Billy Dodds – “Witness for the Prosecution” and a “Smoking Gun”?

In which I comment on Mr Dodds and his piece in Sunday’s Herald. Mr Dodds, in one sentence, destroys the element which is, as described by Mike McGill, Murray Group Finance Director, as “key” to the defence of the HMRC case. Bizarrely his piece seems intended to be a defence of himself and of Rangers. In fact it proves quite the reverse.

Mr Dodds and the Sunday Herald had a scoop on their hands, and failed to notice it!

I was also unaware of Mr Dodds’ apparent keen interest in the movie industry, reflected in the headline to this piece.

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Billy Dodds was quoted at length in the Sunday Herald yesterday looking to clear his name and that of Rangers in connection with the EBT saga.

He is described by Wikipedia as follows:-

“William “Billy” Dodds (born 5 February 1969) is a former Scottish professional footballer. He was predominantly a striker and during a career spanning almost 20 years he played for, amongst others, Rangers, Aberdeen and Dundee United. He also won 26 caps for Scotland scoring 7 goals in those appearances. Along with his friend and colleague Gordon Chisholm, he has been involved with coaching and management at a number of clubs including Dundee United, Dundee and Queen of the South. He is currently working in the media, both as a commentator/summariser for BBC Scotland and as a columnist for the Sunday Herald newspaper.”

I think there are a few things worth saying about his comments so, in the words of Richard Gordon, “Billy?”

My observations are in bold beneath Mr Dodds’ comments.

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I want to address the revelation in Wednesday night’s BBC Panorama programme that I was one of the people to receive money at Rangers through an employee benefit trust (EBT).

According to the BBC report, Mr Dodds received £190,000 through an EBT. Usually in a statement of this nature the first thing to note is the use of the word “allegation”. Here Mr Dodds refers to “revelation”. Immediately the ears prick up as it seems he is going to admit having received such a payment. Bearing in mind that none of the people listed by the BBC responded, one wonders why Mr Dodds feels it necessary to come out publicly. Maybe he will tell us.
I feel that I have to defend myself and fight my corner because I have not done anything wrong. I have paid every bit of tax throughout my professional career, at every club, including Rangers.

The whole slant of the coverage of the EBT issue, as far as I am aware, is that the recipients are not in the firing line, except where other circumstances exist which raise questions. It has been asked many times whether the beneficiaries of these trusts will be pursued by HMRC for unpaid tax or by Rangers for return of the money, if it was a loan. The standard answer is no to each question. The “target” for HMRC is the employer.

Mr Dodds feels he has been traduced by the comments and therefore he wishes, in a spirit of “transparency and clarity” to clear his name. Good for you, Mr Dodds!
The full story is that David Murray came to me and asked if I would receive a payment that was due to me, after tax, through the EBT trust. And I said that I would. It was money that was owing to me when I had six months left on my contract and I moved to Dundee United. After the tax was deducted, that money was put in the trust fund.

Sorry? I want to read that again…

And again…

Once more…

According to Mr Dodds, DAVID MURRAY came to him and asked him, Mr Dodds, if he WOULD RECEIVE A PAYMENT THAT WAS DUE to him, AFTER TAX, and this payment was to be MADE THROUGH THE EBT TRUST.

Now, that strikes me as different from what we have heard from Rangers. From the Herald on 14^th March 2012 we find this in an interview with Sir David Murray and Mike McGill (Murray Group finance director).

“Question – WHAT IS YOUR RESPONSE TO HUGH ADAM’S CLAIMS ABOUT TWO CONTRACTS BEING ISSUED TO PLAYERS AS FAR BACK AS THE 1990S AND ALSO IN THE EBT SCHEME?

Mike McGill (Murray Group finance director):  …The other EBT scheme was started in 2001. The larger scheme involves a payment into an offshore trust, but there is no contractual entitlement on the part of the players. That is key to the defence, and key to the allegations made by the SFA. (Emphasis added)

Question – SO TWO CONTRACTS WERE NEVER APPLIED TO EBTS?

McGill: The whole basis of an EBT arrangement is that there is not a contractual entitlement.

Question – DOES YOUR VIEW REMAIN THAT YOU CAN STILL GET A FAVOURABLE OUTCOME?

Murray: We’re confident that we have a strong case, I think that’s been well documented.”

Rangers’ case is that the EBT payments were not contractual, and this is key to the defence of the EBT case and the SFA/SPL investigation.

Well, Mr Dodds just nailed that argument, didn’t he! One wonders if he gave evidence to the First Tier Tribunal. One wonders if Sir David Murray might threaten to sue Mr Dodds or the Sunday Herald, as Sir David has been accused directly by a participant of acting in a way wholly inconsistent with his public statements.

In addition, as Sir David, as he then wasn’t, had stepped down as Chairman in July 2002, one wonders if asking players about payments was part of his duties as “honorary chairman”!
This was a single payment made when I was leaving the club. I did not receive any payments through the trust fund at any other point of my Rangers career. I don’t know what other EBTs there were while I was at the club, and we never discussed them as players, although I refuse to believe that major players evaded millions of pounds in tax.

Mr Dodds received a payment of £190,000 according to the BBC, a figure that he has not disputed. His statement above confirms it came as one payment. By my rough calculations, if this was a payment made to him after tax, with the top rate being 40%, the gross payment due to him would have been £316,666. In addition, as that payment would have been liable to Employers’ National Insurance at 11.8%, there would have been a liability on Rangers to remit to HMRC Income Tax, deducted from Mr Dodds, of £126,666 and National Insurance, payable by Rangers, of £37,366, making a total payment by Rangers to HMRC of £164,032.
There was certainly no benefit to me from being paid this money through the trust fund. It was simply what I was due, the tax was deducted, and the club simply asked that they pay it to me through the fund. I had no issue with that and, of course, EBTs were legal at the time. It was Rangers who asked me to use the fund.

The answer to this apparent conundrum is simple. Did Rangers remit the sum of £164,032 to HMRC included in the PAYE and NI payments it made to the taxman? If so, then one wonders two things. First of all, why have we had the tax appeal going on so long, as this would seem to suggest some vendetta against a taxpayer who had actually paid the tax. Secondly, why did Rangers make a payment thru the EBT after deducting tax first, which seems to defeat the point of the scheme?

The scenarios appear to be as follows:-

1         Rangers deducted £126,666 from Mr Dodds and paid that, plus £37,366 Employers’ NI, to HMRC. If so, then there is no issue, except why Rangers were using an expensive tax reduction scheme like this.

2         Rangers were due to pay Mr Dodds £316,666 in terms of his contract. They told him that they had deducted the tax but then failed to send it to HMRC. Of course Mr Dodds does not actually say anywhere that the deducted sums were paid to HMRC, although he may well have been assured of this. In any event, one assumes his P45 would have identified this taxable payment, and the tax deducted from it. If, for example due to an administrative oversight, Rangers failed to send the tax and NI on, this would have been picked up in the returns for PAYE at the end of the tax year, and if so, Rangers would have addressed that. Heaven forbid Rangers would have told Mr Dodds that the tax had been deducted and then deliberately spend the money other than by remitting it to HMRC.

3         Mr Dodds was only due to receive a payment of £190,000 and he was told to say that tax had been deducted to cause confusion.

4         Mr Dodds has it wrong and nothing he described actually happened.

As Mr Dodds says he is telling the truth, and as I have no reason to disbelieve him, is it possible he has misunderstood the position, and his accountant who dealt with the matter for him in 2003 has not clarified matters? Otherwise one could be forced to the conclusion that HMRC were being cheated, and that Mr Dodds was being cheated also. However, as Rangers maintain that their practices were entirely fair and above-board, I must confess to being baffled as to how to reconcile the differing positions. 

As a player, you’re aware of all sorts of different schemes for putting your money into.  It’s not that players are dodging tax, it’s just that there are different avenues open to them to pay lower tax rates. There are schemes such as film partnerships that you could pay money into as an individual and so not pay higher tax rates. Image rights seem to be a more recent one that is popular in England.

Mr Dodds is listed as being, or having been, a member of four Limited Liability Partnerships investing in the film industry. They go by the snappy titles of Inside Track 2 LLP, Inside Track 3 LLP, Ingenious Film Partners LLP and Ingenious Film Partners 2 LLP. They have produced, co-produced, or invested in many well-known films over the last ten years, including such as Alien v Predator, Hot Fuzz, the Big Nothing and Notes on a Scandal. Ingenious Film Partners 2 LLP has been most prolific and according to its accounts has shown profits before tax of £84 million over tat period. However, it has also shown losses of £874 million, leading to a net loss for that LLP since its inception of £790 million. Clearly this is not a “scheme” for making profits. As Mr Dodds says, it is a “scheme” for reducing tax rates paid. He is frank enough not to profess some deep love of the cinema and a wish to be the next Harvey Weinstein as reasons for his investments!
There is nothing illegal in it, and the EBTs were the same. I want to stress that mine was simply a one-off payment, after tax, when I left the club, not some sort of remuneration scheme.

I like Mr Dodds’ confidence re the verdict on EBTs. Of course he is correct that, at the time, and if properly administered, then they were not illegal. The case against Rangers is not that they were used, but they were used in such a way as to render them ineffective. If Mr Dodds’ EBT was used as he described, to receive a payment made after tax, then one wonders how this qualifies in any way as a “scheme” to reduce tax? Did he take advice from his accountant when David Murray suggested this to him? How does a “tax reduction scheme” work, when the money paid into it has been taxed already?

His comment regarding this being a payment after he left and not a “remuneration scheme” also suggests that Mr Dodds is as comfortable in these waters of tax legislation as I would be in his field of explaining the advantages of the Christmas Tree formation, and the benefits of the overlapping wing-half! Remuneration is what Mr Dodds has described this as earlier in that it is payment for service rendered in terms of his contract.

 
I never heard anything about side letters when I was at the club, not one person ever mentioned anything like that.

One assumes that, if the allegations about side letter are correct, them someone, whether the player or agent, was told not to mention them. In addition, in many workplaces, employees do not sit around discussing what they are all getting paid, especially where there is not a fixed pay scale. People jealously guard that information as private, which it is, at least until it is opened up for scrutiny by a tax investigation. Maybe Mr Dodds did not need a side letter. Maybe if he has one his agent negotiated it and did not trouble to explain all the fine detail to him. The absence of evidence is not evidence of absence.
I’ve been in Spain golfing, so I’ve not yet seen the BBC programme, but I was shocked to hear that 87 players and staff were involved in the EBT scheme at Ibrox – but it should also be remembered that the trusts were not illegal. People do have to understand that this wasn’t players or staff trying to do something that would harm Rangers. And I do feel that it wasn’t telling the full truth for the programme to bracket all the players and staff together if the EBTs were different for each of them.

It is interesting that one of the first ex-Rangers players referred to in the programme to come out guns blazing in defence of the club and himself is one who has not seen the programme! As the Herald was asking Mr Dodds, as one of its columnists, to write about the programme, surely he would have asked for a copy to be made available to him to see before he responded? I am sure the Herald could have had a DVD of the programme couriered over to him!
All I can say is that in no way did I avoid paying tax, in no way was I paid wages or anything through an EBT over the course of my contract, and in no way was I aware of any side letters.

The allegation of course is that Rangers avoided paying tax. Mr Dodds’ comment at the head of the piece confirms this was a contractual payment made through the EBT. He is not accused personally of having a side letter.
It amazes me that John Yorkston has the gall to talk about Rangers not paying their bills. He’s a hypocrite, and he should start making sure that his club pay their bills instead. Jim McIntyre served a writ on Dunfermline on Thursday because he has still yet to receive his settlement after being sacked by the club last season. The issue is with the court now, because Dunfermline said they cannot pay it in one instalment. Yet John Yorkston is in the press all the time talking about other clubs. He should be looking after the financial affairs of his own club.

Mr Dodds is employed by the Herald to offer his opinions. This one, with respect, seems entirely wrong. To call Mr Yorkston a “hypocrite” for criticising Rangers for not paying bills seems the type of reaction one would expect from an ill-informed Rangers cheerleader, who believes that no one other than Rangers is allowed to talk about Rangers. Mr Dodds however is a professional commentator on football issues, employed by the BBC and the Herald. He is not a spokesman for Rangers, and if he is he should make that clear. Dunfermline might well have criticisms that can validly be made of them, but not being able to settle a payment to a former manager in one instalment is, I respectfully submit, a rather different situation from Rangers, in administration and facing possible liquidation over debts in excess, possibly, of £100 million.

I have not checked through Mr Dodds’ archives to see if he has been as voluble on Rangers’ debt issues as he is regarding Dunfermline’s. However, it seems a very unwise coda to his piece, and would be unlikely to garner any neutral support, I feel.

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Conclusion

Billy Dodds confirms that he received a contractual payment through the EBT, after tax was deducted. Something is not right with that. I am sure there is a way in which what he and Rangers say happened totally legitimately took place. However, I find trouble reconciling the accounts.

I wonder if Mr Dodds took advice from his accountant, his lawyer, or Rangers, prior to penning his piece. As he was golfing in Spain, he may not have had the chance to do so.

One also wonders if he was a witness at the First Tier Tribunal, and if so if he gave the same evidence. If so, then one suspects there would have been frantic efforts to get him to backtrack or clarify his evidence. We will wait to see the verdict to find the answer to that.

What he has done is shown, in one sentence, that the EBT scheme was not operated in the way Rangers claimed.