As broken by Alex Thomson of Channel 4 News yesterday, HMRC have been granted leave to appeal against the majority decision in the EBT tax case known to one and all now as the “Big Tax Case”( © RangersTaxCase.com.)
After a flurry of anger on Twitter and elsewhere about this “leak” to Mr Thomson, and even more misplaced anger by people who thought this meant the appeal itself had been decided, Mr Thomson published a blog post on the subject. You can find it here.
As far as leave to appeal being granted was concerned, no one I spoke to with knowledge of the appeal system thought that the application for leave would be refused. An appeal can only be taken forward on a question of law.
What, some have cried, was the question of law in this case?
The answer to that question is very simple. (Though the answer to the legal question is not).
Put simply the majority interpreted the legislation and case law to allow them to look at the form of what was done whilst the minority judge applied the same law and reached the conclusion that the substance of what was done was more important than the form.
Therefore there is a clear distinction about how the law should be applied.
That is, undoubtedly, a “question of law”.
As Mr Thomson made clear, his source was none other than the HMRC Press Office. So, not a leak!
He is spot on too to say that it will take some time to finish this saga.
I wrote, at some length, in November regarding the appeal process. The full post is here.
The section of my post relevant to where we stand now is copied below, extracted from HMRC’s own publication, with my comments in bold (note that the document is addressed to the taxpayer as appellant so I have adjusted it to reflect this case, where HMRC is appealing):-
How the appeal will proceed
If HMRC has appealed, the Upper Tribunal (Tax and Chancery Chamber) office will ask you whether you have a representative and you (or your representative) will be asked if you wish to make comments on the appeal.
I suspect that Rangers/MIH would want to make some comments!
You will be told how the appeal is to proceed and any time limits. You and HMRC may simply be asked whether you object to the Upper Tribunal deciding the appeal on a particular point.
You should note that all comments or observations made by one party will be copied to all the other parties. At the same time the office will send out letters explaining what, if anything, needs to be done next.
Will there be an oral hearing of the appeal?
Appeals in the Upper Tribunal (Tax and Chancery Chamber) can be decided with or without an oral hearing. If the appeal has been made by someone else and you are a respondent, and the judge decides to have an oral hearing you will be told about it and will be entitled to attend even if you did not ask for a hearing.
An Upper Tribunal judge can direct an oral hearing be held even though no one has asked for one. Oral hearings are usually held in London, Manchester and Edinburgh.
What will happen if there is an oral hearing?
Once the date for an oral hearing has been set, you will be sent a letter with details of the date, time and place.
You must normally be given at least 14 days notice of the date of a hearing unless both you and HMRC have agreed to shorter notice. However you will usually be given more notice.
Oral hearings are normally in public unless the judge directs a private hearing. However, it is unusual for members of the public to come to hearings. If you would like your hearing to be private, you should say why and the judge will decide this.
Your representative (if you have one) and HMRC will also be entitled to attend the oral hearing and will be told about it.
Where a case raises a particularly important or difficult point of law, it may be heard by three judges instead of one. However, this is very rare.
It may be rare, but I think this will be one of those rare cases, both for the public interest issues but more so for the consideration of the Ramsay principles. (The “Ramsay” principles relate to the determination of “form over substance” or “substance over form”).
———————————————————-
Mr Thomson has generally been on the mark with much of his comment, investigation and analysis of this issue. I was very disappointed to have missed his talk at Napier University regarding the matter.
However, as far as further procedure goes, Mr Thomson was incorrect to say that the matter would next go to the High Court, probably in London. I am sure he will not mind the correction.
In fact, the next level is, as mentioned above, the Upper Tribunal (and not the “Second Tier Tribunal” as the BBC referred to it).
After the Upper Tribunal, there is a further right of appeal, on a point of law, to the Inner House of the Court of Session (as this is a Scottish appeal) and from there, finally, to the UK Supreme Court in London.
At that stage the case would make it south of the border, but it will not go there beforehand.
At the appeal there would normally be no evidence led, as the Upper Tribunal, consisting of one or three judges, is only there to determine the legal aspects of the case. There was, in any event, little difference in the “factual” determinations of the Tribunal. The dissent arose from the way in which those facts were fitted into the legal matrix.
For that reason the Upper Tribunal appeal will take nowhere as near to be heard as the FTT did. The legal points at issue should be argues in two or three days only. However, it is unlikely that any appeal will be heard until near the end of this year.
In general, it takes the Upper Tribunal judge around 3-6 months to issue a decision after hearing an appeal. The appeal hearing itself would normally be listed to take place between 12 and 24 months after the decision which is being appealed against. This is simply a function of the number of appeals, as opposed to the number of judges able to hear these cases.
The First Tier Tribunal (Tax) decides over 700 cases a year, and in addition, there are appeals marked which are withdrawn before a decision is reached. The Upper Tribunal (Tax and Chancery) determines around 100 cases per year.
So, on that basis, there might not be an Upper Tribunal decision until into 2014, and an appeal to the Court of Session might not be resolved until 2016, and then the Supreme Court could take until 2017 or 2018 to determine the matter.
The costs for MIH will be significant. The costs for the taxman will be too. However, the case has implications not just for EBTs created by football teams. It is a high-profile case and one where clarification of the application of the Ramsay principles will extend far into all aspects of tax “arrangements” designed to reduce tax liabilities.
So there remains plenty of time for us all to be further educated in the intricacies of tax law!
(I knew that winning the class prize for Applied Tax Law in the mid-1980’s would prove to be useful eventually!)
And finally Mr Thomson is being a bit grudging in his comment that the FTT was misinterpreted as a win for oldco. It was a victory for MIH and oldco, but not, because of rights of appeal, a final one. It is better to be in MIH’s position now than that of HMRC. The taxman has to persuade the Upper Tribunal that the FTT majority got it wrong.
Equally though, and I will write more about this, I think, it was wrong to interpret it as a knock-out blow for Rangers either.
And I will next pen a couple of thoughts on Mr Green’s letter from whichever part of the world he is presently situated, to HMRC regarding the appeal.
Soon…
Here…
(I can’t be bothered with that joke any more)
Posted by Hector McConville
Random Thoughts Re Scots Law by Paul McConville 
a man in the street commented
all uk taxpayers of non rfc persuasion were disappointed at the fttt verdict last november and are pleased that hmrc have now launched an appeal against the judgement.
the ruling of the fttt does affect the operations and the financial position of ukplc as it stands today and the appeal will have an affect on us all as this is a historic case for ukplc ( current co).
As HMRC stated last June when they decided to vote against the proposed ‘’oldco’ CVA, no tax liabilities relating to ‘oldco’ would transfer across to the new company. HMRC have also reaffirmed this position to the Club’s tax advisers, Deloitte.
“What the appeal does do, however, is provide a ray of hope and clarity over a situation that has already been ruled on against ukplc interests and has taken a number of years to investigate.
“There is money to be gained by HMRC as there are thousands of ebts out there to be challenged and ukplc is a vibrant company that does have the time and resources to pursue these matters.
“I have written in the strongest possible terms to HMRC expressing gratitude for their appeal on behalf of ukplc and wishing them every success in the daily fight against possible tax evasion on all our behalfs.
There may be trouble ahead
but while theres moonlight and music love and romance
Time to face the music
Lets dance !!!
@Paul
Thanks for laying out all the possibilities – so almost certain to be still going in 2017 – not sure anyone can remain excited or indignant for that long. So let’s look forward with optimism to that day in history:
TRFC will be playing top flight football in Scotland or England or somewhere.
TRFC will be playing in the Champions League – assuming they are still in Europe
Ally will have 20 years to run on his contract – hope it’s index linked
Scottish reconstruction will have rejuvenated Scottish football and the SFAPLFL will be hailed as a great success.
The mono-rial will be ferrying people between Casino, Hotel, HS4 terminal and the Charles Green Arena in the Vegas of the North
happy days
Another two years then another two and another two add in a few tea breaks, stump up a few hundred thousand for the impoverished legal profession, and final decision Circa 2020, while anyone with half a brain and a bit of decency knows that Rangers were on the fiddle.
Paul,
Was there not a statement recently that if the UTTT found against rangers they would have to pay in full, then seek permission to appeal ?
John C
” if the UTTT found against rangers they would have to pay in full,”
You can’t take feathers off a frog, especially a dead frog.
Paul
Regards whereabouts of King Chico 1st. I heard a rumour that he had been found under a car park in Leicester.
are your confusing a turd with a third and guess what you can’t polish
Part of the new motorway in sheffield
This may sound really silly,but if oldco are found not guilty,then what incentive is there for any other busines,never mind football teams to be compliant with their tax affairs???
I simply cannot envisage HMTC losing this and firmly believe that common sense will prevail.
While the tax man may struggle to prove the EBT’s were illegal,they should have little difficulty in proving they were designed to help oldco to avoid paying tax on players wages.
Am I miles away here??
Please feel free to educate me.;)
And I see all the (Same club, New company) crap is starting again about Twitter! Well do Sevco fans really believe that David Murray one of the richest men in Scotland with a great team of lawyers
and company directors Couldn’t think up the (liquidate the company but still have the same club idea!!) That he would sell everything for just one pound if he could just write off his debt by liquidating a company! Do they believe that the successful Businessman Craig Whyte a venture capitalist, Along with his team that has made millions on dying companies by liquidating them, Even he didn’t think of liquidating the company in the close season and the club carries on!… But they believe some 2bit Yorkshireman knows more than all of the self made millionaire Businessmen and lawyers put together! Clutching at straws in division 3.
“An appeal can only be taken forward on a question of law.
What, some have cried, was the question of law in this case?
The answer to that question is very simple. (Though the answer to the legal question is not).
Put simply the majority interpreted the legislation and case law to allow them to look at the form of what was done whilst the minority judge applied the same law and reached the conclusion that the substance of what was done was more important than the form.
Therefore there is a clear distinction about how the law should be applied.
That is, undoubtedly, a “question of law”. ”
Paul, as a solicitor, you should know that the above is nonsense.
2 of the panel looked at the evidence and found no case to answer.
1 of the panel did the same and found there was.
The fact that one did so against the other two does not give the right to appeal.
HMRC will be appealing on a point of Law [Case Law] and not because of how they have interpreted Ms Poons written judgement.
No. I don’t know which point they will be using.
Dick,
At no point does Paul credit HMRC’s grounds for appeal on either “how they have interpreted Ms Poons written judgement” or on the basis that Ms Poon disagreed with the majority decision. That can help form HMRC’s opinion and direct their grounds for appeal but Paul has lucidly noted that the appeal itself is based on a matter of law – specifically a disagreement over the interpretation and application of current legislation and case law:
“Put simply the majority interpreted the legislation and case law to allow them to look at the form of what was done whilst the minority judge applied the same law and reached the conclusion that the substance of what was done was more important than the form.”
Abuse ? Not enirely unexpected. Lol.
Here’s the bit you missed out – ” Therefore there is a clear distinction about how the law should be applied.
That is, undoubtedly, a “question of law”. ”
HMRC can only appeal on a point of law. NOT on a question of law. Good to see the rubbish about Ramsay appearing again though. Lol.
Pray enlighten us WW…
Whats the difference between a ‘point of law’, and a ‘question of law’?
Read the opening post and what it is saying.
You have changed the goalposts but you are still wrong, Dick. An appeal can only be made on a question of law i.e. a point of law.
hmmm https://scotslawthoughts.wordpress.com/2013/02/03/on-catholic-education-sunday-re-post-of-my-thoughts-on-catholic-education/comment-page-2/#comment-46847 Although maybe Bud was correct about not mentioning devices capable of combustion
Ramsay seemed to exercise the minds of the judges on the FTTT, Are you being a bit glib calling it rubbish.
Do you think the Appeal should have been launched ?
Willywonka
I struggle with your argument.
No one suggested that the Appeal would be based on interpretation of Dr Poon’s statement. It may be based on something which she covered in her opinion or it may not.
The fact that it has been allowed confirms that there is one or more points of law. We may not know for some time, and I may never understand the arguments.
It will not be based on anything Ms Poon said. Nothing at all.
The appeal will be based on a point of Law. Case Law.
I think you will find that is what we are all saying.
Am I missing some subtlety?
@willy wonka
Guessing you never actually read the FTT Decision?
Paul,
Quick thought on this.
If this UTT lingers on as you have imagined it and we all suspect anyway, where does that leave the case if Scotland votes for independence next year and is a sovereign state by 2016?
Will this case die with others in the system or will Scottish tax officials merely take the case up within their jurisdiction?
There then being no route to the UK supreme court.
Can you imagine hoards of loyalists voting for a free Scotland to free TRFC of the mill stone around their necks.
Ah! dilemmas, dilemmas.
Ha Ha Happy Valentines Day
that did me chuckle !
There WILL be no separation/independence – 82% to 18% will see to that….and let’s hope that the Ibrox brand reap all that they have so systematically and methodically sown, over the last twenty-five years of ‘ducking & diving’
Yes twenty-five years, and all their supporters, officials and MSM apologists want the ‘slate wiped clean’ in a matter of a few months.
The Ibrox philosophy was always built on supremacy (WATP) with sectarianism, bigotry and bullying the drivers.
From their position ‘squirming around’ in the lowest tier British football, they continue to force-feed us all with their ‘black propaganda’, indeed they have engaged the modern equivalent of Joseph Goebells, to do just that. He (Traynor) said on Clyde the other night that the Rangers brand had been “bombastic” in the past (what does he mean the past?) – bombastic means high-sounding but with little meaning, exactly the description I would use for the utterances of Green, McCoist and Traynor, NOW. Traynor also took the opportunity to blame Craig Whyte for all the ills – he just could not bring himself to criticise SDM, even now.
Finally we must all work hard to debunk the widespread (and it seems accepted) theory that it was the companies running the CLUB that ‘sinned’ and somehow the now ‘debt-free’ club was totally blameless – the classic ‘big boy done and ran away’ defence.
The club benefited from the ‘goings -on’ and therefore must forfeit those benefits when the ‘skulduggery is uncovered – let’s hope LNS takes the appropriate action.
‘Tis a great thing how all the aforementioned bombast, sectarianism, perceived supremacy &c. was/is centred around the idea of British Unionism and in part the denial of a smaller Celtic nation (Scotland) to seek democratic rights as a self-determining country. Does this not leave you just a tad uncomfortable as a pro-Unionist?
I do not deny the SNP right to seek separation and so-called “democratic rights” – I just say that over four-fifths of the Scottish people don’t buy it.
What I do find amazing is that a political party with 1% of MPs and less than 1% of the popular vote in parliament, can have he power to break-up the UK, regardless what the other 99% say,or,do!!
I do say that the Ibrox brand deserve their comeuppance.
You may take an opposing view – that is your right, and I respect it.
Fair do’s John – it was intended as an honest and forthright question – strangely enough many other nations that have sought their independence from Westminster administration – India, Jamaica, Ireland, &c. &c. didn’t seek to include the consensus of circa. 50m. people in Britain as to whether they should have it – but thought to determine their own constitutional paths as an independent entity. Although I have to say as to the general gist of the question – as to whether you may feel a tad uncomfortable – as a pro-British Unionist – with the Union-Jack wearing / Unionist / Imprerialist / Monarchist view of the Ibrox brand – whose views to a degree concur with your own – you seem to have comfortably skipped!
So in your view an individual is either pro-independence or a fully paid up unionist-extremist?
Is it not possible to believe that Scotland would be better off as part of the Union without having to wear a UJ waistcoat and be carrying a large flag…?
SF, thanks for your reply. I believe that we are “better together” – as to the Ibrox brand – they are not the UK, indeed the people of the UK know them and their ‘normal’ behaviour well, and are rightly reviled by it.
The minority that I belong to (and maybe you) in Scotland have nothing to gain from independence – we enjoy some degree of protection from the excesses of the West of Scotland hoards, simply because of the larger UK population, the close ties to the Anglican Church and the empathy of the Westminster government, whatever the colour.
We will be ‘fed to the wolves’ in an Independent Scotland, where all the vested opposing interests – Church of Scotland, Wee Frees, Orange Order, modern-day Covenanters…etc would ‘come out of the woodwork’ and under various guises, would infiltrate and,influence opinion in the Scottish parliament – these people are of a mind that this is their Protestant country and would be relentless in driving this home, free from ‘interference’ by the rest of the UK.
Look at the bullying and influencing of the media that has gone on during the recent Rangers crisis – that is with us part of the UK – what would it be like if these people were give free rein should we be separated and cast-adrift?
No Vega, that is not my view at all, rather it was a question as to whether someone with an evidently anti-Rangers stance, might feel any conflict or dichotomy in concurring with their (passionately held) anti-independence stance. I have met for example people in my time who have been pro-Irish independence and yet pro-British Unionist and it is a position that has often intrigued me. The intention was – in the hope of learning something – to ask a question – not to draw a conclusion.
John – just saw your reply come in – do you really think that these kind of idiots – who represent a small proportion of a secular majority – would be voted into parliament?
SF,
That’s fair enough then.
Mr galloway is well on there case to ,so it should be well intresting and london is a well balanced court so no angry bears able to moan if result gos bad it will be non biased not that am calling in to question the integrity of the 2 that found in favour of the last sitting but maybe deep down they knew london would sort it if they dident lol
EDITED ON THE GROUND THAT THE SUBJECT MENTIONED IS NOTORIOUSLY LITIGIOUS, AND I DO NOT WISH TO BECOME THE SUBJECT OF HIS LITIGATION
That Galloway ?
Be very carefull wonka, gorgeous George is one of the most successful claimants in british courts.
The establishment have been tryingto do him down for many years , to no avail. So you wont be any match for him if you start telling lies about him.
I believe he does not drink, and he wouldnt be the only person assualted by rangers fans on tour.
https://scotslawthoughts.wordpress.com/2013/02/05/hmrc-given-leave-to-appeal-tribunal-decision-re-mihrangers-plus-clarification-of-tomo-blog/comment-page-1/#comment-47027
quote from article above
The consensus opinion was that there would be another insolvency event because the numbers just do not and could not stack up and they do not have enough cash to see them through 2013 (their only hope is immediate league restructuring to parachute them back into the top league).
wow lol say no to fast tracking sevco and it could lead to tesco
http://alzipratu.wordpress.com/2013/02/05/39/
a bit of a mix up there the above quote is from the above article
@mick
Very interesting – dynamite if true – but begs the question – how did Chico ever think it would work out – was he given a nod and a wink over reconstruction – or is he a bigger chancer than Whyte – just hoping something will turn up – nothing to lose – potentially lots to win
@mcfc the producer of that article is well respected with the academic clatters theres something massive brewing and its not yorkshire tea there is lots of talk speculation at this point 9 mil in shares sold and 12 mil went to ticketus they are all spivs and lord hodge is still to do his findings and whyte knew green and d&ps knew whyte its a web of spivs a think they thought that it would blow over but glasgow is like a goldfish bowl were soccer is concerned a forgot to mention imran and brian stockbridge are zues so its a spiv circle imran and brian are behind green and the share issue did not mention the deeds and sevco were started in england theres lots to this DUE TO SCOTS LAW its caving in on them lol BDO better get a move on or by the time they go to bill green a tesco will be there and they will all be in monaco drinking champpers and laughing at the sevcoians they created and robbed lol
Paul. I’m looking forward to reading your posts on the Upper Tribunal, Court of Session and Supreme Court rulings; over the next 5 years! In 2018, Celtic will be going for 7 in a row and Albion Rovers will be securing the second Champions League place!!
good lo’ british justice
Good grief Mick!!!
That’s dynamite if accurate. it looks like Green, as well as everyone else involved in rangers old and new, assumed they would be parachuted right back into the upper echelons of Scottish football, after dumbing their debts and leaving so many people, clubs and companies in the lurch.
I suppose the sense of “superiority” many of them like to wallow in lulled them into a false sense of security.
Sadly for them, it’s the “British” establishment they were up against. To them, Rangers were nothing but a flag waving embarrassment.
I hope it’s finally sinking in. They will get no preferrable treatment from their English based “superiors” . They will be treated with the same contempt they always have been shown south of the border. To them the sevcovians are nothing but political puppets, to be used when and if required.
Even the Military are rushing to dissassociate themselves with them. How they have managed to stay so deluded for so long is a mystery to me.