10 years later, a new court battle looms over £168million Rangers debt mistakes.

IT started with a supposed billionaire in the person of 'Motherwell financial prodigy' Craig Whyte, whose fortune 'fell off the radar' to buy Rangers for just £1.

GB About: Rangers FC Publish: 02/15/2022 Edit: 02/15/2022 Author: Gardener


10 years laterIT started with a supposed billionaire in the person of 'Motherwell financial prodigy' Craig Whyte, whose fortune 'fell off the radar' to buy Rangers for just £1. It ended in financial collapse, liquidation, humiliating relegation to the bottom of the Scottish Football League, malicious prosecutions and the abuse of government power over a failed fraud investigation into the club that could cost taxpayers over £120m. Claims made when Rangers went bankrupt ten years ago today totaled £168.8m, according to insolvency practitioners BDO. But now a court battle is looming over the amount of debt the club actually owed, with the final figure expected to be just under £100million. The club's unsecured creditors included more than 6000 fans, who bought £7.7million worth of bonds from Ibrox - only to have their investments ripped off when the club was plunged into administration. Creditors also include a lady named Susan Thomson, who ran a makeup shop who was owed £40 when the club went bust. New court cases are now believed to be on the way as both club liquidators BDO and Rangers Oldco's biggest debtor HM Revenue and Customs (HMRC) are deadlocked over a "mistake" that could see the revenue officer's total claim against Rangers Oldco £94.4m halved. The road to liquidation began when Rangers owner David Murray, whose own group of companies was experiencing financial difficulties, came under pressure to sell. Unhappy with the club's £18million debt, Lloyds Banking Group wanted out of football and were concerned about a tax case with a possible bill that could bankrupt the club. After a string of failed bids for the club, Mr Whyte came up with a pledge to invest and pay off the debt. But behind Mr Whyte's spin were a string of failed deals, concerns not overlooked by the club's Independent Board Committee (IBC), which evaluated bids on behalf of shareholders. By the age of 40, the man once heralded as "the next Richard Branson" had either run or been a key director of a number of companies that had either gone out of business or were threatened with dissolution and millions of pounds owed . The IBC, which includes former chairman Alistair Johnston, Martin Bain, John Greig, John McClelland and Donald McIntyre, was sufficiently concerned about Mr Whyte's offer to issue a statement demanding that the new owners return their financial commitment to indicate the club. Despite the allegations and legal proceedings, the then 29-year-old insisted at his home in Monte Carlo in May 2000 that he was debt-free. "I don't owe anyone money - least of all the tax office". The IBC's concerns were justified, as Mr Whyte took over the business of Rangers after just nine months at the helm. About £74m of the alleged remaining debt came from the Inland Revenue and related to the club's use of Employment Benefit Trusts to pay players and staff from 2001 to 2010. Under the scheme, around 80 players, staff and officials had deposited money into Murray Group subtrusts owned by Mr. Murray. The finance officer said the scheme was tax avoidance and hit Rangers with a bill to pay back the money while the club was owned by Mr Murray. Known as the Big Tax Case, it was seen as the trigger for the club's disastrous sale to Mr Whyte. HMRC have insisted they made no mistake about the debt that led to the club's bankruptcy. However, according to the BDO, almost £30m has already been 'successfully challenged' - £20m of which is EBT tax penalties which were deducted from the original total when the club business, now known as RFC 2012, went bankrupt. It has also emerged that the tax trigger that prompted the tax officer to submit his application to put Mr Whyte's owned club into administration at all has been called into question. At the Court of Session in Edinburgh, the Finance Officer tried to appoint his own trustee over alleged failure to pay £9million in PAYE, VAT and Social Security - but Mr Whyte submitted his own legal paperwork to appoint trustees and insisted the Club "come out would be stronger" and "always be here". Paul Clark and David Whitehouse of Duff and Phelps, who were favored by Mr Whyte, were given promises by the court to take over Rangers' day-to-day operations while tackling its debt problems. In liquidation, that tax claim grew from £9m to £15.43m – only to be reduced by £5.2m following another challenge by BDO. HMRC is under pressure over its action as its total claim could be reduced from £94.4million to just over £40million if the liquidator manages to challenge the way the tax officer calculated what the club did owes for its controversial use of EBTs. Interview with Craig Whyte on taking the club into administration. While the current tax bill currently stands at £64.5m, BDO says about £51m remains in dispute - £48.8m linked to the use of EBTs. The Herald believes the contested EBT matter could well end up before a judge at the First Tier Tax Tribunal. BDO questions HMRC's calculation, which included interest, saying it was wrongly subjected to the so-called 'extrapolation' in relation to the calculation of the tax. An HMRC calculation would add the higher tax rate of 40 per cent plus Social Security to the payment to arrive at the total owed. Executives in charge of Rangers prior to Sir David Murray's sale believe the magnitude of the potential EBT debt had deterred potential buyers of the club - paving the way for a £1 sale to Mr Whyte in May 2011 and the financial collapse paved nine months later. Back then, executives feared a £50m “nuclear missile” bill if they had landed with the EBT bill and were so worried they sought advice. Supporters groups have criticized HMRC's involvement in the club's demise. Chanting fans hail Ally McCoist as Rangers went into administration ten years ago today. HMRC, Oldco Rangers' biggest creditor, effectively blocked a CVA proposal that would have allowed the club to negotiate their way out of administration. Had the business been prevented from being plunged into liquidation, the club would have held on to lucrative UEFA competitions. A CVA allows companies to come to an agreement with creditors on how to pay off debt, and provides for partial or full repayment, depending on what the company can reasonably afford. But Rangers' CVA proposal offered creditors less than 10p a pound. In May, evidence was produced by Mike Baird, who had been Head of Financial Experts at HMRC's Special Investigations, that the tax officer wanted it to go into liquidation so that an investigation into the Rangers business and HMRC's debt build-up could be carried out. He said there were concerns about the extent of what he described as non-compliance [over taxes] across the club and concerns about the EBT agreements. Drew Roberton, who was general secretary of the Rangers Supporters Association at the time of the club's financial implosion, said: "I believe the HMRC prosecution was an anti-Rangers agenda. A debt is not a debt until the court rules in favor of whoever says you owe them money. So Rangers didn't owe anyone anything until it went to court, and it took a couple of court runs before they finally got what they tied around. And to be honest, any sane person who had taken the time to think about it and examine it properly would realize that it was rubbish football, Rangers returned to the top flight and were promoted under coach Steven in March of last year Gerrard crowned Scottish Premiership champions. “I think everyone was hoping that the situation we are in now would have come sooner rather than later. "It's amazing to look back now and see how far we've come since then.


Keywords: Rangers, Whyte, BDO, HMRC, CVA, EBT, Social Security, Murray, IBC, David Murray, ten years ago, Craig Whyte, 40, 29-year-old, 2001, Scottish Premiership, March of last year, Steven, anti-Rangers, the Rangers Supporters Association, Drew Roberton, Financial Experts, Mike Baird

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