IN April 2010, it finally emerged that Rangers were facing a colossal tax bill from HMRC over the club’s use of the controversial EBT and DOS tax avoidance schemes. The revenue and customs service were demanding an astonishing total of roughly £50m from the Ibrox club, broken down as £24m in unpaid taxes, known as the ‘core amount’, plus £12m in backdated interest, as well as non-payment fines, which were a negotiable sum but precedent suggested that penalties of 50% – 75% of the underpayment would also be applied.
Rangers were disputing the assessment and the case was set to go to court, to the first tier tax tribunal in Edinburgh, starting in October 2010, but coming on top of all the other financial woes at Ibrox, including the £30m still owed to Lloyds Bank, this new liability was potentially a killer blow to the club.
Things had started to unravel for Rangers behind the scenes when, in July 2007, the City of London police, who operate in the UK capital’s ‘square mile’ financial district, raided Ibrox in connection with the former Metropolitan Police Commissioner Lord John Stevens’ inquiry into under the table transfer ‘bungs’ in football.
The Stevens report ultimately found ‘unresolved issues’ in the case of the transfer from Rangers to Newcastle of Jean-Alain Boumsong in January 2005, although the matter, along with 16 other transfers involving British clubs between 1 January 2004 and 31 January 2006 which Stevens had been unable to sign off in his report, was ultimately not pursued by either the FA or FIFA.
However, Stevens’ team of forensic accountants uncovered evidence of the use of EBTs at Ibrox, and in particular the shoddy way in which the scheme was being administered through secretive side-letters, and passed on the information they had acquired to HMRC, an unfortunate consequence from Rangers’ point of view.
The revenue service had been investigating Rangers since as far back as 2004, but had been blocked at every turn by the club’s denials, obfuscations and even the destruction of evidence, after CEO Martin Bain was found to have issued instructions that his own letter requesting a £100,000 tax free bonus was to be shredded. Finally, it now seemed, HMRC had the smoking gun they needed to pursue their case against Rangers.
Perhaps not unexpectedly, the media in Scotland were slow to pick up on HMRC’s investigation of Rangers, and even seemed to be ignoring the story altogether at times, until in May 2010, Phil Mac Giolla Bháin, a blogger and freelance journalist with unabashed Celtic sympathies, managed to get his scoop about the Ibrox tax case onto the cover of the News of the World’s Scotland edition.
On the inside pages, Mac Giolla Bháin’s exclusive elaborated on the extent of HMRC’s claim against the Ibrox club. Under the headline, ‘Simply the bust’ – not, as it may have appeared at first glance, a typical Sunday tabloid exposé, but a play on Ibrox stadium’s adopted signature tune, the Tina Turner classic ‘Simply the best’ – Mac Giolla Bháin reported: “Officials are worried the hammer blow from Her Majesty’s Revenue and Customs could make the club UNSELLABLE – and could even push them towards ADMINISTRATION.”
It was the first public reference to the possibility that Rangers’ financial difficulties might pose a potentially terminal threat to the club, and of course the full use of HMRC’s official, acronym-free title in the piece was no accident. Rangers were being investigated at the behest of Her Majesty, an ironic and uncomfortable position for a club with not one, but two portraits of the young Queen Elizabeth adorning the home dressing-room…
As details of the EBT scheme slowly emerged, it became clear that Murray himself was the single biggest beneficiary from the trust payment system, with the Rangers owner trousering a total of £6.3m in tax free income from MGMRT, more than the combined totals received by Dick Advocaat, Stefan Klos and Barry Ferguson.
All that was required was a carefully worded letter to the trustees, acknowledging their notional discretion, and sums of up to £1m would be transferred to Murray’s personal disposal, no questions asked. So much for never taking a penny out of the club.
Murray later bragged that if he wanted any extra tickets for matches, he paid for them himself, but in reality, he was very far from the benefactor figure which he was often portrayed to be by his friends in the media, and with no ‘white knight’ on the horizon thanks to the toxic liabilities at Ibrox, which by now were in the public domain, it soon became obvious, especially if the tax tribunal should rule in HMRC’s favour, that Rangers were a dying club.
Stephen O’Donnell, Author, Tangled Up in Blue
This Extract on The Celtic Star is from Tangled Up in Blue The Rise and Fall of Rangers FC by Stephen O’Donnell, published on hardback this month by Pitch Publishing and available now on Amazon and at selected Waterstones stores.
Please note that there are currently 35 reviews for Tangled Up in Blue showing on Amazon with numerous coming from truth deniers among the Ibrox support who clearly have not looked at this book but just wanted to trash review it. These can and should be ignored.
Indeed given the myth and the lies that have emerged since the death of Rangers in 2012, this is the book that tells the story and should be kept in the house and in the family and passed down the generations so that the truth is known and not the lies that are peddled by the liquidation deniers in the media and the Rangers support who will tell you that they were unfairly put down the divisions or even relegated to the third tier.
We also have carried an interview with Stephen and published a few other extracts from his new book, Tangled Up in Blue. Celtic Historian David Potter has also reviewed the new book on The Celtic Star. Links to these articles are below…