By Tony Attwood
Her Majesty’s Revenue and Customs has finally pulled the plug on Rangers, the club that previously owned shares in Woolwich Arsenal and Arsenal (until recently selling them to Mr Usmanov). The team that invited Arsenal to play at their centenary celebrations – a match at which incidentally, the club charged supporters 10p each to get in (and which Arsenal won).
It was always likely to be thus, since it was found that the money paid to Rangers under Craig Whyte’s tenure in terms of PAYE (deducted from salaries) and VAT (paid on entrance fees, shirts etc) was being used to keep the club afloat, rather than being handed over to Revenues and Customs.
An attempt at administration which would mean that everyone owed money would get just a few pennies for every pound they were owed, was never likely to be accepted not least because there was never a disclosure of a full list of the people behind the offer.
Indeed even if there had been a mood to accept such a tiny payout the fact is that lurking behind it is the Employee Benefit Trusts (now known in Scotland as “Rangers Tax Case” after the web site that exposed it) in which Rangers paid money to players, managers (G Souness was one such who (according to the recent BBC Scotland programme) appears to have received sudden windfall payments from the club with no tax paid – although the issue is still under investigation) without paying tax. The bill for that little escapade of not paying tax on salaries alone is said to be £75 million.
The people who are the losers are all citizens of the UK, because it means that a whole chunk of money that should have been paid in tax, and which could have been used to build a hospital wing or some other public venture, has gone into the pockets of already very rich men.
By liquidating the company HMRC now allows them to pursue the individuals who personally oversaw Rangers decline and who may have been guilty of criminal activity in defrauding public finance. In short, this means that anyone who can be found to be responsible for authorising illegal actions in the club can now be prosecuted. It is quite likely that a number of people who have lived quite a good life until now might end up in prison, and a number of people who received large chunks of tax-free money will be required to repay the tax due.
Rangers have assets, including Ibrox, but the details of those are unclear because now they have no membership of a football league and have to apply. The club will now presumably start by applying for a place in the Scottish Premier League and that application will be heard sometime in July. For New Rangers to be allowed into the SPL eight of the other 11 have to say yes.
Another approach would be for New Rangers to join the 3rd Division of the Scottish League, and the Scottish League might like this as they would then be able to negotiate a TV deal for the league.
The busiest people will be the lawyers however. When a company goes down those running the company are not held responsible for the losses, unless they acted in a reckless manner or illegally – for example trading when they knew they had no chance of paying what they were buying. And that is what a lot of people will now want to prove, in order to recover some of the public money (ie tax money) that has gone missing.
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There is a big argument about what happens to the players who are left in Rangers, and whether the new club will take over the contracts of the old club. Indeed if the club went into the 3rd division would players want to stay, with lower salaries and without any trusts to funnel the money through? Further the club’s one year ban from Europe now goes up to three years so more ambitious players might not want to play there.
There is still the question of the legal case that Rangers took against the SFA in which they persuaded the court that the SFA could not ban them from buying new players for a year. The SFA appeals panel is looking at that again, and it could throw out Rangers, or ban them from the Cup or fine them. Whether such action would then apply to New Rangers is not clear to me – if you know about situations like this, let me know!
But if New Rangers get back into the Premier League Livingston are likely to sue the Scottish Football Association since they were demoted to the 3rd Division in Scotland in 2009 over insolvency rules. The SFA will need to show why it is making a difference between Rangers and Livingston other than just by saying “its Rangers”.
So why should any of this bother us?
Because so far in England we have seen clubs use the rules to go down and come back again at high speed. Accrington have been morphing in and out of existence since the very first days of the league. Leeds City were thrown out of the league and quickly came back as League United – so it goes on through the history of football in England.
Now lined up for treatment are Portsmouth and Birmingham City. And who knows what’s hanging about in other boardrooms especially now, as we showed yesterday, not many people want to buy clubs in England.
Remember, Rangers story was lurking around on websites for several years, but never once reported in the press until it finally exploded. A parallel might be this site’s endless investigation into referees. I said “might” be – it might not, because apart from the BBC getting interested in us, and the referees’ association shutting down their web site, we are still in the same position as “RangersTaxCase” was – gathering the information for those who want to see, and being ignored by those who don’t.
It is unlikely that Rangers is the only case of its kind, in my opinion. It happens in all countries – take the example Anne covered here of Neuchâtel Xamax Football Club which was ejected from the Swiss Super League and declared bankrupt on 26 January 2012. We can keep on saying “oh it wouldn’t happen to a big club here” but there are growing signs that it will.
OK that Swiss club is not a name you are likely to know – but this situation is everywhere, and the walls holding it all together are paper thin.
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