EBTs not Football Contracts

[Loyal Bear 72 363]

Evening Times running story that state experts say EBTs used by clubs are not contracts as there is no contractual requirement for the player to receive money.

[beattie72 170]

6 Mar 2012

LEGAL experts have revealed that Rangers could argue Employee Benefit Trusts do not constitute a contract – as the SPL became the latest organisation to investigate their financial affairs.

There have been claims today that the stricken Ibrox club could be stripped of the titles they have won since the inception of the SPL, after the governing body launched a probe into an allegation made by former director Hugh Adam last week that players were given two contracts and ‘under-the-table-payments’ stretching back to the 1990s.

The SFA confirmed last Friday they were already looking into the Adam allegations, and the SPL confirmed yesterday: ‘‘SPL rules D9.3 and D1.13 impose a prohibition on players receiving payments for playing football or participating in an activity connected with football except where such payments are made in accordance with a form of contract approved by the SPL and require that all such contracts are submitted to the SPL within 14 days of being entered into.”

But Richard Cramer, a lawyer with FrontRow Legal, a firm that specialises in sports business, believes the discretionary nature of payments under trust rules is the opposite of the normal understanding of a contract.

Rangers, of course, have already been served a demand by HMRC for their use of EBT’s over a decade; the club’s appeal on that demand to a First Tier Tribunal will rule inside the next month on whether they are liable, and the bill could hit a staggering £49million if it goes against them.

But it’s the allegation that SPL and SFA contract legislation has been breached that will be probed by the governing bodies, with a range of sanctions open to them if any wrong-doing is proved.

It would appear, however, that EBT’s cannot be considered as ‘second contracts’ as has been claimed.

Cramer said today: “Rangers could argue to any inquiry that the EBTs are a private matter between club and player because they involve a discretionary payment.

“They could say to the league: ‘Why should we inform you of discretionary payments that do not fall under the umbrella of a normal contract?’

“For example, with EBTs there is no contractual enforcement right. You are relying on the goodwill of your employer and you could advance the argument that if there was no contractual obligation to pay money then there is no binding contract.

“There is an argument that the club could simply say that all EBTs fall outside the normal definition of contract.

“EBTs have always been a little bit scary from a player’s point of view precisely because it is a discretionary payment. What the player is relying on is the ability of the owner or company to honour the agreement.’’

SportTimes can reveal that Rangers paid its parent company Murray Group a £500,000 fee every season for legal matters to be taken care of, and the administration of player EBTs came under that umbrella.

And EBT expert Graeme Nuttall, an independent government, said payments made under the scheme were ‘‘not a contractual right’’. He explained: ‘‘There is no obligation to pay the employee a certain amount of money.

“Typically, there would be an expression that you were part of a bonus plan and that would be paid into an employee trust.

“So it is not a contractual right for the player to receive a sum of money.’’

A draft letter claiming to outline details of off-shore payments and performance-related incentives issued to an un-named Rangers player was published in a Sunday newspaper nine days ago.

Nuttall conceded, however, there would be documentation on both sides. He said: “The player would receive some documentation and there would also be a trust deed.

“You would expect letters of instruction from the club. The trustees would have issued guidance that is not strictly legally binding. It all works on a trust basis.

“There are a lot of good, genuine employee trusts out there.

“It has been a constant frustration to me over the years that employee trusts have been used for tax-driven purposes rather for genuine purposes.

“I do not know the details of the scheme at Rangers but I assume it was tax-driven.’’

[Bothwellbear 1,392]

oh.... well...phew .....glad thats over

[Sobatai 70]

I think the argument is that Rangers always paid, making it look a bit "iffy" ... apparently the clever thing is to not pay it every once is a while.

[Loyal Bear 72 363]

Thanks for posting the story.

[RFC55 110,160]

Sobotal the new rm finance expert, we salute you

[54andcounting 627]

A balancing story for a change!

[jack1690 793]

Sobotal the new rm finance expert, we salute you

That made me laugh for the 1st time today.

[Shuggy 1,308]

Don't let the facts get in the way of a good story ... that sums up the whole media coverage of Rangers woes.

Shuggy

[nelsonRFC82 305]

To be honest, I have my doubts that a contract exists in relation to the EBTs. Surely the whole thing would not have dragged on as long as it has, with numerous hearings and days in court etc. If it was as simple as we had quite openly broken the law by writing up a contract to pay players via the EBT.

HMRC may well argue that a contract was "effectively" in place due to how we administered it (as stated above, by always paying it, it no longer looks discretionary) but surely that is a lot different to Adam's claim of "two contracts" being in place.

Whether the SPL/SFA could follow on with the same argument about an "effective" contract I'm not sure...they could always re-write the rules prior to any disciplinary hearing of course, given current form!

[Guardian 4,281]

Oooft. A kick in the nads to Timothy as we get some good news for a while.

Bang goes their theories of titles being stripped from our world record.

Lovin it.

Tainted lovin it in fact.

[ScottBF2 3,540]

Didn't we already know this? If the EBT's were in the form of a contract... they wouldn't be EBT's.

[debear 603]

Posted several times already.

[TheLawMan 6,240]

They are only not a contract if we havent actually given them a contract saying they are a contract.

Which is..........why we are facing a tribunal on the Big Tax Case.

[watp1690rfc 32]

Get ready for an other quick fire meeting with spl dicks as they try to move the goal post yet again!! Good news if true though!!

[blueoutthedome 87]

Nice bit of news for a change the SPL and the SFA will do there best to find something else so bring it on Timothy

[GeneralCartmanLee 313]

They are only not a contract if we havent actually given them a contract saying they are a contract.

Which is..........why we are facing a tribunal on the Big Tax Case.

We presume that is why it s.....

[bankieblue 10]

good to see something positive on here for a change .

[bs1982 22]

Rangers paid its parent company Murray Group a £500,000 fee every season for legal matters to be taken care of, and the administration of player EBTs came under that umbrella.

So we got screwed twice! First Murray putting our money into his other companies then giving us shit legal advice which could put usout of business.

[OlegKuznetsov 10,816]

This is really inconvenient for the media. Now they will have to get their own legal experts to prove, "Aye, they urr!"

Give it a day or two to come to fruition.

What a shame that nice Mr McBride popped his clogs.