The club filed the papers with Edinburgh’s Court of Session and now has 10 days to make a decision over whether to enter administration. The Glasgow giant has been battling the tax case with Her Majesty’s Revenue and Customs (HMRC) that could see it hit with a substantial bill for back-taxes, interest and penalties. The case relates to the use of employment benefit trusts (EBTs) to pay players and other staff.
The BBC reports that HMRC believes the club misused the scheme and avoided paying significant sums in tax. While this bill has widely been reported at £49 million up to this point, Rangers stated that a decision in favour of HMRC “could result in liabilities and penalties substantially more than the £50 million reported which the club would be unable to pay”. Rangers chairman Craig Whyte acquired the club in May 2011 after he secured a controlling stake of 85% and he insists the move towards administration is a necessary measure to protect its future.
“Since I took over the majority shareholding of the club in May last year, it was clear to me the club was facing massive financial challenges both in terms of its ongoing financial structure and performance and the potential consequences of the HMRC first tier tax tribunal,” Whyte said. “I have taken the decision that the most practical way to safeguard the long-term future of the club is to go through a formal restructuring process. It may still be possible to avert this but that is not the most likely way forward. What is of paramount importance is the long-term security, survival and prosperity of this great football club.”
Whyte has outlined that the club is currently operating with annual losses of £10 million, adding that substantial cost-cutting measures are necessary. Stating that there is “no realistic or practical alternative” to the move towards administration, Whyte added that even success in the tax tribunal would see HMRC “appeal, appeal and appeal again” the decision.
The chairman’s stewardship of Rangers has come under intense scrutiny in recent months, but he added: “All I would say to these people is that if they want to step up to the plate and invest money in Rangers to avoid a restructuring of the business, then I would be most willing to talk to them. In the past unfortunately, there were people who not only failed to prevent Rangers being engulfed by our current problems but chose not to invest their money to help put it right.” Any decision to enter administration would bring with it penalties such as an automatic 10-point deduction and a transfer embargo.
