It is not a good time to be a Ranger. Court cases, past and future, abound. The latest accounts show another multi-million pound annual loss. And the latest twist/turn in the “Rangers Tax Case” has, frankly, turned a reality of the last three years on its head. To recap quickly (and, experts may argue, simplistically), from 2001 to 2010, Rangers paid a number of their staff, mostly players, using off-shore “employee benefit trusts” (EBTs). In 2008, Her Majesty’s Revenue and Customs (HMRC) claimed that the monies were contracted earnings, liable for tax, and issued Rangers with their assessment of tax owed, approximately £24m.

Rangers appealed the vast majority of this assessment and in November 2012, a “First-Tier tax tribunal” (FTT) ruled, by a majority two-to-one verdict, that the assessment of tax owed be “substantially reduced.” HMRC appealed to an “Upper tax tribunal” (UTT), which, in August 2014, again largely ruled in Rangers’ favour. So HMRC appealed to the Court of Session (CS) which last Wednesday ruled in their favour. At the time of writing, the issue could be appealed to the UK Supreme Court, which would make it “best of five.”

The one consolation for Rangers is that this has no impact on the current club, which is handy, as it is hazardously cash-strapped and a multi-million pound tax bill would kill it off. The CS verdict surprised many, with the result and the ferocity of its findings. The blogosphere’s “smart money”, consistently smarter than the Scottish mainstream media’s (SMSM), was on the issue reaching the Supreme Court. Meanwhile, Rangers-minded bloggers were already demanding action against HMRC for wasting taxpayer’s money on the case, as they had after both tribunal rulings.

There were, though, hints that things were different this time. HMRC told the CS in July that EBT payments not being taxable was “a fantastically silly proposition” and “a catastrophe for the public purse” if tax avoidance was as easy as paying earnings to someone else. Reports on the Scottish Football Monitor website from hearing attendees suggested this view was persuasive. And at 7.30pm on November 3rd, Channel 4 television journalist Alex Thomson, a fascinated/appalled observer of Rangers’ “situations”, tweeted: “The ever-helpful HMRC have written: ‘Good evening, Alex, the Rangers judgment is out tomorrow.’” They sounded jaunty. We now know why. The judgment said the “fundamental principle was clear: If income is derived from an employee’s services (as an) employee, it is an emolument or earnings, and is thus assessable to income tax, even if the employee requests or agrees that it be redirected to a third party.” This “accords with common sense.”

It acknowledged that Rangers had been in “a difficult financial position, competing for good players in an international market where other countries may not have the same rigorous approach to taxation as the UK.” But “nevertheless, the law is clear.” The EBT payments were taxable. The judgment damned both tribunals for giving undue emphasis to the trust mechanism over the fact that demonstrable “emoluments and earnings” were being paid into it. They ruled this mechanism merely a “redirection” of taxable earnings which did not lose this liability on its way through it. Where the tribunals ruled the monies non-taxable because they were not at the recipients’ “unreserved disposal”, the CS ruled that while loan requests could theoretically be refused, they were never likely to be as they were negotiated as part of contracted remuneration packages.

There was another key difference. The tribunals were limited by law to appeals on points of law. The CS believed that, as a court not a tribunal, they had an over-riding duty to justice which allowed case facts to be revisited. And the judgment carefully explains this, perhaps aware it could itself be grounds for an appeal. Oh…and it addressed the issue of whether “Regular Pringles” had sufficient “potato flour content” to be exempt from VAT. So you can’t say the judgment isn’t thorough. It did provoke interesting debate between two Guardian newspaper columnists. Critical of the CS was Jolyon Maugham QC, described at the top of his Guardian column as “a tax barrister who specialises in litigating avoidance schemes.” Critical of Maugham’s criticism was Richard J Murphy, a political economist and member of the Tax Justice Network of researchers into tax avoidance and most recently in the news when Labour Party leader Jeremy Corbyn backed many of his ideas.

Importantly, the legal procedure is not over. The losers of the case have until December to apply for leave to appeal. Until that procedure is as exhausted as the rest of us, everyone’s next move should be something in which Scottish football authorities are expert, doing two-tenths of five-eighths of foxtrot alpha. Nevertheless, welcome to a new “reality.” Where Rangers were once victims of what the Daily Record newspaper recently called a “phantom” £80m tax bill, they were now guilty of improper payments to players over a 12-year period. The award-winning “Rangers Tax Case” (RTC) blogger, who exposed details of the Rangers’ scheme from March 2011, simply tweeted “Vindication.”

There were immediate widespread calls from fans (not just Celtic’s) for Rangers to be stripped of titles won while the scheme operated, believing that countless Rangers players had been improperly-registered, breaching SPL rules on contract disclosure, and thus received an unfair sporting advantage. The independent “Lord Nimmo-Smith Commission” set up by the Scottish Premier League (SPL) in March 2012 ruled that Rangers received no such thing, based on the assumption that the EBT payments were not irregular, the FTT having ruled during the commission process. That assumption is, for now, overturned.

This, however, was not an argument to be found in SMSM outlets. As title-stripping calls gained momentum the SMSM vigorously tried to halt it, acting with a speed suggesting considerable pre-planning. Within hours, the Scottish Daily Mail and Sun newspapers ran a story that the Scottish Professional Football League (SPFL) had “no mechanism” for stripping titles, citing, but not quoting, unidentified league “sources.” However, this was demonstrably untrue. There was no lack of “mechanism” in June 2012 when the SPL grubbily offered to drop proceedings against Rangers in return for Rangers “dropping” titles.  And the Nimmo-Smith Commission had 19 sanctions available to it, including “withdraw or withhold the award of a title or award.”

On the BBC’s Scotland 2015 news and current affairs programme that night, the Sunday Herald newspaper’s investigations editor Paul Hutcheon said Rangers “probably did” have an unfair sporting advantage but claimed title-stripping would be “unfair somehow” and “a punishment too far for the fans.”There were speedy media moves to suggest that there was “no appetite” for title-stripping, which were quickly exposed as another lie by adjacent reports of “Twitter meltdown” on the issue and rushes to suggest title-stripping was “unlikely to succeed” (Euan MacLean, Daily Record, and “phantom £80m tax bill” author) or “somewhere between unlikely and definitely not,” (Rob Devine, in London’s free Metro newspaper).

This, MacLean added, was because of Nimmo-Smith’s “no sporting advantage” ruling. But MacLean’s belief that “the victory by HMRC was unrelated to that point” was disingenuous at best. The judgment directly referenced the point: “…it seems to us that if bonuses had not been paid (the footballers) might well have taken their services elsewhere.” Then, titles could not be “withdrawn” without proof that Rangers would not have won them anyway. The Sun’s Derek McGregor wrote: “The vast riches reaped from the EBTs unquestionably helped (Rangers) keep and attract top stars.” Yet when Celtic lost titles by a point this “unquestionable help” was no help at all.

This onus of proof was a novel concept. Entering administration attracts sporting sanction without evaluation of its on-field impact. Points are frequently deducted simply for regulation breaches. Indeed, these have invariably assumed sporting advantage. In 2007 AFC Wimbledon were deducted 18 points for a minor registration impropriety, the points they won in the games in which an ineligible player played. This was reduced to three points but only because 18 points was deemed a draconian punishment for a very technical, unintentional breach. And even the “draconian punishment” angle couldn’t keep Legia Warsaw in last season’s Champions League after they fielded an ineligible player for two minutes of a tie already comprehensively won.

But if such evidence was required, David Murray, Rangers then-owner whose company scheme it was, supplied it, telling the FTT that the trust was not for tax avoidance but for “acquiring better players in a more cost-effective manner than we would be able to do otherwise.” The FTT judgment said it “enabled the club to attract players who would not otherwise have been obtainable.” I.e. sporting advantage. An official club statement declared: “Rangers have not lost the case,” and in a “correction” to “misleading information that has been circulating”, added: “There is no question of any liability impacting on our Club (or) its history. The Rangers Football Club and the entities which currently own and manage it are not party to these proceedings.”

However, Rangers was a “respondent” in the case, alongside four Murray’s business group companies. So while it wasn’t just Rangers who “lost the case,” they lost. And the idea that the current Rangers are “not party to these proceedings” is not in sensible dispute.  This is translatable as “the titles are ours, the tax debt isn’t.” A novel concept, whether you agree or not.
Rangers fans are almost wholly unrepentant. They believe Lord Nimmo-Smith’s “no unfair sporting advantage” ruling stands regardless of the CS verdict because he was investigating registration breaches, not tax liability. The delightfully-monikered “Exposing the Rhats” (long story) said using EBTs “clearly…wasn’t cheating” but “taking a route which saves some money but leaves the club exposed to potentially massive future risks” such as “facing years of litigation from HMRC” if “you make an error with the administration of it…as happened to Rangers.” “Of course a team should not be stripped of titles for making a mess of their tax affairs, insolvency was the punishment for that,” he adds, suggesting that saving millions in unpaid tax resulted in going bust. A novel concept whether you agree or not.

An article by “D’Artagnan” entitled Gunning for Rangers highlighted Arsenal’s use of off-shore trusts until they were “exposed” by documents relating to midfielder Ray Parlour’s 2005 divorce case. A linked Guardian newspaper article names a company Arsenal used for another scheme…Sevco 1270. But D’Artagnan (not thought to be his real name) focuses on the lack of calls for Arsenal to be stripped of their seven honours in their “EBT years.” Of course, Arsenal paid their owed tax in full, immediately on demand. As to whether Parlour constituted a “sporting advantage”…

The SMSM weren’t finished. Matthew Lindsay of Glasgow’s Evening Times newspaper, tweeted: “Serious question. If the SPFL decide to strip Rangers of their titles…will Hibs be crowned 2004/05 Scottish champions?” This inferred that Celtic had no title claim after using an EBT to pay ex-Middlesbrough star Juninho a lump sum of £765,000. The payment was exempted from SPL investigations as it was made after Juninho left Celtic. In 2008, on demand, Celtic paid the tax owed. The “serious” answer was “foxtrot oscar.” The majority view is that stripped titles should not be re-awarded (despite Rangers fans’ accusations of attempts to “steal” titles). Lindsay also equates the one Celtic payment and the hundreds of Rangers payments. A novel concept whether etc…

Regular ET columnist Rangers ex-striker Derek Johnstone labelled notions of title-stripping “nonsense” as “it doesn’t matter what a player earns, it is about what they do on the pitch.” While “there is no outcry over the seasons when we didn’t win anything” and it “will baffle a lot of people” that “two cases can go against HMRC and the third one, with the same details put forward, goes in their favour.” How title-stripping works in “seasons when we didn’t win anything” isn’t clear. And if he’d read even the summary of the CS judgment he would know that “the same details” were not all that was “put forward.” If you can’t pick at least one hole in his arguments, even if you support Rangers, you aren’t really trying.

However, more damning than what he said is the fact that the paper published it unchecked (unless the original was worse!). Basic research would have corrected any factual errors, which raises questions about the paper’s editorial process.

This week, the current Rangers issued another statement: “(Rangers wish) to reach out and work with all clubs to help revitalise Scottish football…(but)…cannot countenance or accept any talks, attempts or actions designed to undermine what this club has achieved throughout its long history.” They said football “must become more attractive to potential sponsors and partners…but this can only be done if we present a united and coherent strategy”, that “a line must be drawn now” and “there is no need for further SPFL consideration of court judgments or appeals.” A suspect dictating terms to the authorities? A novel concept…

Yet, drawing this line would leave Rangers unpunished for improper tax avoidance. The old club’s demise was a consequence of not having enough money, not punishment for keeping too much. As things stand, no action should be taken, and no action at all against the current Rangers. The legal process is incomplete, as it was when Rangers people were demanding punishment and retribution after the FTT decision. This error mustn’t be repeated. However, fans, administrators and the media are preparing for the possibility that last week’s ruling will stand. Fans believe sanctions should apply if the CS decision stands. Rangers fans disagree and brand critics as hysterical/agenda-driven/Rangers-haters (delete as, or if, applicable) regardless of whether those critics are any of those things.

Senior administrators either don’t know what to do, or are scared to do anything which might antagonise the Rangers-minded or upset their own financial/business model. At a slightly lower level, less fear reportedly exists, with last Friday’s SPFL board meeting producing a, cough, ‘frank exchange of views’ on the topic. But while I’ve tried to give a flavour of the reactions to the CS verdict and tried to limit comment and criticism to areas of accuracy and conflicting logic, this has proved virtually impossible with the SMSM.

Previously relatively even-handed journalists, STV’s Grant Russell a particular example, seem inordinately determined to quell title-stripping talk, almost as if title-stripping is such an appalling vista that it cannot be right that actions against Rangers should go further. Hence the preponderance of ex-players wheeled onto various platforms to spout variations of “won on the park” and “time to move on.”  Ex-Celt Darren O’Dea tweeted within three hours of the judgment “Haven’t even kicked a ball and I think I might have doubled my SPL football winners medals to 4 today,” and his views on title-stripping were very clear very quickly. Yet it took until Monday for a media outlet to give him his say. Finding balance in this debate is not on any media “things-to-do” list.

Increasing numbers of journalists are hiding behind the Nimmo-Smith commission, avoiding its numerous debatable aspects (which I will revisit in a future article if you don’t behave yourselves), as if they’ve lost their interrogative and/or campaigning instincts. Perhaps they really believe it fair that Rangers used improper tax avoidance schemes, with the declared intention of facilitating the purchase of players they could not otherwise afford, while deliberately concealing such actions from the football authorities…for 12 years. Either way that attitude is unacceptable and, as has been the case throughout Rangers’ financial demise(s), it shames their profession.

Ach…enough of this madness. I’m away to blog on Fifa. Stinks a bit less.

You can follow Mark on Twitter by clicking here.

You can follow Twohundredpercent on Twitter by clicking here.

You can follow Twohundredpercent on Facebook by clicking here.