Is a CVA possible?

[theiconicman 3,013]

I would also expect that they will proscribe that hmrc auditors be allowed full access to books for a period of years going forward to ensure that rangers is remaining within their business model and plan.

HMRC already have the right to investigate your books and records when they see fit, they don't need a CVA with conditions to do that.

Also, following a CVA you have the administrator to ensure everything agreed to in the proposal is carried out.

And finally, your posts reek.

[London Bear 1]

A quick question, and forgive my lack of financial knowledge. But why wouldn't HMRC agree a CVA when with a CVA they will get more money than liquidation. Given that HMRC must be involved in nearly every CVA going as they will always be a creditor as all companies have either National Insurance, PAYE or VAT to pay, and if a company stops paying the bills, they will stop paying HMRC, surely HMRC are dealing with CVAs the whole time?

[Chambo 197]

http://www.mlm-solutions.blogspot.co.uk/

Let’s examine HMRC’s conditions and in particular those conditions that may preclude HMRC from accepting any proposal delivered by Rangers FC.

A Company Voluntary Arrangement (CVA) can be an effective way of restructuring the debt of a company and, when successful, results in the company’s survival.

A few months ago, CVAs were a relatively unknown effective business tool, particularly in Scotland. They have now been brought into the spotlight due to the situation at The Rangers Football Club plc.

A CVA requires 75% of a company’s creditors to vote in favour to be successful. It is difficult to predict the attitude of creditors towards any CVA proposal. However, HMRC provide a guide to its conditions for accepting a proposal, which indicates how they are likely to vote on any proposal. HMRCs conditions are summarised on its factsheet - http://www.hmrc.gov.uk/helpsheets/vas-factsheet.pdf.

Conditions for HMRC accepting a proposal that cannot or may not be achievable –

• an optimised and achievable offer is made to creditors

This is a wide ranging condition, parts of which are covered by more specific conditions below. It does specifically cover HMRCs condition that they expect the Company to pay monthly contributions into the arrangement for a period of 5 years.

• the proposal treats all creditors within the same class equally

There has been no suggestion that the anticipated CVA funded by Charles Green’s consortium will attempt this. Previous bidders proposed treating certain unsecured creditors differently (such as bondholders and TicketUs) and this would have led HMRC to reject the CVA.

• that the open market value of assets is not materially different from the proposal

The offer put to creditors is likely to be rejected if there are independent professional valuations which suggest more money can be raised by ceasing to trade, then selling the assets off separately. If a CVA proposal does not disclose the break up valuations, HMRC will specifically request that information.

• that values being placed upon liabilities are not materially different from the proposal

There needs to be a full disclosure of liabilities. In relation to RFC, this is complicated by the EBT liability raised by HMRC, that has been defended by the club, and is presently subject to a decision by a first tier tribunal.

• full reasons for past non-payment of tax and clear explanation of changes made…

The most obvious reason appears to have been Craig Whyte’s apparent decision not to pay Tax & NI, during his period of control. HMRC will seek assurances that Mr Whyte will not be involved in the affairs of the club going forward, as a shareholder or director.

• evasion of statutory liabilities or past association with contrived insolvency

Proper use of EBTs is widely accepted as good tax planning. Mis-use of EBT resulting in an abuse of the tax system is considered by HMRC to be tax evasion.

• payment of other creditors whilst withholding sums due to the Crown

This relates to the payment of other creditors, whilst withholding sums due to HMRC. It has been widely reported that this happened during Mr Whyte’s period of control.

• failure to meet any obligations under a prior voluntary arrangement

This can apply where the company enters any form of payment arrangement with HMRC, then subsequently defaults.

• exclusion of creditors who are entitled to receive the same treatment as all others within their class

It is essential that all debts due to creditors, are treated equally. HMRC will expect it’s assessment of the unpaid tax liability relating to the EBTs to be dealt with by the proposal.

• a purchaser assuming responsibility for payment of some of the debts in consideration for the purchase of the debtor’s assets

There has been no suggestion that Mr Green’s proposal contains such conditions. Previous bidders did make this a condition of their bids, and such conditions would have led those bidders’ proposals to be rejected.

Those with a keen eye may have noticed that there is little guidance on the level of dividend which HMRC expect, other than the proposal to creditors is required to be optimised. Our two most recent CVAs proposed around 35p in the £, and HMRC successfully negotiated these up to around 70p in the £. Whilst this should not be taken as any guide whatsoever in relation to RFC, these examples evidence the influence HMRC has in CVAs, where it has 25% or more of the voting rights.

If a CVA is accepted by at least 75% of the creditors of RFC, then the club will avoid the sanctions that are anticipated to be levied against it, if it seeks to re-enter the SPL through the newco route. Therefore, achieving a CVA clearly has benefits for those involved with the Club.

However, taking into account the foregoing analysis, it is clear that the Company has never been able to meet HMRCs conditions for accepting a CVA in the recent frantic months and it would prudent for those involved to anticipate HMRC rejecting the proposal.

Allan McLeod is a Senior Manager at MLM Solutions, who are Scotland’s leading provider of CVAs and successfully negotiate with HMRC to meet their conditions for accepting CVA proposals.

Maureen Leslie, Director of MLM Solutions, is a regular commentator on BBC Newsnight Scotland and Reporting Scotland regarding CVAs and corporate insolvency matters.

[jerfeelgood 0]

In fact are you that porn star that was on tv for givin Gers advice on ebt's?? Obsessed a bit by Rangers predicament?

yet you've not directly disagreed with my analysis....

If green has a viable business model for the company that HMRC can live with, i'll be one of the masses cheering him on... while not a football fan per se, I enjoy the old firm dynamic in scottish football and would genuinely like to see it preserved...

in the current economic climate where every penny deducted from me in taxes squeezes my pocket, i'm not sure if i could abide HMRC writing off a massive tax debt without assurances going forward that this situation is unlikely to repeat itself.... you might forget that every penny HMRC writes off is a penny they have to get from everyone else in the system... every taxpayer in the country has a vested interest in what HMRC does with our taxes...

[theiconicman 3,013]

yet you've not directly disagreed with my analysis....

If green has a viable business model for the company that HMRC can live with, i'll be one of the masses cheering him on... while not a football fan per se, I enjoy the old firm dynamic in scottish football and would genuinely like to see it preserved...

in the current economic climate where every penny deducted from me in taxes squeezes my pocket, i'm not sure if i could abide HMRC writing off a massive tax debt without assurances going forward that this situation is unlikely to repeat itself.... you might forget that every penny HMRC writes off is a penny they have to get from everyone else in the system... every taxpayer in the country has a vested interest in what HMRC does with our taxes...

[Rfc#1. 1,877]

@jer k Since your a neutral supposedly, why dont you give us a slant assuming the cva passes and our ebt's appeal wins for us. just seems every post so far from you has a negative slant.

[marvinsmarvels 13]

Hate to put a damper on things but I was talking to an extremely close relative who is a C.A. and fellow season ticket holder yesterday who works for one of the big four accountancy/tax companies. He tells me he has spoken with their restructuring people at length about the CVA and they tell him that HMRC simply don’t want to do deals on a CVA and they will almost certainly put a company out of business first. The logic is if they do a CVA deal then loads of other businesses will follow simply to get clear of their debts. The fact that something is better than nothing under a liquidation is of no concern to HMRC as it’s not a private company and the money is the taxpayers not their own.

To complicate the issue, Rangers are seen by HMRC as high profile so there is even less chance they would do a deal on a CVA. We then discussed the possibility of a “back door” deal with HMRC and that is a non-starter as they would then publicly be agreeing to the CVA and as this would be a matter of public record you can guarantee those who hate us(you know who) would have that plastered all over the mhedia.

Hate to say this guys but in his and his colleagues opinion the only outcome here is going to be liquidation and a newco.

:anguish: :anguish: :anguish: :anguish: :anguish:

HMRC let Vodafone of with £6billion tax demand, but yet wont do a CVA deal with rangers.

the people you have been talking to obvious really are blowing smoke out of their arse.

[jonbryce 63]

Hate to break it to you & burst your "professional guys" opinions, but HMRC are bound legally to ensure they receive a return on monies due, as, quite rightly stated, it is tax-payers money. So, if the would see more money from the CVA than from liquidation, then the must legally accept the CVA. People seem to forget that as with anyone else, HMRC are NOT above the law either.

Almost forgot to say, they do CVA agreements all the time at HMRC, we just don't hear about them cos they're small-fry compared to this nonsense. But the biggest agreement they've come to recently would be Vodaphone, and that was for many more millions than ours!

Vodafone wasn't a CVA, it was an agreement over a dispute about their capital gains tax bill for selling Orange[1] which came out a lot lower than everyone expected. They would have come to that agreement because they were satisfied with Vodafone's representations that that was the correct amount due.

Having said that, it is true that HMRC agree CVAs all the time. For most businesses, the Newco route isn't a big deal, so they can just do that without any problems. It is also true that HMRC consider the wider public interest if they think that they might get more money from this particular CVA, but it could lead to greater loss of tax in the future. They refuse all CVAs from English football clubs for this reason, but Rangers isn't an English club, so it isn't an issue for us.

[1] Orange was owned by Mannesman, which Vodafone took over. They sold Orange shortly afterwards so they could get the deal past the competition authorities.

[HHB 63]

yet you've not directly disagreed with my analysis....

If green has a viable business model for the company that HMRC can live with, i'll be one of the masses cheering him on... while not a football fan per se, I enjoy the old firm dynamic in scottish football and would genuinely like to see it preserved...

in the current economic climate where every penny deducted from me in taxes squeezes my pocket, i'm not sure if i could abide HMRC writing off a massive tax debt without assurances going forward that this situation is unlikely to repeat itself.... you might forget that every penny HMRC writes off is a penny they have to get from everyone else in the system... every taxpayer in the country has a vested interest in what HMRC does with our taxes...

Businesses go under all the time often owing HMRC and others money. Rangers may be high profile but they are far from unique. The purpose of the CVA is to save the business, put it back on a secure footing and allow it to rebuild itself back into profitability. Refusing a CVA will see a liquidation giving HMRC a few pence in the pound and that is it. A CVA will see HMRC get a few pence in the pound and then taxes on an ongoing basis from a business that survives. Which do you prefer?

[jerfeelgood 0]

@jer k Since your a neutral supposedly, why dont you give us a slant assuming the cva passes and our ebt's appeal wins for us. just seems every post so far from you has a negative slant.

okay then....

to do that I will have to explain some of my personal sporting ethics...

firstly, is it a club or a business... A club is based upon a membership... who pay fees for that membership... who in return get voting rights as to how that club operates and who from the membership base represents the club in the board/committee... the club operates within the budget proscribed by it's revenue stream i.e. fees and revenue generated.... Rangers is not a club it is a business (owners, shareholders, directors, etc)...

Now on a personal level as a sports person I have massive issues with the sport at every level... my biggest issue would be that I cannot condone any business model that consistently burns through shareholder equity in anticipation that there will be more and more and more to come (man city spending a £bn to become competitive in the EPL, see also chelsea, real madrid, barcelona etc etc...). if I as a supporter am to support a business model, I want it first and foremost to be fair. Why is it impossible for a small revenue positive business to rise in the sport? football has now risen to the point that in order to be competitive you must be wasteful... if you look at american baseball they went down that route and the sport stagnated and almost died until wage caps and various other regulatory tools were brought in to allow the smaller teams to become competitive...

I consider blank chequebook owners to be the worst sort of financial doping. how can a sport be fair if the field is so stacked against those who try to operate fairly? which is why I have declared that I have no club...

I also have a massive issue with professional foul play... diving, referee intimidation, etc which could be SO EASILY SORTED and which makes the game almost comedic in a sense but as that is not relevant to the issue at hand I will leave that to one side...

So... I believe in this particular case Rangers have been presented with a golden oppurtunity to reinvigorate the sport in scotland if you would only willingly grab it with both hands and pull it to your bosom.... here is a chance to wipe the financial slate clean and create a model for european football clubs to follow... A business that is first and foremost a business i.e. profitable. you have the fanbase, the location, the grounds etc... you can start with a guaranteed revenue stream that does not need to be built from the ground up...

So i'm rooting for a CVA that treats the creditors fairly and a business plan which is actually profitable and does not operate on presumed income from european competition and blank chequebook sugar daddies. I'm rooting for new owners who will hold their hands up publicly and acknowledge that mistakes were made. You have been given a golden chance here to pull out all the skeletons in a one-r for all to see, take your licks in public (accept with dignity and contrition the adjudication of your peers), but then, your dirty laundry having been washed and aired, come back into the fold and show people how it should and can be done. With this can Rangers attain the moral highground in every level of the sport, national and international. You are in the unique position to do be able to do this. If you did all this you would cut the legs out from underneath all the nay-sayers in the country nevermind the sport as a whole...

You could show everyone that the SPORT can be fair at the top (financial fair play etc...)

With your fanbase and guaranteed revenue stream you would rise quickly from whatever punishment was handed out, with respect and contrition would the adjudicators be more lenient and possibly be willing to discuss reversible sanctions (i.e. rangers voluntarily adopts a sanction on the condition that said sanction would be reduced if certain conditios were met).

So under these conditions I would be in favour of a CVA and could support rangers for revolutionising the sport in scotland... this is your chance.... grab it! it's what i'm hoping for....

jer

[Non_Sucumbi 876]

Well they do deals around 73 percent of the time iirc so he's full of shite for someone "in the know"

Did Portsmouth not get a CVA including a deal with HMRC.

The money being discussed is peanuts compared to the cash 'sheltered' in Luxembourg by companies such as Vodafone and Glaxo Smith Kline --- in the hundreds of BLLIONS.

REckon we'll get a CVA and wee thimothy will not be happy/

[OlegKuznetsov 10,816]

__feelgood?

You're at it, ya c___!

[HHB 63]

Did Portsmouth not get a CVA including a deal with HMRC.

The money being discussed is peanuts compared to the cash 'sheltered' in Luxembourg by companies such as Vodafone and Glaxo Smith Kline --- in the hundreds of BLLIONS.

REckon we'll get a CVA and wee thimothy will not be happy/

International tax planning is a fascinating field and all the big companies play there. I can name one large US company which had operations in both Scotland and Ireland and which was shifting semi-finished good from one end of the world to another and purely for tax reasons; there was no operational logic to it. HMRC get sticky? They just close down UK ops and move them to another country. Even the clean room could be lifted out by a crane, put on a ship and taken elsewhere. Rangers travails are, as you say, peanuts in this world where 1% off the effective tax rate can amount to hundreds of millions in savings.

[Non_Sucumbi 876]

International tax planning is a fascinating field and all the big companies play there. I can name one large US company which had operations in both Scotland and Ireland and which was shifting semi-finished good from one end of the world to another and purely for tax reasons; there was no operational logic to it. HMRC get sticky? They just close down UK ops and move them to another country. Even the clean room could be lifted out by a crane, put on a ship and taken elsewhere. Rangers travails are, as you say, peanuts in this world where 1% off the effective tax rate can amount to hundreds of millions in savings.

One large Chicago based company has a staff of 19 in a purpose built location in London. Reason - so they can shift money through London then via some 'sheltered countries' like Luxembourg..

Certainly fascinating if the BBC docu. on Tax Evasion by GSK + Voda.... was anything to go by. GSK were due tax at 28% on over 100 BILLION pounds. They shuffled the money to Luxembourg and paid 0.5%... half of one fukkin percent.

[Smile 26,622]

yet you've not directly disagreed with my analysis....

If green has a viable business model for the company that HMRC can live with, i'll be one of the masses cheering him on... while not a football fan per se, I enjoy the old firm dynamic in scottish football and would genuinely like to see it preserved...

in the current economic climate where every penny deducted from me in taxes squeezes my pocket, i'm not sure if i could abide HMRC writing off a massive tax debt without assurances going forward that this situation is unlikely to repeat itself.... you might forget that every penny HMRC writes off is a penny they have to get from everyone else in the system... every taxpayer in the country has a vested interest in what HMRC does with our taxes...

Smells bad.

[HHB 63]

One large Chicago based company has a staff of 19 in a purpose built location in London. Reason - so they can shift money through London then via some 'sheltered countries' like Luxembourg..

Certainly fascinating if the BBC docu. on Tax Evasion by GSK + Voda.... was anything to go by. GSK were due tax at 28% on over 100 BILLION pounds. They shuffled the money to Luxembourg and paid 0.5%... half of one fukkin percent.

Sounds like an international treasury operation. Presumably not a large Chicago based food company whose Treasury operation is/was in Zug, Switzerland (unless that changed when the parent split the business up). Most large companies have them. Often they are located in Switzerland, sometimes in the RoI, etc. Typically, they 'sweep' the cash out of the various countries on a daily basis and just leave enough in to fund operations. Another 'wheeze' which is often used is 'Toll Manufacturing'. Just because you manufacture, sell and ship a load of stuff in one country does not mean you actually pay tax there. Also, you get a lot of European HQs in high-cost countries like Switzerland because the corporate taxation there is so favourable to companies.

Most people have no idea how this stuff all works. As someone who does have an idea (although I am far from being an expert), I can promise everyone that the Rangers situation is a drop in the ocean. The problem is that Rangers are high-profile and HMRC can look good in the eyes of public opinion by acting tough. Rangers are also a test-case for the whole EBT wheeze probably because David Murray sailed a little to close to the wind in setting them up. Meanwhile, the great British public have no idea of the billions flowing elsewhere in search of lower tax rates.

[HHB 63]

.........

[jerfeelgood 0]

if i'm interpretting the post re MLM Solutions up the thread...

Do people realise that

(i)a CVA may be binding for a number of years

(ii) a condition of the CVA may involve rangers paying into this CVA monthly for the duration of the CVA

(iii) that this will in turn reduce the clubs cashflow...

A CVA won't be just the money Green puts in... It'll be that money plus monies to be realised from monthly payments over the period of the CVA... i.e. future Rangers Revenue....

[RFC55 110,241]

if i'm interpretting the post re MLM Solutions up the thread...

Do people realise that

(i)a CVA may be binding for a number of years

(ii) a condition of the CVA may involve rangers paying into this CVA monthly for the duration of the CVA

(iii) that this will in turn reduce the clubs cashflow...

A CVA won't be just the money Green puts in... It'll be that money plus monies to be realised from monthly payments over the period of the CVA... i.e. future Rangers Revenue....

You fuck sheep so wtf do you care.

[Blue Army Faction 28]

A CVA won't be just the money Green puts in... It'll be that money plus monies to be realised from monthly payments over the period of the CVA... i.e. future Rangers Revenue....

It may include monthly payments over a period of years, no one will know until the CVA offer comes out and is immaterial anyway unless HMRC accept it.

[RFC55 110,241]

It may include monthly payments over a period of years, no one will know until the CVA offer comes out and is immaterial anyway unless HMRC accept it.

I would just dingy the cunt and dont give him a serious reply. Fuck knows why admin have allowed him to stay,

[Blue Army Faction 28]

I would just dingy the cunt and dont give him a serious reply. Fuck knows why admin have allowed him to stay,

[debear 603]

Only if we ever send the fucking letters out.

[theiconicman 3,013]

if i'm interpretting the post re MLM Solutions up the thread...

Do people realise that

(i)a CVA may be binding for a number of years

(ii) a condition of the CVA may involve rangers paying into this CVA monthly for the duration of the CVA

(iii) that this will in turn reduce the clubs cashflow...

A CVA won't be just the money Green puts in... It'll be that money plus monies to be realised from monthly payments over the period of the CVA... i.e. future Rangers Revenue....

(i) Yes, this is fairly standard for a CVA and requires evidence to HMRC of ongoing good governance and payment on time of tax liabilities

(ii) It may but probably won't unless the consortium have agreed to pay creditors over a period of time but this will be funded by the consortium, not Rangers. The only delayed aspect of the CVA for Rangers is likely to be the outcome of the court case against Collyer Bristow.

(iii) No it won't. The club won't self finance the CVA other than those aspects of book debt identified already (i.e. Jelavic money)

You talk some amount of shite, but then you are a Rangers hater so what else should I expect?

[disgruntled_bear 157]

Yes, a CVA is possible. Will it happen though... That's another question.