A Taxing Matter – Glasgow Rangers, Part 1.

I have decided to write down in hard format the Rangers Tax troubles that have plagued the club for approximately the last three years or so. I am a Rangers fan, I have an interest in the case both in the perspective of the law and also some may argue a vested interest due to not only my support of the club but my continuing purchase of their produce in an up front, annual manner.

My reason for doing this is simple: to help myself understand the complexities of Rangers football club at present and the revered “tax Case” itself. If along the way I help to clarify a matter for someone else then fine, I do not guarantee that 100% of the information that I write will be accurate – I will relay on opinion, fact, hearsay and any other viable authority that I can come across.

I will not predict anything as such, merely voice whatever is out there in the public domain and give my opinion and concern on the matter.

First of all, I will begin with what I regard to be an overview of the current financial problems facing Rangers. Along the way I will no doubt enter tangible sub-stories such as the resignation of John Greig and Martin Bain’s pending case, not to mention others.

Let’s get something straight first of all. Rangers Football Club is a company of its own legal entity. When rumour of this tax case first reared its ugly head among the tabloid media and internet forums it was presumed by many that David Murray’s Company would be liable for the tax bill. Without spending much time on this subject let’s gloss over it with the simple fact that this is complete and utter rubbish and could never have been the case. Glasgow Rangers Football club is a legal entity in its own right, it’s has its own legal personality to enter into contracts and financial agreements in its own name.

So, what is this tax case all about then?

This particular case in question, from what I can gather, reverts back to the financial year of 2000 to 2001. You guessed it, around the same time as Rangers were financing deals for the supremely talented players playing under the Dick Advocaat Era as it shall be fabled.( this is the origins of the matter, it has continued from this period).  During this time Rangers entered into a tax plan with a company named ‘Baxendale Walker’. The company have offices in both London and Glasgow at Buckingham Palace Road and Claremont Terrace respectively. The company is a Limited Liability Partnership (LLP) setup in 1994 by none other than Paul Baxendale Walker  whom is; interestingly enough, featured on BBC Money Programme – “No tax please, we’re rich!

The firm like to outline their core beliefs on their own personal website outlined as:

  • the liberty of the individual underwritten by the rule of law
  • the primacy of commercial freedom
  • the enhancement and protection of wealth
  • achieving justice under the law
  • the protection of private rights
  • the enforcement of state obligations

The company also outline the following, something that would now appear a statement of developing irony:

At the core of our Firm is the power of strategic planning. Unlike many advisors, we are not crisis-driven. All too often, by the time a problem arises, it is already too late to achieve the optimum solution. Using our research, we identify potential problems for clients and prospective clients. We implement strategies which provide our clients with a dual advantage:

  • maximising wealth by the use of current opportunities
  • minimising the potential effect of future risks

We work closely with departments of state and other institutions in a continuing dialogue devoted to ensuring congruence in compliance with the rule of law by them and by our clients. We also work as part of our clients’ teams of professional advisors, deploying our expertise within a collaborative framework.

There is a wealth of information on the man behind the company that is not difficult to find with a simple Google search. I will not go into detail but his record on legal matters is dubious and he has found himself on more than once occasion on the wrong side of the law as well as having been struck off the register of the Law Society. Most of it is uneasy reading to be brutally honest – and not something that would particularly fill any Rangers fan with confidence on the company he is charged with being in partnership for. He also has an interest in Pornography, but that is irrelevant for current matters involving Rangers.

What would be of concern to me is simple; Paul Baxendale Walker has on more than one occasion been discredited as having cited cases with absolutely no foundation in the Courts. (See Justice Supperstone).

He is also an author and has written booked alongside Rangers Football Clubs current QC Andrew Thronhill named, The Law and Taxation of Remuneration Trusts (Key Haven, 1997) and also Purpose Trusts (1999, 2009 [2nd ed.])

This does not particularly mean anything as such, but Rangers new owner Craig Whyte has insisted that he has assurances from top legal advice that Rangers can and will win their impending tax case. My concern is that the advice he has been seeking is from this very source, and that does not sit easy with me in respect to being ‘sound advice’.

However, back to the case in hand:

Rangers entered into a system known legally as,”Employee Benefits Trust” (EBT). This is a perfectly legal thing to do and is outlined in the link here: EBT

The idea of an EBT was effectively outlawed in 2010 and this is outlined- I am sure- in the proposed Finance Bill 2011.

An employee benefit trust would often takes the form of a pension or profit-sharing plan set up by an employer to ensure that its employees have an adequate income stream during retirement. Such plans are usually managed by banks or third-party EBT firms, which act as a company’s trustee, and pay out money from the funds in accordance with the regulations, set by the company. Additionally, some EBTs also offer preretirement benefits such as health care insurance and employee loans. This is the avenue that interests Rangers.

This is a general overview of the scheme so how does this effect rangers as such? Well, when cash was deposited into the EBT it would no longer be the employers. Basically, a company could deposit the cash from its profits into the trust and then in turn use the cash as a loan as such to the employee that would never be repaid as such in reality. Only very small amounts would be paid in interest on the loan as opposed to the large sums that would be paid in tax and national insurance if the sum of money was paid through a national insurance/PAYE structure. It was a clear loophole that was being exploited in business up and down the country for a long time. It might appear simple and almost a case of money laundering as such but the point is that proving the purpose was to defraud the tax office (HMRC) was extremely difficult to do as the transaction could also come across simply as a ‘loan’ as stated.

I have brushed over a few technicalities here to try and put this in simple straight forward terms as much as for my own understanding as that of anyone else that cares to glance over this piece.

For further reading on the matter of EBT and ‘loans’ read the Macdonald (HMIT) v Dextra Accessories Ltd & others

Right, so – we have established that this is a legal and wide-spread way of doing things; so why are Rangers seemingly in trouble for doing such?

Well, as always – it isn’t quite this straight forward.

The case that is outlines above, without having to read it as such also outlines certain exceptions to the case of EBT’s legality. The main exception that is outlined if you care to search for the case on the internet is that the payments made could not have any link to contractual obligations – for Rangers these could include salary, win bonuses and the like. EBT’s were a brilliant loophole but only for those who wished to take sums of cash from a company where the sums of cash involved were never written down anywhere. What do I mean by this? Well basically if you are a company Director for instance and have total control over this matter then you can trust yourself or your fellow directors to exploit this loophole on the basis of a ‘gentleman’s agreement’ for want of a better phrase.

We are not dealing with that situation at Rangers, basically. We are dealing with players that will not just take a ‘gentleman’s agreement’ when it comes to their remuneration from their employer. The fact football players are also advised by agents means that no agent of any ability would allow his player to enter into such an agreement where the outcome was not legally secure.

I must say at this point that what I am suggesting here is speculation on my behalf; it is not complete fact although it is an idea that is accepted by many. I am only a fan, and everything I say here is for my own records and not that of fact against Rangers Football Club.

I do not believe for a minute that Players signed agreements on a ‘handshake’. I would guess that for this case to come to light somewhere along the line Rangers Football Club must have been issuing written guarantees regarding EBT’s and contractual terms. It would be Idiotic for Rangers to provide a written contract that guaranteed or implied that the’ loans’ would never need to be repaid by the employees/players – it would appear as an admission of wrongdoing and would contravene the original plan purchased from ‘Baxendale Walker’.

Rangers own financial records show that these funds amount to a total of payments at the sum of £47/48 million pounds between 2000-2010. These records are available online.

Without going into detail the question that arises from these records is not how much was paid in to such trusts as to whether the sums of cash would be regarded as pre or post tax earnings to HMRC. What is the difference? Well, again without boring with financial details let’s just say that if worked out on a PAYE calculator as such including N.I. contributions Pre Tax would amount to £25 Million approx. Post Tax it would be nearer the £45 Million mark. (There figures are not inclusive or completely accurate they are ballpark figures based on my rough calculations accurate to within 2/3 million pounds). If Rangers were to lose the pending case they could be liable for up to 100% of this sum, meaning a debt of something in the region of £25million or £45 million to HMRC depending on how the sums of cash were judged in relation to pre/post tax earnings.

Part 2 To Follow……

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10 Comments on “A Taxing Matter – Glasgow Rangers, Part 1.”

  1. John Johnston Says:

    Great reading. I imagine the ‘side letters’ would have been the reason Plod invaded and impounded RFC’s computers/paperwork. No?

    THE telling action for me was that on the final day of the FTT Murray gave the club away for a £1.

    My hope is that all the proceeds of their systematic financial doping/cheating are removed from the record books.

    For 100 years they had (with the complicity of the Scottish media) a sectarian employment policy, they sing songs of hate which have them fined by civilised Europeans yet encouraged to continue judging by the comments of the countries justice minister.

    They apologise for nothing, deny, deflct is their modus operendi, whataboutery is their mantra. The SFA will do their utmost to aid their club, they will go down fighting but I sincerely hope justice will be done.

  2. There are other reasons for the £1 charge that i will go onto with later posts on the matter.
    You have a rather clear opinion of Glasgow Rangers and the Scottish media, one that i am neither going to concur with nor strive to disagree with. Everyone is thoroughly entitled to their opinion on the matter and your’s is put forward in a far more articulate manner than most i could find with a quick google search, of that i have no doubt.

    On the other side of the fence i would have to suggest that i have seen almost IDENTICAL statements from someone with the shoe on the other foot. I neither have opinion on the matter nor do i wish to develop one anytime in the future – it is a minefield.

    Your suggestion to the removal of the record books due to “systematic financial doping” is one that i have never heard before. A very interesting statement though and one that i admit had never crossed my mind before. However, for the purpose of this statement i must verge on the side of caution and say that at present Rangers are guilty of nothing and therefore any such suggestion would have to be looked at with retrospect. The argument would have to develop at a later date but if i am honest i would have to suggest that i doubt very highly anyone could find a reasonable link to Rangers financial implications and on the field success – after all, unless proving Rangers KNEW what they were doing was wrong you cannot apply the law later in retrospect to suit another agenda.

    Thanks for the comment though, i will update the rest of the case regularly so feel free to chip in with other comments as you see fit. Always be appreciated , especially if you know something that i do not.


  3. John Johnston Says:

    Many thanks for your response Garry. I really would be surprised at someone from the “other side of the fence” having identical statements, I shall leave it at that.

    What interests me is the apparent complete denial from Rangers fans I know as to their clubs predicament.

    Part of the problem, I am sure, is the almost total blanking by the Scottish tabloid press as to anything amiss at RFC. One only has to compare and contrast the blanket coverage received when Celtic were in financial troubles in the 90’s. The man who led Celtic from the abyss had every detail of his past, present and intentions for the future analysed in minute detail.

    I accept the standard “innocent until proven guilty” but should the rumours be true about EBT’s etc. one club in Scotland had an approximate 25% advantage on player wages, is this not financial doping? Cheating if you will?
    The last big European match I attended was Celtic at Old Trafford.
    Celtic who were/are solvent played Sheridan (19) and Hutchison (20) that night as the team had injury problems. Manchester Utd who were approx £850 Million in debt, had a substitutes bench valued at £100 Million.
    Is this sport? A level playing field? To me it is cheating, pure and simple and I gave up on funding Champions League football.

    Why does Whyte get away with telling people he has untold wealth when even a basic web user is aware the guy has very little in the way of income to justify his “billionaire’ (Jackson, Daily Record) status.


  4. When i said other side of the fence with identical statements i was meaning on a role reversal situation. But that is by – the – by.
    I tend to agree with the denial from many Rangers fans. It angers me in some respect. Part of me thinks it is perhaps wishful thinking – bury your head in the sand and all will be okay. For the most part i think this is down to a lack of education on the subject.
    I agree completely that something is amiss in the national press. Snippets have been covered in broadsheet publications but very little in term of fact or definition by the Tabloid press. I don’t care to speculate on the reasons why, but i find it interesting. I will leave it at that.
    As for the takeover of Glasgow Celtic by Fergus Mccann – i know absolutely nothing of the situation as i was only a kid at the time so i can’t comment but it would appear to be a lot more transparent than the going on at Ibrox.
    There is quite clearly something amiss here, quite what is a complex situation and one that is sure to come out in the wash somewhere along the line.
    Your comments on a level playing field are most interesting. The points you make are completely valid and in true olympian sporting spirit they are stark and true. However, we both know that football is far more about business (fairly or not) and the argument of uneven playing fields could rumble for a very very long time. An endless web of who has done what wrong, not just in Scotland but worldwide. As you mention, Manchester united and i put to you Real Madrid. A club with absolutely fantastic financial implications.

    Football has ventured so far from a sporting spectacle that it is a meagre dot on the horizon and for that purpose, as much as i completely agree with your sentiments on the matter – i don’t particularly agree with the simplicity of wiping the record books on such matters. I think it is perhaps a matter to complex for such a simple remedy.
    Not that it would matter, record books would effect nothing in reality – the days have past, and for that reason i can see your moral argument.

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  6. Anthony R Says:

    Paul Baxendale Walker is of course the owner of Bluebird Films and appears in the films himself. Check out Bluebird Films and look for “Paul Chaplin”.

  7. chris latimer Says:

    Yes Paul Chaplin aka Paul Baxendale-Walker is all over the internet as a performer in porn films. But I doubt that Rangers would have known that he was a tax adviser doubling as a porn star when they first got involved with him, as I think that his Bluebird porn career only commenced after his involvement with Rangers. Maybe someone can check what year Bluebird Films started?

  8. chris latimer Says:

    2008 – thank you. Quite recently then, so nothing for Rangers to know about back when he gave them tax advice.

    I notice that the story of Mr Baxendale-Walker’s porn performances with Bluebird has made the Sun newspaper now.

  9. Really? Not totally surprised at that but I must admit I don’t buy many newspapers.

    If anything I am surprised that it has taken so long- not like the information was particularly difficult to find.

    It would appear that , when first entered into, Rangers would have had no idea the man was a porn star. I hope he is a better pornatar than he is a lawyer because he was suitably crap at that job- and continually laughed out of court.

    He is a joke figure- one of life’s great chances.

    He actually creeps me out to be honest

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