the liability as reported to SFA. File 2
4th Oct 2011. At same time as Olverman telling SFA an appeal has been lodged Saffrey & Co hired to assist explain HMRC’s position on an appeal which is they would reject any appeal which means Rangers would have to go to a Tribunal to obtain leave to appeal. Reasons to refuse was rejection of the same reason by the Court of Session for suspension of collection proceedings (Aug 2011) and that Grier had acknowledged 20th May letter in June 2011. File 3 For this reason, a Tribunal would also reject an appeal. Further discussions on any evidence HMRC mislead by Rangers (which there was and the basis liability was accepted on 21st March 2011). HMRC also intimated that they might take action against the Directors of RFC for trading whilst insolvent.
HMRC want to know by 10th Oct if Rangers wish to withdraw the late appeal to them, failing which HMRC will write to Saffrey rejecting the appeal but it looks like Saffrey wished to pursue. (see 24th Nov) See File 4
19 Oct 2011 Saffrey to various Rangers parties. HMRC will not do an overall deal unless a new argument can be found on which to base an appeal other than those made on 4th October. File 5
11th Nov 2011. Result of QC advice on which to make an appeal to the FTT Service which should be simple in first instance but requiring detail subsequently. Given that advice based on 20th May letter was not received or read when evidence that it was already known on 4th Oct or there was no evidence of dishonest conduct when there was, it is questionable what information the QC was supplied with by Saffrey File 6
22 Nov 2011 Olverman to Whyte explaining the hurdles to be overcome to obtain 2012 UEFA Licence. It refers to wee tax case liability “ The tax case and claims by Bain and McIntyre were know items at June which we dealt with” This refers to the Art 66 submission which was accepted after Sharp SFA and UEFA discussed it on 19 Sept 2011. File 7 Sharp is presumably Olverman’s contact at the SFA and Andrew is presumably Dickson who advises on such matters and who Stewart Regan consulted on 6th December 2011 before e mailing him on 7th. File 7a.
“ I can investigate further with my contact at the SFA, especially on the finer point once we have determined where we think we will be on the various requirements. This matter should also be discussed with Andrew to determine his view and understandings to ensure that consistent with mine” See File 8
24th November 2011. Saffrey to interested parties. Leave to appeal to Tribunal must have been given as HMRC are asking Saffrey if they have received any word from the Tribunal as HMRC had not. Neither had Saffrey. On hearing why HMRC are confident of their reasons for issuing out of time Determinations starting from Oct 2010 to arrival of 20th May letter (on fraudulent or negligent grounds – the latter being sufficient cause to do so, Saffrey say they “have no fundamental position with regard to the late appeals because we have no material argument that the assessments themselves are incorrect.” File 9
16 Dec 2011. Saffrey e mail to Rangers advising that having heard from HMRC that only the penalty amount (£1.3m ?) and not the core £2.8M was under appeal that Saffrey write to HMRC on Rangers behalf and try to postpone collection on the wee tax case liability until big tax FTT is over and that the appeal (on the penalty) is withdrawn and ask for a time to pay arrangement. File 10
31 Jan 2012. Rangers provide a UEFA licensing template to Sharp at the SFA along with a covering e mail. As well as other issues on Art 50 overdue tax payables it says, “Detail and agree dispute on DOS Tax Case”. File 11
31 Jan 2012. The covering e mail refers to an appeal on 4th Oct but makes no mention of events from 16 Dec 2011. It calls into question the information Olverman supplied to Sharp on 4th October in respect of what actually was being appealed. See File 2
1st Feb 2012. Sharp at the SFA sends a formal reply to Olverman which asks for proof there is a legal dispute on both wee and Big tax cases. File 12
2nd Feb. Olverman circulates SFA response to Craig Whyte. File 13
No specific mention of proof required on overdue tax but at very end after main body of e mail in a separate e mail comments that £500k released from arrested has been allocated by HMRC to VAT and not PAYE overdue. The sum of £500k is the same as the amount Craig Whyte had claimed had been paid to HMRC under the Article 67 submission completed under the guidance of Sharp on September 19th ( see File 7 ) and submitted to Sharp for UEFA on 30 Sept 2011. File 14 Did Sharp submit without questioning given tone of his communication with Olverman on 19th September?
10 Feb 2012. No record of any letter to HMRC from Rangers but HMRC respond to a settlement offer confirming that only the penalty is under appeal and that whatever proposal was made since 16 Dec 2011 was unacceptable and that the standstill agreement was at an end and HMRC would take action without further notice. Four days later HMRC caused RFC to enter administration. File 15
It is evident that there was never an appeal against the £2.8m liability and the motivation for saying it was is at least questionable and enabled Donald Findlay defending Craig Whyte to say in his summing up that the wee tax case liability had been appealed
Additionally the appearance of an appeal would have enabled the wee tax case liability not to be an overdue payable at 31 March 2012 had SFA finally not been as diligent as they should have been in 2011. The foregoing narrative backed by evidence suggests that Rangers FC under Craig Whyte had no intention of paying the overdue tax liability they took over responsibility for after Rangers under Sir David Murray had accepted the liability on March 21st 2011 and the SFA’s handing of same should be part of any Compliance Officer investigation.
If only the BBC would apply as much diligence to publicising the whole story of huge tax evasion by unlawful means by a football club as they have tax planning using lawful (if socially unacceptable) methods by a private non UK individual they might help Scottish football to move on.