Tax Avoidance Or Tax Evasion

[TheLawMan 6,240]

With all the talk and furore around EBTs, cheating and Lord Nimmo Smiths decision of “no sporting advantage” I thought I would clarify a few things.

The simple difference between evasion and avoidance is that one is legal and the other is not. It is perfectly legal and acceptable to “avoid” tax by using one of the many loopholes in order to reduce your tax liability. Most, if not all, companies seek advice before doing so, however they don’t always get it right.

Evasion on the other hand is illegal. This is where a company deliberately hides something, misappropriates their figures, undercuts income or over states expenses with the intention of misleading HMRC to reduce their tax liability. Or to put it another way. They CHEAT.

Now that we know the difference between the two, lets look at Rangers EBT situation. First thing first, the club took appropriate advice from, what was at the time, a so called expert. They also took legal advice on them. EBTs back in 2000 were very popular and widely used. I myself, was involved with 2 companies who looked at them but decided not to go down that road. As a Board member of both companies, I voted against them and was happy that we didn’t implement them in light of the changes made by HMRC in later years.

The next and very important aspect to consider in the Rangers situation was disclosures. As above, evasion is when you hide something deliberately which is simply not the case here. The EBT’s were disclosed to HMRC from day one. They appeared in every set of audited accounts and were in plain sight for everyone to see. Rangers were not trying to hide anything. We were not evading tax.

The EBT case has now been heard 3 times. HMRC have never in any of the cases asked the numerous judges to consider evasion. They have never suggested the club were evading tax. HMRC case and claim is that the scheme didn’t meet the required standards of a compliant EBT scheme and as a result, they want additional tax to be paid. They have not asked for anyone to be charged, arrested or fined as a result of evasion, which would be the case if they felt the club had deliberately misled or evaded tax.

In all the summaries and findings, not one judge has suggested evasion, even when dissenting from decision that the scheme was ok.

To summarise all of the above, irrespective of the final outcome, there is no suggestion or charge that Rangers have done anything illegal. The final result may be that we got it wrong, but it will never be illegal.

This is a very important distinction when you consider the reason why some fans are asking for a new inquiry. The rabble rousers out there are pointing to a particular sentence in Lord Nimmo Smiths verdict as a key point for a new inquiry. LNS stated “Accordingly we proceed on the basis that the EBT arrangements were lawful”

This, they state, is now defunct due to the latest verdict, prior to any appeal, however they are completely wrong on the basis of above. As outlined, irrespective of the final outcome, EBT arrangements are lawful. They are not illegal. No-one, anywhere int he UK, has been arrested or charged for operating EBT schemes, even when found to be doing so in an incorrect manner. The statement made by LNS still stands and will stand after any final appeal, upheld or not.

Interestingly enough, there was another lawful tax avoidance scheme used by various football clubs around the UK. This involved them bringing in tax experts to help their staff avoid tax by placing their money in Film schemes. These schemes were used by clubs to attract players to the club as they were able to explain to the players before they signed how they would make more money by joining these schemes. Like the EBT's, HMRC changed the rules and are now going back to the way to get more tax paid. Nobody will be charged and nobody will be arrested. They were lawful schemes that avoided tax. They are not illegal. They were used by certain clubs to help them attract players. This was not cheating.

In the interest of balance and to highlight the difference between legal and not legal, I thought it best to give a hypothetical example of tax evasion.

Lets say you ran a football club and had anything between 40,000 and 60,000 fans coming through the turnstiles each week. Lets say, hypothetically speaking, you rigged the counters at the turnstiles to ensure that when you reported the official attendance, you state it is only 25,000 to 45,000. In doing this, you bring in 15,000 x £10 per head, hide the income from the accounts, filter it in elsewhere and avoid paying tax on £150k every second week. This is TAX EVASION. This is illegal. This is cheating.

Now imagine, you did this constantly for 10 years to the point where your own fans, the media pundits and the press used to laugh and joke about it, whilst winning leagues and cups. This is cheating.

Im old enough to remember the above allegedly happening somewhere in Scottish Football. I cant think who it was, though I am pretty sure the hypocrisy is looming large on it.

[Bad Robot 21,513]

Good post TLM and it would be interesting to see live footage of full stadiums and then making a comparison with the official attendance numbers against the stadium capacities for these matches.

[RM Monitor And Standards Officer 112,686]

Good article/post tlm

Good hypothetical scenario as well

Doubt anyone would do that.....

[Helicopter Sundae 6,430]

Excellent points TLM....strange is it not that the only time the verdict went against us was when it appeared in a Scottish Law Court!!!!

[Hoosier Ranger 1,554]

Excellent explanation and summary

[Bears r us 31,283]

Thanks TLM for that post, after all the shite we have heard about this over the last couple of weeks I could hardly remember what was the truth and what was lies.

Surely no one in this country would have used the film scheme or disguised their crowd numbers

[The Man In the HAT 34]

Good points

Though currently we have tax 'in dispute'

Once concluded we will get a bill, or we will not depending on the outcome.

If lets say we do get a bill then it will be paid via the law of the land and insolvency criteria.

Exactly as happens, day in day out across the country, and as was done without any fuss with Motherwell Livy Dunfermline and Dundee (twice)

As for ''sporting advantage'' well that's already been concluded, we didn't get any.

Quite why a player would have become worse by us telling the SFA he was entitled to a loan is frankly absurd ...

[thehost 11,061]

tax avoidance is really, when al is said and done, tax minimisation

in exactly the same way as people buying goods for the lowest possible price

[Frank Reynolds 3,359]

tax avoidance is really, when al is said and done, tax minimisation

in exactly the same way as people buying goods for the lowest possible price

I pay my taxes, fuck paying more than I have to.

If the government ups the tax rate, I'll pay it, but I'm not voluntarily giving more

[Jonok 1,245]

Excellent points TLM....strange is it not that the only time the verdict went against us was when it appeared in a Scottish Law Court!!!!

To be expected in Scotland, the bheasts have heavy numbers working in the Scottish legal system, but never mind m8 the next hearing

is in England and we can expect a proper British masonic judge next time.

[dummiesoot 16,233]

Good post TLM, let me jog your memory, it was the Kings of Sporting Integrity themselves, ra poops.

PS in know you knew that, stop beating about the bush

[Brackley 1,412]

We are being accused of not paying tax on the EBT's if the final ruling goes against us as HMRC are claiming they were earnings and not loans.

Two points here assuming the final ruling goes against us.

1) If they are earnings then surely the tax liability lies with the employee in receipt of the money and not the employer ( Rangers FC)

2) Should they hold the employer responsible then it is entirely possible that HMRC will get the tax owed from the funds held by BDO. If this is the eventual outcome and that the tax is paid retrospectively as was the case with Celtic's EBT then where is the alleged cheating.

[dummiesoot 16,233]

And another thing, ra poops hid their ebt from everyone, they did cheat.

[Carsons Army 4,146]

Lets be frank here, The first rule of sporting integrity is.....

Thou shall not systematically sexually abuse and molest young vulnerable children.

Not once and certainly not for a period spanning 2 decades.

We shall take no lessons in morality from a vile evil club who thrive on hatred and intolerance.

[Bluefarm 1,055]

Lets be frank here, The first rule of sporting integrity is.....

Thou shall not systematically sexually abuse and molest young vulnerable children.

Not once and certainly not for a period spanning 2 decades.

We shall take no lessons in morality from a vile evil club who thrive on hatred and intolerance.

Just about covers it. A club steeped in child abuse and terrorism, should think twice about lecturing us on morality.

[Hoosier Ranger 1,554]

This is a very important distinction when you consider the reason why some fans are asking for a new inquiry. The uneducated media whores out there are pointing to a particular sentence in Lord Nimmo Smiths verdict as a key point for a new inquiry. LNS stated “Accordingly we proceed on the basis that the EBT arrangements were lawful”

This, they state, is now defunct due to the latest verdict, prior to any appeal, however they, like on most issues that involve a brain, are completely wrong on the basis of above. As outlined, irrespective of the final outcome, EBT arrangements are lawful. They are not illegal. No-one, anywhere int he UK, has been arrested or charged for operating EBT schemes, even when found to be doing so in an incorrect manner. The statement made by LNS still stands and will stand after any final appeal, upheld or not.

Fixed this for you

[dummiesoot 16,233]

This should not be in the board room, it should be out in the open for all the rhancids to read, digest and choke on their own vomit.

[bombaybadboy08 15,660]

Brilliant, this should be released as an article from the site.

[TheLawMan 6,240]

This should not be in the board room, it should be out in the open for all the rhancids to read, digest and choke on their own vomit.

Feel free to share wherever.

[legalbeagle 3,734]

The entire question of tax liability is utterly misunderstood, probably wilfully, but even in the event of a loss, so what, we just effectively have a bill to pay. Ignoring the bullshit fines which should be set aside given the circumstances, the oldco could have funds to pay out with anyway, certainly on the playing staff.

[dummiesoot 16,233]

Feel free to share wherever.

Would love to but I can barely post, linking to posts or cutting n pasting on my phone is beyond me, one is a bit of a luddite.

[Sweetheart 8,458]

Excellent points made OP

[Bears r us 31,283]

I might be in a minority of one, but this is one thread I would like to see in the BEARS DEN.