17 Feb 2012
Rangers FC – a pre-emptive strike against HMRC?
Following recent news of Rangers FC's financial turmoil, Lawrence Graham Corporate Tax partner, Elliot Weston, commented:
"Going into administration looks like a pre-emptive strike against HM Revenue & Customs (HMRC) and suggests that the company are anticipating an adverse decision from the forthcoming judgement of the First-Tier Tribunal in relation to their employee benefit trust arrangements.
"Now that HMRC no longer have the status of preferred creditor and have to compete with other ordinary creditors for a share of the pot, they have little choice but to be more aggressive in seeking underpayments of tax, as in the case of Portsmouth Football Club.
"The full details of Rangers FC's tax affairs are yet to emerge, but it looks as if they are the latest in a line of examples of HMRC targeting avoidance of income tax and national insurance contributions on employment income under employee benefit trust (EBT) arrangements.
"Under arrangements designed to avoid tax, EBTs can involve off-shore trustees receiving contributions from the employer which are used to channel funds in an indirect way to employees and their families, often through the use of "soft" loans which are not intended to be repaid."