Scottish Media & “The Celtic Tax Case”

by | Oct 17, 2016

It was front-page news on October 12th. A Daily Record investigation. “Celtic and the tax dodge firm,” screamed the headline. £434m in unpaid tax. Rangers Tax Case? Relative peanuts. Many Scottish football fans would consider the existence of a Record newspaper investigation into anything front-page news in itself. The Record played its full part in missing the Rangers liquidation story, the biggest in Scottish football history, as it unfolded in the years leading up to 2012. More recently, they ignored a damning report into Scottish football governance by the Tax Justice Network. And they are currently missing/ignoring the financial stories brewing at Ibrox. But this, Celtic Football Club’s involvement in what the Record story called a “massive tax dodge,” was too good to miss or ignore. Except that it was rubbish.

John Ferguson “wrote” the story, about the use of film production company investments to lower personal tax liabilities. And he supposedly undertook the “investigation.” The suspicion is, however, that the inspiration/evidence came from, ahem, “outside” sources. The on-line article was headlined Celtic chief Peter Lawwell among club figures linked to £434m tax dodge. And Record on-line sports editor Darren Cooney denied on Twitter that there was a “slant” to the story. But Cooney’s burgeoning reputation for talking tosh on Twitter was only enhanced by this claim. The sub-headline ran “the Parkhead chief executive, along with several former players and managers, are linked to a massive tax dodge.” And, ignoring the wonky grammar, the Record was clearly presenting the story as a “Celtic Tax Case” to match the famous “Rangers Tax Case” (RTC).

The players and officials mentioned were predominantly Celtic, with only brief indications, about 94 paragraphs in, that other footballers, and very famous non-footballers, were involved. A supplementary article, “by” Graeme Thomson, Companies House records show how former Celtic stars invested in film schemes linked to tax dodge contained “documentary evidence” concerning “a host of former Celtic stars.” This presentation had the desired effect. There was only inference of, not reference to, Celtic owing tax. But inference sounded enough like reference to stir the walloper element of the Rangers twitterati, who claimed Celtic were in club-threatening trouble, owing tax authorities millions.

For the UK taxpayer, the story was very good…but not news. HMRC won a tax tribunal case in April 2012 against Eclipse Film Partners No 35 LLP, whose investors included Alex Ferguson and money-making scheme addict Sven Goran-Eriksson. And on July 8th 2014, the Daily Mail newspaper’s Adam Uren highlighted similar schemes in his article Investors warned of huge tax demands as taxman cracks down on suspected avoidance schemes, writing: “Investors put money into schemes that backed the British film industry. As directors of partnerships they were able to write off losses against other income.”

There was a welter of celebrity-investors in Ingenious Film Partnerships, the company highlighted in the Record’s “investigation.” Uren listed “David Beckham, Ant and Dec and Gary Lineker” but they were hundreds of stars, mostly from the entertainment industry, especially of you include football as entertainment (Sunderland fans, feel free to disagree). And “under controversial rules, investors will have to pay back the tax they are alleged to have avoided…even before a decision has been made on their case.” Investors would “get a refund from the Government” if the tribunal ruled the schemes legitimate, or could settle “out-of-tribunal” for reduced fees if they didn’t want to pay, in some cases, six or seven-figure sums in the meantime.

In a November 21st 2014 article Investment in British film or a tax avoidance scheme, legal advisors Tees Law said it “sounds a lot like HMRC changing the law retrospectively.” They predicted “an increase in disputes and litigation.” And Ingenious, perhaps predictably, suggested it was: “a crude attempt to generate cash for the Exchequer in a wholly unfair and unjust manner.” On January 23rd 2015, the Guardian newspaper’s David Conn and Daniel Beizsley co-wrote Footballers who once earned millions face penury over tax demands which reported that “more than 100 footballers…are in severe financial difficulties and even face bankruptcy” after the law was enacted. The article cited Ingenious Media, who “had around 70 former and current footballers signed up, including stellar names, publicly recorded at Companies House…Gary Lineker, David Beckham, Steven Gerrard and Wayne Rooney.” It added: “Players signed up…because financial advisers targeted high-earning footballers…it became a culture within the game.” Geoff Scott, CEO of players’ welfare organisation Xpro, said many joined “because they saw their team-mates doing it.”

On March 31st 2016, the Record suggested Former Rangers stars face ruin as taxman gets tough following Budget crackdown on EBTs. Cooney would claim this Mark McGivern article showed that the paper had no “slant” on these stories. However, the March piece was rightly sympathetic to players who faced payment demands when their old club, Rangers, had “avoided” the tax. The Record extensively quoted “tax expert Andrew Watters, of accountancy firm Thomas Egger,” who “represented several EBT clients.” Watters “claimed players’ agents and Rangers’ tax advisers could be dragged into court” and said “people are considering legal action against their advisers.” The Record called the government action a “tax grab.”

On April 15th, the Record ran award-winning Keith Jackson and soon-to-be “investigator” Ferguson’s article Celtic and Rangers heroes among football stars facing financial ruin as HMRC send cash demands over tax avoidance schemes. It was sub-headlined “Some of Scottish football’s biggest names are facing…disaster as tough new rules has seen a clampdown on tax avoidance schemes used by the wealthy.” Again ignoring the wonky grammar, this was a retread of the Guardian’s January 2015 piece, timed for sensationalist effect. “Many of the schemes had been officially approved by HMRC,” it noted, “but a retrospective change in the law means those who used them are now personally liable.” And “the bombshell demands” were “dropped on at least three Scotland captains,” a “host of their international teammates,” and “former big earners from across the Old Firm divide” including (sensationalism alert) “at least one player who is likely to feature in Sunday’s Scottish Cup semi-final between the Glasgow rivals.”

The story re-emphasised the iniquity of demanding “full repayment of all disputed amounts” which were only “subject to appeal” once they were “deposited.” As “one current Scotland player said,” correctly: “We feel we are being hung out to dry.” And “one of the most influential men in Scottish football told the Record” that “some of the guys put money into a scheme that helped fund the movie Avatar so we’re talking about bona fide investments. They were told the tax incentives were perfectly legal. Some of them have letters from HMRC to prove it.” This perspective has since disappeared. HMRC wins blockbuster tax avoidance cases screamed the Companies House website headline on August 11th, the article detailing the increasing misnomer that was the Ingenious scheme. Investors owed “£434m in unpaid tax,” the figure which adorned Ferguson’s “investigation.”

“Ferguson’s” findings were published two-months-and-a-day later. Yet two hours’ research revealed that the article misled readers about Celtic’s role (there wasn’t one), the predominance of Celtic people involved (there wasn’t one) and the “investigation” itself (guess). Thirteen Celtic people were name-checked: Lawwell, ex-finance director Eric Riley, ex-managers Martin O’Neill and Neil Lennon and ex-players Craig Bellamy, Momo Sylla, Bobby Petta, Chris Sutton, John Hartson, Stan Varga, Alan Thompson, Johan Mjallby and Darren Jackson. It also name-checked “Aberdeen chairman Stewart Milne, former St Mirren caretaker boss Gary Teale, ex-Scotland captain Gary McAllister, former Aberdeen stars Stephen Glass and Eoin Jess, ex-Rangers striker Billy Dodds” and “Rangers legend Gordon Durie”, and continued: “As well as the Celtic players and management, former England stars David Beckham and Gary Lineker and telly favourites Ant and Dec were involved.” It also referenced “film director Guy Ritchie, former BBC news reporter Kate Adie, singer Craig David and footballers Emile Heskey and Martin Keown.”

However, the following pertinent facts and perspectives went missing. There were three thousand investors in the schemes referenced in the article, including two hundred football people from 40 clubs. And Celtic had less involvement than Middlesbrough, Charlton, Fulham, Blackburn and Leicester. Celtic predominated among Scottish clubs. But “financial advisers targeted high-earning footballers.” Only Celtic and Rangers had significant numbers of “high-earners” when the schemes started last decade. And Rangers players, you may recall, had their own tax thing going on at the time. Genuine investigation would have revealed all that. And if Ferguson thought “Celtic’s” involvement newsworthy, he presumably contacted the Leicester Mercury, Lancashire Telegraph or Teesside Gazette so they could file their own front-page stories.

Genuine investigation would also have revealed even more crucial information. Caldwell, the article said, invested “in Inside Track 3 LLP and Inside Track 2 LLP” and “resigned from Ingenious Film Partners LLP in 2010.” He joined Inside Track 3 LLP on 3rd March 2004, Inside Track 2 LLP on 12th February 2004 and Ingenious Film Partners LLP on 25 February 2005. He joined Celtic on 1st July 2006. Petta joined “The Film Development Partnership 11 (sic) LLP” on 10th February 2004 (actually Film Development Partnership TWO…pesky roman numerals), when he was on-loan at Fulham. Celtic were still his parent club, although he didn’t play for them again. But while “ex-Celtic star Craig Bellamy also joined schemes linked to Ingenious in his time at Parkhead,” he was then on-loan from Newcastle United.

So, only if Celtic were paying both salaries could the two be considered Celtic players in the context of the article. And that’s only if the clubs were relevant to the scheme, which…er…they weren’t. A particularly “pertinent fact” to overlook, as it undermines the entire story. Oh…and Darren Jackson? Left Celtic years before such schemes were even contemplatable under UK law. Only the fools who wanted to be fooled were fooled. On my twitter timeline “Blue Bastion” suggested, based on evidence from thin air, that “CFC nomads” were involved and asked if “these schemes absolutely DID NOT save CFC any tax if employees used them?” The answer: “absolutely not” failed to register. As did my delight that HMRC had rumbled said “dodge.” Instead, he (not unreasonably) accused Lennon of hypocrisy for condemning Rangers’ tax avoidance strategy while following one himself. And…er…that’s it.

Had Ferguson read the tribunal’s findings, published on August 2nd, he might have noticed that its 342 pages possibly contained a majority of the words in the English language…and that not one of those words was “Celtic.” Or any other football club’s name. The investments were personal. The tax was deducted at source from club salaries involved. And investors’ employers saved no tax. All this should have been clear to Ferguson and Cooney. So why did Ferguson write such misleading, half-researched-if-researched-at-all, incomplete crap? And why was it passed for publication, with an entirely misleading front-page headline inaccurately suggesting illegality? Such “errors” only come from journalistic failure or a willingness to be manipulated by public relations (PR) firms. Both of which reflect badly on, in this case, Ferguson and Cooney. “You employ tax avoidance schemes, you get name-checked,” Cooney tweeted, referencing the March 31st Rangers story to counter accusations of bias. But Celtic didn’t “employ tax avoidance schemes.” Rangers did.

Media manipulation isn’t new. I vividly recall watching as contradictory “exclusive” stories marked Liverpool co-owners Tom Hicks and George Gillett’s public fall out in 2008. I wrote almost an entire letters page on Kingstonian’s ownership troubles in 2001, with friends (I had them once) happy to “sign” my work. However, Scotland’s football press is too willing to be so manipulated…and so bad at hiding said manipulation. Texas salamanders could see it coming. If bad news looms for Rangers, bad “news” looms for Celtic.  Rangers’ inability to afford the obvious solution to the “Joey Barton problem” is a story in itself. Cue the “Celtic Tax Case.” Without evidence of Celtic Football Club investing in the film production company schemes, no journalist should have written this story, no editor OK’d it. Yet the Record ran it and had the nerve to call it an “investigation.” Scotland’s football press. Scotland’s shame. Again.

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