The taxman has failed in its appeal against the Murray Group, former owners of Rangers, in regards to their use of Employee Benefit Trusts (EBTs) to pay employees at the club.
EBTs are a method of paying higher-earning workers by essentially storing an amount of their pay elsewhere so that no tax is paid on it until it is released. This would allow a footballer to defer his payments and then receive them while in a more favourable position tax-wise.
In what has been called the “Big Tax Case”, HMRC had wanted payments made to players and other employees through this method to be taxable. In a first-tier tribunal HMRC failed and were told their requested amount of £46.2m from the Murray Group should be “reduced substantially”.
In an upper-tier appeal, a very similar verdict was given again, although it did say that some payments would be re-examined, such as “guaranteed bonus” and terminations payments.
A spokesperson for Murray International Holdings (MIH), had this to say about the outcome: “”We are pleased with the judgement which again leaves negligible tax liability and overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH itself.”
HMRC unsurprisingly expressed dissatisfaction with result and said they “are considering an appeal”.
The EBT scheme at Rangers was brought in while the club was owned by Sir David Murray. He went on to sell the club for £1 while disputes continued over tax issues. HMRC eventually forced Rangers into administration in 2012 due to the non-payment of tax.
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