The Supreme Court has ruled in favour of HMRC over Rangers’ use of Employee Benefit Trusts (EBTs) between 2001 and 2010.
In its judgement over the use of EBTs, the Supreme Court upheld HMRC’s appeal that payments using the scheme should be taxable.
Under the scheme more than £47m was paid to players, managers and directors between 2001 and 2010 in tax-free loans which HMRC argued were earnings and therefore should be taxable.
What became known as ‘the big tax case’ the case focuses on RFC 2012 and will have no financial impact on NewCo Rangers.
Focusing on the activities under Murray International Holdings Ltd, and former chairman Sir David Murray, 108 sub-trusts were established in the name of individual employees, of which 81 were for RFC employees (footballers and executives) and 27 for other Murray group employees.
The group companies also used the combination of the Principal Trust and a sub-trust to pay discretionary annual bonuses to employees, other than the footballers whom RFC employed.
Since 2005 only RFC used the Principal Trust to remunerate its employees.
In a statement issued to the Press Association, Sir David Murray, said: “I am hugely disappointed that the Supreme Court has upheld the decision of the Court of Session, reversing the decisions of the specialist tax First Tier Tribunal and the Upper Tribunal in this matter.
“The decision runs counter to the legal advice which was consistently provided to Rangers Football Club, that on the basis of the law and legal precedent at the time, the contributions made to the trust were not earnings and should not be taxed as such.
“It should be emphasised that there have been no allegations made by HMRC or any of the courts that the club was involved in tax evasion, which is a criminal offence.
“The decision will be greeted with dismay by the ordinary creditors of the club, many of which are small businesses, who will now receive a much lower distribution in the liquidation of the club, which occurred during the ownership of Craig Whyte, than may otherwise have been the case.
“I have not had the opportunity to discuss the decision in detail with Tax Counsel, but will do so, particularly in light of proposed legislation, which will alter the tax position applying to loans made by trusts to employees. Once the impact has been assessed, a further statement will be issued.”
Two tribunals in 2012 and 2014 had previously found in Rangers’ favour, but after an appeal in 2015, the Court of Session found in favour of HMRC.