Rangers on Monday filed legal papers indicating its intention to enter administration and it was originally thought that the club would have 10 days to decide whether to proceed. However, its hand was forced on Tuesday as HMRC made an unsuccessful legal bid to appoint its own administrator at the Court of Session in Edinburgh. The Glasgow giant has now appointed London firm Duff and Phelps as administrators, and they will now take over the running of the club while it seeks to address its debt problems.
“The club did not want nor anticipate having to take this course of action today but had no option,” said Rangers chairman Craig Whyte. “We had hoped that continued dialogue with HMRC would mean that a decision on administration would not have to be taken for 10 days while all other avenues were explored.” He added: “It remains our firm belief that the club’s future can be secured and we hope this period of administration will be as short as possible.”
Rangers’ tax case with HMRC 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. 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 on Monday 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”.
Following Tuesday’s case a spokesman for HMRC told the BBC: “We can't discuss specific cases for legal reasons but tax that has been deducted at source from the wages of players and support staff such as ground keepers and physios must be paid over to HMRC. Any business that fails to meet that basic legal requirement puts the survival of the business at risk.” In addition to the HMRC case, Whyte has outlined that the club is currently operating amid annual losses of £10 million, adding that substantial cost-cutting measures are necessary. It was also reported last week that the chairman had borrowed up to £24 million against four years of future season ticket revenue from the Ticketus agency.
In the immediate future the entry into administration will see Rangers docked 10 points, effectively handing the 2011-12 SPL title to bitter rival Celtic. Administrator Paul Clark has denied reports that Rangers’ game against Kilmarnock on Saturday is under threat, adding: “We fully recognise the great history of this club and what it means to people throughout the world. Whilst today is a sad day for Rangers, it also addresses the terrible uncertainty that has been hanging over the club. The administration period, while difficult for all involved, will give stability to the club in order to move forward.”
