Rangers Tax Case: More Shite Scottish Journalism
The “Rangers” or “Big Tax Case” (BTC) has provided mountains of such codswallop since it became public knowledge. And, on Thursday, the Times newspaper’s Scottish edition ran a front-page story, by Scottish Business Editor, Greig Cameron, headlined “Tax officials blamed for the downfall of Rangers,” which could have been headlined “Tax officials blamed for two plus two equalling seven,” for all its veracity. Nonetheless, Rangers fans bit and, actively aided by Scotland’s football media, are attempting to rewrite the case’s history.
On 5th July 2017, the United Kingdom’s Supreme Court ruled that the Rangers players’ contracted salary payments, which were placed in offshore Employee Benefit Trusts (EBTs) to avoid tax, were taxable income, ending a decade-long journey through tribunals and courts, the case outliving Rangers by five years. The case first became public knowledge on 27th April 2010, via Darrell King, in the Herald newspaper. And Chris Watt’s explainer article was headlined “Rangers face £24m tax bill for offshore payments to players.”
Meanwhile, in 2012, Rangers entered administration for other financial woes. And Her Majesty’s Revenue and Customs (HMRC) voted down voluntary arrangements to repay creditors (CVA). As Rangers’ administrators told creditors “the size of HMRC’s vote, even excluding those liabilities arising from” the BTC (my emphasis) gave them “an effective right of veto” on the CVA. And when they exercised that right, that June, “Rangers RIP” headlines followed.
These figures and chronology are key to Cameron’s story. He wrote that a “multimillion-pound blunder” by HMRC meant “up to £50m” was “set to be wiped off” the old Rangers’ “tax bill.” HMRC “acknowledged that it claimed too much” and “accountancy sources” (un-named and neither directly nor indirectly quoted) “believe the outstanding bill” is “likely” to be a “more affordable” £20m (only £4m “more affordable” than original reports).
John McClelland, Rangers’ chairman from 2002-2004, provided a supplementary narrative: “At the time of the sale of the club in 2011, had the tax claim been at the level now being reported then, in my opinion, the outcome would have been different. I believe there would certainly have been a much higher level of interest in acquiring it and therefore more potential buyers.”
And Cameron referenced “sources from the football world” who indicated “serious interest from a number of buyers between 2006 and 2011.” These were again neither named nor quoted, Cameron simply noting that “the unknown quantity of the EBT liability” was “cited by (Rangers’ ex-owner) David Murray as having made it very difficult to sell Rangers.”
Cameron’s story came from a report to creditors by Rangers liquidators, BDO. They stated that “c£36m” of the “Big Tax Claim” of “c£74m” was “interest and penalties” with “the penalty element” being “c£24m.” BDO appealed the penalties to HMRC’s “Penalty Consistency Review Panel” which “agreed with our submission in its entirety.” HMRC withdrew their penalty claim “in full,” admitted that “a further small element of their claim had been overstated” and revised their claim to “£68.3m.” Meanwhile, BDO would “make further representations to HMRC” on its “principal element.”
This benefitted the 275 non-HMRC creditors (from football clubs to face painters) stiffed by the old Rangers, as it meant “a release of (over) £1m…for dividend purposes.” But this wasn’t news. The report quoted above was dated October 2018 and has been public since being issued to creditors that December. Indeed, BDO had referenced “discussions with HMRC” in an April 2018 report, published that June.
Cameron noted “there is an appeal over the value of the £36.6m principal sum. If that appeal is successful, it is believed (that) figure would be reduced to closer to £20m,” adding “it is thought likely that the £12m interest claim will eventually be reduced by a substantial amount.”. And Rangers fans with no reason to be conversant with the issues were understandably furious. Although some fury showed lunatic non-conversance, including claims that Rangers were due a rebate of tax they never paid in the first place.
TheCoplandRoad.org tweeted: “HMRC have confirmed that they vastly overbilled Rangers Old Co for EBT tax assessments. The ‘real’ bill would not have been sufficient to see the company sold and then pushed into admin, leading to the club being relegated. A monumental scandal.” But even that is codswallop. When Rangers was for sale, from 2008-2010, its potential liability was unreported. Yet no-one showed sufficient interest until November 2010. Rangers were “pushed into admin” for entirely separate reasons. And, as demonstrated in court, Rangers were not “relegated.”
The Times piece spawned many inevitable follow-ups, including discombobulating nonsense from the Telegraph’s Roddy Forsyth, headlined “Rangers consider taking legal action after HMRC says penalty was ‘too high’.” This made no sense because the current club has consistently, correctly, claimed that the BTC was nothing to do with them.
Forsyth quoted Jolyon Maugham QC, recently famed for court challenges to parliamentary prorogation, and an EBT scheme advocate, which probably led to expectations that he would back a “sue HMRC” narrative. But he said successful litigation “would take an awful lot more than getting the number wrong.” Forsyth carried on regardless, “understanding” that Rangers “intend to undertake a forensic examination of tax and company law in respect of HMRC’s recalculation and its impact.”
And this “understanding” was shared, word-for-word, by the Herald groups’ Martin Williams, who cited “unconfirmed reports” that “the current owners are considering legal action by the current board.” This suggested an unconvincing attempt to show that he hadn’t just copied Forsyth’s piece (or that, perish the thought, Rangers were co-ordinating the press coverage). Or that he’s an idiot. Rangers’ statement said they would “take time to consider any courses of action which may become feasible.” Which suggested Williams wasn’t alone in his unconvincing idiocy.
HMRC’s first response sounded tersely unofficial: “As widely reported, and just to clarify, HMRC won against Rangers’ tax avoidance in the Supreme Court and did not miscalculate anything.” Mercifully, the recently-appointed CEO and First Permanent Secretary Jim Harra sounded more official…if equally blunt. “The article is incorrect. HMRC did not make any mistakes that led to the club’s insolvency. Inaccurate and partial reporting only serves to undermine public trust in the tax system.”
Press challenges to the narrative were limited, although there wasn’t the near-unity with which other Rangers tax stories have been suppressed. The Scottish Sun’s Q&A with Thomas Wallace, tax consultant WTT’s ‘Head of Tax,’ had a “here today, gone to…day” quality as it was taken down and re-instated as Thursday progressed. Under the very Sun-esque banner “Change of Tax,” the headline was “EBT expert says HMRC hasn’t ‘blundered’, Oldco isn’t due money and taxman didn’t cause liquidation.” But, apart from that…
Wallace “spent years working for HMRC” and “the last 24 months fighting on behalf of companies embroiled in EBT disputes with HMRC.” So, he offered a two-pronged perspective. But he stressed the “sound commercial benefits” of HMRC dropping their penalty claims when “whether £50m, £30m or £10m, HMRC were never getting that money. It just doesn’t exist.”
HMRC, he agreed, had simply decided that pursuing these payments was “not worth the hassle,” a line which has taken hold among those railing against the Times’ narrative, despite BDO’s reports suggesting that the penalty claims were dropped because of their successful appeal to HMRC’s own “Penalty Consistency Review Panel.”
The Scottish Daily Mail’s Stephen McGowan also rejected the narrative, stating that “the actual architect of Rangers’ downfall” was Murray. While, the Scotsman’s Andrew Smith called the Times report of “bungled” HMRC calculations “bungled interpretation” and suggested that even a tax bill in the twenties (plus £8m interest) would have killed Rangers, quoting contemporary reports agreeing with this scenario from a certain Roddy Forsyth. Awkward.
Awkward too was Maugham’s typically ‘self-confident’ intervention in the Herald: “I’m a QC who specialises in tax. I’m a litigator in the tax sphere. HMRC are no longer contending that it is appropriate to apply a penalty and that’s pretty much it. I don’t see anything that suggests HMRC has done anything wrong.” As for suing HMRC? “Fantasy stuff.”
And the “Rangers Tax Case” (RTC) blog refuted “the latest embarrassment” of Scotland’s press. It portrayed HMRC’s claim-dropping as “cost-benefit expediency” with “nothing” to indicate HMRC “was admitting to any error,” insisted that if Rangers “had survived and was a going-concern with assets and revenues, HMRC would not have given up the claim on the penalties” and praised how the story was “masterfully spun by the usual Ibrox lackeys in the press.”
Cameron’s story is cleverly headlined, seemingly designed to avoid press regulatory sanction. It doesn’t state that HMRC caused Rangers’ downfall, which is untrue but that HMRC are being “blamed” for it, which is true. And his editor, Magnus Llewellin, stood by it on Friday: “We reported HMRC was reducing the size of its EBT claim and was being blamed for its part in the club’s downfall. We highlighted claims the EBT liability made it extremely difficult to sell Rangers.”
But why is this 11-19-month-old story an “exclusive” misleadingly sensationalist “bombshell” now? The only named source quoted (directly or indirectly) is responding TO it. It reports anonymous unspecified apportioning of blame without checking its veracity, either alongside contemporary reports or the chronology of events. It is unusually unthorough for a business editor. Yet Llewellin thought: “Yeah, front-page lead.”
Was this slapdash journalism? The pursuit of other peoples’ narratives? (e.g., Cameron says Celtic used one EBT but omits the key point that a Celtic director was uneasy about it and Celtic paid the tax due). Distractive preparation for near-future financial events? Such as the current Rangers’ court appearance on Thursday; a £1.3m claim against a club which admits it needs £10m external funding to remain a going concern and faces potential eight-figure costs for losing a previous court case. Yes, this is sensationalist speculation. Without direct quotes. So, yeah, front-page lead…next October.
The screaming frustration at the Times’ Scottish edition is intensified by the Irish edition’s exposure of John Delaney’s financial (mis)dealings as Football Association of Ireland (FAI) chief executive. Mark Tighe’s regular revelations, since St Patrick’s Day, helped oust Delaney and directed long-warranted scrutiny on the association. And Cameron could have done similar. Because HMRC possibly made, in modern football parlance, “clear and obvious” errors, meriting scrutiny. There may BE a story here. Just not the one he wrote.
I’m probably as tired of writing articles on shit Scottish football journalism as my editor is of posting them and you are of reading them. Sorry. But they are almost therapy. Journalism is a profession with which I am grateful to be involved. Hence my anger at Scottish football media regularly besmirching that profession, writing poorly-disguised, agenda-driven drivel which misleads to the point of fiction, typifying Rangers Tax Case reporting, even now, over two years after it closed.
In November 2012, when Rangers successfully appealed HMRC’s tax assessment, the media focused on the injustice done to Rangers, sidelining the near-certainty that HMRC would appeal. Yet when Rangers lost their appeal in Scotland’s courts in November 2015, the media focused on Rangers’ appeal to the Supreme Court, sidelining HMRC’s victory.
This may have been football media showing pro-football bias. But that wasn’t evident in the Daily Record ‘newspaper’s’ desperate concoction of a “Celtic Tax Case” in October 2016, from tax avoidance schemes involving players, not clubs, of which Celtic’s were not even the largest group.
Scottish journalist Angela Haggerty (a recent BBC Question Time panellist) tweeted on Thursday: “Most of the time, when big businesses fail to pay taxes, and try to cheat the system, the media holds them to account. Except in Scotland, where when Rangers do it, they somehow become victims of the piece. This narrow-minded loyalty blindspot is a journalistic embarrassment.” Of which the Times story is just the latest, and surely not the last, of many.