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Date set for liquidator's appeal attempt in Rangers tax case

BDO will seek permission to go to the Supreme Court at the Court of Session on February 24.

By STV News

Published 14 Jan 2016.

A date has been set for the liquidators of the 'oldco' Rangers Football Club to legally challenge a court decision over the verdict in the Rangers tax case.

BDO will seek leave of appeal to the Supreme Court at the Court of Session on February 24 as they look for permission to attempt to overturn a ruling that payments made under a tax avoidance scheme should have been subject to income tax.

HM Revenue and Customs successfully argued to the court in November that millions of pounds worth of cash loans made to employees of Rangers from 2001 to 2009 should have been treated as contractual earnings.

It had been successfully argued at two previous tax tribunals that the schemes, implemented by Sir David Murray and also used at a number of his other companies, should not have been subject to tax.

In court, HMRC argued the payments had technically been "earned" by employees as they were made as consideration for their services.

The scheme, it was claimed, was “a mere redirection of earnings which did not remove the liability of employees to income tax".

HMRC's third attempt was allowed on those grounds, with the court agreeing its argument was correct.

In his verdict, Lord Drummond Young said: “It seems to us to be self-evident that the obligations in the side-letter were part of the employee’s employment package, and provided him with additional remuneration.

"They were negotiated as part of the total employment package. Once it is accepted that the bonus payments represented consideration for a footballer’s services qua employee, it inevitably follows that those payments represented emoluments or earnings of the footballer in question.

"On the foregoing basis, we are of opinion that the sums received by the trustee of the Principal Trust and in due course by the trustees of the sub-trusts amounted to a mere redirection of income and thus constituted emoluments or earnings of the employees in question.

“That accords with common sense. If the law were otherwise, an employee could readily avoid tax by redirecting income to members of his family to meet outgoings that he would normally pay: for example to a trust for his wife ... or to trustees to pay for his children’s education or the outgoings on the family home.

"The funds are ultimately derived as consideration for the employee’s services, and on that basis they are properly to be considered emoluments or earnings."