timberland tops HMRC win appeal over Ibrox club’s use of EBT payments
Rangers tax case: HMRC win appeal over Ibrox club’s use of EBT paymentsA judgment from the Judiciary of Scotland this morning stated the Employee Benefit Trust scheme operated by Sir David Murray between 2001 and 2010 was “subject to income tax”.10:52, 4 NOV 2015Updated13:03, 4 NOV 2015Get daily updates directly to your inbox+ SubscribeThank you for subscribing!
Could not subscribe, try again laterInvalid Email
THE TAXMAN today won its appeal in the Rangers Big Tax Case after judges ruled against the Ibrox club’s former owner.
Her Majesty’s Revenue and Customs (HRMC) last year lost its original appeal against a tax tribunal ruling on payments made by former Rangers owner Sir David Murray’s group of companies.
But that ruling was overturned after judges at the Court of Session in Edinburgh found various trusts for executives and players at the club were “a mere redirection of emoluments or earnings”.
They ruled the trusts were accordingly “subject to income tax”.
Delivering the opinion published this morning, Lord Drummond Young said it was “common sense”.
A court previously decreed that a tax demand on Murray’s company, most of which referred to oldco Rangers, be “reduced substantially”.
The Murray group contended the payments made through the now outlawed Employee Benefit Trusts were loans and not taxable income.
HMRC appealed against a decision on tax assessments made on Murray Group Holdings and other members of the Murray Group of companies, including Rangers oldco.
In the new appeal Lord Justice Clerk, Lord Carloway, sitting with Lord Menzies and Lord Drummond Young, heard that from 2001/2 to 2008/9 the companies entered into transactions in a scheme designed to avoid income tax and National Insurance contributions (NICs) for employees.
The taxman argued the cash payments were in consideration of services by the employee, and thus had been “earned”.
Therefore, the scheme amounted to “a mere redirection of earnings which did not remove the liability of employees to income tax”.
The appeal judges observed that the “fundamental principle” that emerged from previous cases was clear, namely “if income is derived from an employee’s services qua [in their capacity as] 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”.
Lord Drummond Young wrote: “That accords with common sense.
Murray was in charge during the period EBTs were used
It’s thought the decision on the notorious “big tax case” will have no impact on the current regime at Rangers although that has still to be confirmed.
Murray sold Rangers to Craig Whyte in May 2011, and the club was liquidated 13 months later over separate debts.