So far I have tried to explain, insofar as I understand the reasoning, the basis for the Nimmo Smith Independent SPL Commission finding that Rangers oldco broke the rules – it was “deliberate non-disclosure” rather than a clerical error or administrative oversight.
I have also explained how the Commission came to the conclusion that, even though the rules about documents needed for registration were broken, this did not change the status of registered players and thus there were no ineligible players. This was despite the fact that, before this case, it was understood that a defect in registration did invalidate the registration.
The third area for me to look at is that of “unfair competitive advantage”.
How, observers ask, was there not a “competitive advantage” as a result of these manoeuvres. As was heard in evidence in the FTT, the use of the EBT schemes allowed Rangers to afford to pay players money that could not have been afforded if all had been paid by a traditional route, such as by way of salary. How, the question is asked, does that not amount to a competitive advantage, or at least an attempt to gain one?
It reminds me of the statement attributed to Bill Shankly about the offside rule:-
“If a player is not interfering with play or seeking to gain an advantage, then he should be.”
On the same basis, why enter these convoluted schemes IF NOT to gain an advantage!
Again, as with the decision on ineligible players, I think a close reading of the Commission decision is essential.
The neutral observer might follow the thought process shown below.
- Rangers broke the rules about payments and reporting financial information to the football authorities.
- They did this in connection with their operation of a scheme to save tax, and thus allow them to pay higher wages to players, or to pay high wages to more players.
- It was acknowledged at the FTT that this was a motivation for the scheme.
- Therefore players were signed by Rangers who, if not for the EBT scheme, either could not have been afforded, or would not have signed.
- As these players were intended to be better than less expensive players, and as they would not have signed without the EBT scheme, this surely is at least an attempt to gain an advantage.
The first point about “competitive advantage” is that this however was NOT in connection with playing ineligible players. Once the Commission made it clear to Mr McKenzie, presenting the SPL’s case, that the practice and procedure operated by the SFA in relation to registrations did not match the Commission’s interpretation of the rules, and coupled with the SFA official responsible also indicating that what the rule meant was not how it had hitherto been applied, then there was no “guilt” on playing players who ought not to have been playing.
That makes the competitive advantage issue far clearer, I suggest.
The “man on the Garngad omnibus” would find his thought process de-railed.
What did the Commission say about the competitive advantage issue?
At paragraph 25 it said:-
In our view the burden lay on the SPL to prove (on the balance of probabilities) material factors which might affect sanction, such as whether a particular breach had given Rangers FC a significant competitive advantage.
It was therefore for the SPL to establish by way of evidence or agreement that an advantage had been given. It was not the Commission’s position that it would accept automatically that wrongdoing = competitive advantage.
At paragraph 105 the Commission addressed the issue as follows:-
It seems appropriate in the first place to consider whether such breach by non-disclosure conferred any competitive advantage on Rangers FC.
Given that we have held that Rangers FC did not breach Rule D1.11 by playing ineligible players, it did not secure any direct competitive advantage in that respect.
If the breach of the rules by non-disclosure of the side-letters conferred any competitive advantage, that could only have been an indirect one. Although it is clear to us from Mr Odam’s evidence that Oldco’s failure to disclose the side-letters to the SPL and the SFA was at least partly motivated by a wish not to risk prejudicing the tax advantages of the EBT scheme, we are unable to reach the conclusion that this led to any competitive advantage.
There was no evidence before us as to whether any other members of the SPL used similar EBT schemes, or the effect of their doing so.
Moreover, we have received no evidence from which we could possibly say that Oldco could not or would not have entered into the EBT arrangements with players if it had been required to comply with the requirement to disclose the arrangements as part of the players’ full financial entitlement or as giving rise to payment to players.
It is entirely possible that the EBT arrangements could have been disclosed to the SPL and SFA without prejudicing the argument – accepted by the majority of the Tax Tribunal at paragraph 232 of their decision – that such arrangements, resulting in loans made to the players, did not give rise to payments absolutely or unreservedly held for or to the order of the individual players. On that basis, the EBT arrangements could have been disclosed as contractual arrangements giving rise to a facility for the player to receive loans, and there would have been no breach of the disclosure rules.
And at paragraph 106:-
We therefore proceed on the basis that the breach of the rules relating to disclosure did not give rise to any sporting advantage, direct or indirect. We do not therefore propose to consider those sanctions which are of a sporting nature.
The Commission’s thought process was, unlike the “man on the Garngad omnibus” as follows.
(What follows is my breakdown of that process, not a quote from the decision.)
- We will ignore any issue of ineligible players, as there were no ineligible players.
- Did the non-disclosure, on its own, give a competitive advantage?
- We have heard no evidence of what other football teams in the SPL do regarding similar schemes, or indeed whether or not they exist, so we cannot determine if the non-disclosure gave an advantage.
- If we do not have evidence of the effect of disclosure, how can we decide that non-disclosure gave an advantage?
- We had no evidence telling us that it was the non-disclosure which enticed players to enter the EBT schemes with Rangers.
- It is perfectly possible, hypothetically, that the EBT schemes would have operated in the tax efficient ways intended even if disclosed.
- Therefore we cannot find that non-disclosure made any difference.
- We therefore proceed on the basis that the breach of the rules relating to disclosure did not give rise to any sporting advantage, direct or indirect.
I suspect that some readers might view that as an unrealistic and unduly legalistic approach. But bearing in mind that the Commission consisted of a High Court Judge and 2 QCs, then what else would one expect?
One could take from the decision veiled criticism of the SPL case. After all, it was for the SPL to convince the Commission on the balance of probabilities, and to do so, as the Commission has spelt out, evidence was required.
I think though (from my reading of the decision, and I accept that I could be entirely wrong) that the need for evidence about the matters the Commission refer to in paragraph 105 would never have occurred to those presenting the case.
I think their thought process was rather more akin to the man on the Garngad omnibus. After all, does one need to present evidence that a tax saving scheme, admitted to be for the purpose of signing players one otherwise might not be able to sign, was seeking an advantage?
It would appear not to have struck the SPL “prosecution” that there would need to be evidence about the advantage gained solely from non-disclosure, as opposed to disclosure.
For the legally minded amongst the readers, it seems similar to the issues which have to be dealt with in defective pavement tripping claims against local authorities, following on the precedent of Gibson v Strathclyde Regional Council.
That case, very simply, indicated that if a claimant wanted to show that a local authority had failed in its duties of reasonable care regarding maintenance of pavements, this could only be determined by leading evidence of what other similar authorities did. It was not permissible only to lead evidence that, for example, a slab had been broken for three months and, on the basis of that alone, then to invite the court to accept this as proof of negligence. If, in fact, it turned out that no other authority would fix a slab for six months then, no matter how unreasonable that might seem to the lawyers, the claimant or the court, then the case would fail.
In the aftermath of the Gibson case there were a number of claims which fell by the wayside for want of evidence which, frankly, it did not occur to most as being necessary.
So what have the Commission decided about “competitive advantage”? I will try to help with some quick questions and answers.
Q Did the Commission decide that the EBT scheme gave Rangers an advantage?
A No. The commission did not look at that question. This case was not about the operation of the EBT scheme.
Q Did the Commission decide that Rangers were trying to gain an advantage by using the EBT scheme?
A No. For the same reason stated above.
Q Did the Commission decide that Rangers were trying to gain an advantage by non-disclosure?
A No. The Commission did not consider that question at all.
Q Did the Commission decide that Rangers gained an advantage by non-disclosure?
A No. Because there was no evidence that allowed the Commission to decide if there was any advantage.
And so we have the decision which is already being reported as the EBT scheme not giving Rangers any competitive advantage, when in fact the Commission never even considered that.
I hope that analysis makes this issue a bit clearer, although I can imagine some readers thinking that, as lawyers sometimes do, the big questions are ignored whilst we nibble round the edges on technicalities.
Am I criticising the Commission for reaching this decision on this point? No. I am not. I can see the logic of the approach it took although I suspect that such a fine analysis of sporting advantage has never troubled those deciding on football rule-breaking before.
Posted by Paul McConville