Former Rangers players and staff who received payments through an offshore trust have been urged to settle outstanding tax bills with HMRC.
BBC Scotland has reported that beneficiaries of employee benefit trusts (EBTs) could face even larger bills if they don’t come forward in the next few weeks.
Last year, the Supreme Court upheld a ruling that £47 million paid to Rangers employees between 2001 and 2010 through EBTs was liable for tax. Many were led to believe that cash paid to them as loans was never to be repaid.
The BBC shared contents of a letter from Trident Trust, a Jersey-based financial admin company. This warned players and staff to seek urgent advice.
Former employees held liable
“HMRC has confirmed that it will seek to recover all income tax found by the Supreme Court to be due and that, where HMRC is unable to recover the tax from the employer, it may transfer the liability for unpaid tax...to employees or former employees,” the letter said.
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HMRC is currently targeting BDO – the liquidator of RFC 2012 – for a portion of what the company owed. But former employees will be held liable too. Some face tax bills of hundreds of thousands or even millions of pounds.
Hefty tax bills
Several players received payments through EBTs. The BBC reported that former captain Barry Ferguson received £2.5 million, German goalkeeper Stefan Klos £2 million and former manager – and current Scotland boss – Alex McLeish £1.7 million. Former owner Sir David Murray also received £6.3 million.
Trident has warned that employees must approach HMRC before the end of September this year to settle their affairs. And further charges will be applied if tax liabilities have not been settled by 5 April 2019.
Come forward or face bigger fines
“If you do not come forward voluntarily and seek to settle on preferential terms, HMRC could well pursue you directly and make an assessment on a less favourable basis,” the letter said.
While EBTs can be used legitimately, they were widely misused from the late 1990s until tax legislation was tightened in 2010. This means it isn’t just Rangers players whose tax affairs are under scrutiny.
“Follower notice (FN) legislation says that HMRC has 12 months to issue FNs following a final decision,” HMRC said. “The final decision at Rangers was on 5 July 2017. We have looked at a range of schemes where the principles at stake were similar. Follower notices have been issued where appropriate.”