Celtic Diary Wednesday May 11: Lawwell Goes On Charm Offensive

caption- sfa hacks destroy scotland’s supply of truth serum ahead of the res 12 and ebt year’s enquiry

He gave an interview in the Sun because he gives so little a toss about what supporters think it didn’t even register with him. Also, if you believe that his role in the Sevco saga is anything other than helping them back on their feet to have the repugnant Old Firm nonsense back then buy two season tickets you mug. Keep giving them your cash because nothing is going to change. They do not want it to change. And when the international win the league Pete will insist that Celtic applaud them onto the pitch. Afterall it is the staus qup that must be maintained. Two cheeks of the same arse? i am sickened by the whole Scummy Tory lot of them . They have shamed Celtic and betrayed the support. I will do the only thing I can, refuse to pay into a rigged , corrupt game. No more cash from me.

Caption, Celtic fans still pissed off its the aboard.

Common now jimmy you are beginning to sound a wee bit desperate,it is Keano btw,just accept it and enjoy the ride next year.Lambert no way hose.H.H.

Gonna do feck all about res 12. Get to f… Peter, sevco lover

Caption: The Stoke CSC pour Monti’s missing comments where they’ll never be found. Thankfully.

Since publishing our report we have had a number of people contact us about a post elsewhere which questioned our conclusions on the grant of a UEFA license to Rangers in 2011.

Further to this we have been in email communication with the writer/s of the post and discussed their position. We would like to note that they put their comments in a constructive manner and we engaged in a positive and interesting conversation. We found our correspondence a useful exercise, however, as will become clear from this post we do not think that the criticisms levelled raise any problems with our conclusions and stand by our report 100%.

We are happy to take this opportunity to respond to the issues raised so that people interested in our report can better understand our position and the reasoning behind it.

THE PURPOSE OF THE UEFA FINANCIAL FAIR PLAY REGULATIONS
Before dealing with the specific criticisms raised, it is important to keep in mind the purpose of the UEFA Financial Fair Play Rules (FFP). It is clear that the purpose of the rules is to prevent clubs from gaining access to economic resources they would not normally have through being late with their tax payments. This is to prevent teams gaining an unfair financial advantage over clubs that were up to date with their tax payments.

The DOS scheme was operated by Rangers between 1999 and 2003. Taxes on payments made though the scheme first became due in 2000, and in subsequent years for subsequent payments. However the club did not pay the liabilities as they came due, and concealed the payments through the use of of an offshore trust (note, this was a different trust structure than the Big Tax Case). Rangers then lied to the tax authorities when they were questioned about payments made though this scheme in 2005, denying the existence of side letters.

The club were later caught out, when the documents came to light during an unrelated police investigation. This led to an accusation of fraudulent conduct made against the club by HMRC. The club then accepted that they needed to pay, and entered into discussions about what the remedy for their conduct should be. In the end the agreed penalty was never paid. To be clear, although we will expand on this below, this is very obviously not a situation that the FFP rules ever intended to sanction!

THERE WAS NO OVERDUE TAX BILL
There has been a long discussion on the internet for many years on the question of when Rangers’ tax liability arose. People on different sides of the argument have dissected in detail the correspondence between HMRC and Rangers in 2011 in an attempt to resolve this issue, yet there is still a lot of disagreement. Our view here differs from many of the commentators we have seen, including those backing ‘resolution 12’.

The FFP rules refer to the need for payments to be made in line with “the agreed terms”. To be clear, we take the agreed terms to mean the statutory obligation to pay taxes. In the case we highlighted the relevant statute is the PAYE legislation. That deadline under these rules for tax relating to payments made through the DOS scheme fell in 2001-2003 and that is the date we consider the liability to have become “overdue”. That interpretation is in line with the way UEFA interprets the rule as set out in the Malaga case, and the way the Italian courts have interpreted it in the Parma case (see below).

If there is no payment by the due date, a club needs to have a written agreement with the revenue authorities to extend that deadline. At no point did this happen in the DOS case.

It is for that reason that we regard Rangers to have had an outstanding tax payment on March 31st 2011 and their characterisations of those payments – as ‘potential’ and ‘postponed’ – to be inaccurate.

It has been said that the liability only became due when the settlement with HMRC was agreed, or alternatively when the appeal period for the Section 80 notices issued by HMRC expired. We believe that interpretation to be wrong, because it would entirely defeat the purpose of the FFP rules. If we were to accept that interpretation the effect would be that a football club would be free to mislead the tax authorities for as long as they didn’t get caught, and would still be regarded as in compliance with the FFP rules. Even then, when they are caught there would only be a liability when the penalty is agreed. As long as discussions are ongoing, there would be no problem with the FFP rules. This is plainly ludicrous. We do not think that it reflects either the intent or the meaning of the FFP rules.

It has been said that correspondence between HMRC and Rangers shows that there was no settlement and therefore no agreed terms. For the reasons set out above, we do not think that such correspondence is material.

NO REQUIREMENT TO HAVE NO OVERDUE PAYABLES
The next argument is that the only obligation under rules is to declare an overdue payable, not to ensure that no overdue payable exists. The evidence used for this is the paragraph in the rules which sets out the details of the information that should be provided in the licence application. That paragraph says:

The following information must be given, as a minimum, in respect of each employee: a) Name of the employee; b) Position/function of the employee; c) Start date; d) End date (if applicable); e) The balance payable as at 31 December, including the due date for each unpaid element; and f) Any payable as at 31 March (rolled forward from 31 December), including the due date for each unpaid element, together with explanatory comment.
It is said that this paragraph shows that all that is required is an explanation of an overdue payable, which Rangers did provide. Given our views on when the liability became due, we do not believe that Rangers did provide the minimum information required under this paragraph. In any event, we do not think this is a valid criticism because we believe that this clause is broader than overdue payables and encompasses liabilities that have not yet fallen due.

This we think is clear from the proceeding paragraph which states:

“The licence applicant must submit to the auditor and/or the licensor a social/tax table showing the amount payable (if any), as at 31 December of the year preceding the licence season, to the competent social/tax authorities as a result of contractual and legal obligations towards its employees.”
In our view the reference to the unpaid element does not only concern overdue payables but includes liabilities that have arisen but have yet to become due. The PAYE example is a good example of why this is important. A football club throughout the year will be withholding income taxes from its players every month though their pay checks. However, PAYE is only due to be paid to the tax authority shortly after the tax year in April. There is a timing difference between the liability arising and the due date and it is therefore possible that the club may have accumulated tax liabilities which are not yet due – and of course, this is important information for the regulator.

It is the same with self assessment. If you do self assessment tax returns, you pay some of your tax on account, and then when your liability is calculated you have some time to pay. Your liability will be less than your due amount, some money already having been paid on account.

It is our view that this requirement to provide information is part of the obligation on clubs, in order to allow licensing authorities to more easily monitor tax payments, to make sure that the club has understood their payments correctly, and to make sure that payments have not become overdue. The importance of this becomes clear with the Parma case (see below).

RANGERS WOULD HAVE GOT THEIR LICENCE ANYWAY
The third argument put forward against the analysis in our report is that none of this matters, because whatever the process Rangers would have got their licence anyway. The evidence here is the Malaga decision, which is quoted in our report. The argument is made that the Malaga case was much more serious, as the tax liability was several times the liability Rangers had. Malaga originally received their licence only to have it taken away when further liabilities were discovered. This is taken as evidence that Rangers would have received their licence anyway because their liability was much less to begin with.

In our report we accept that the Malaga case was more serious, and that it was open to UEFA and the SFA to grant a licence to Rangers if everything was properly declared. However, it is dangerous to rely on Malaga case as a precedent in this regard.

Consider the Parma case. Parma was denied a license in 2014/15 for having an unpaid tax bill of 300,000 EUR on March 31st 2014 despite fact that the Italian tax authority only first contacted them about the matter in April. The payments were in relation to 10 players they had on loan, and Parma’s understanding of the relevant tax rules was that the liability was only due in June.

In this case the authorities took a strict liability approach and decided that Parma fell foul of the FFP rules by not paying in line with their statutory obligations, even though they (i) had made a genuine error of judgement about what those obligations were (there was no allegation that they deliberately tried to hide the position); and (ii) they had not been informed of that error by the relevant tax authorities. It was their obligation to know the law and to follow it without the need for the intervention of the authorities.

The case also highlights why part of the licence requirements is to declare liabilities that have not yet become due (as discussed above), because that is the only way in which the Italian football authorities could have known about the issue.

Had the SFA taken the same strict liability approach, on this precedent Rangers should certainly have been denied a license. However, we do stress that we are not in the business of deciding what the correct decision should be, had the authorities had all the correct information in front of them. We simply make the point to highlight the danger of relying on one precedent when others point in the other direction.

This is the conclusion we drew – which, note, does not indicate whether or not a licence should have been granted:

The key point is this: the SFA had the right to check with HMRC directly the status of Rangers in respect of tax liabilities (that is, of overdue payables). From public information alone, no regulator could possibly have argued against carrying out such a check. And such a check could only have provided the answer that there were indeed overdue payables – either at 31 March, 30 June or both.

We do not know if those checks were not carried out, or if they were carried out and the results ignored. In either case, there was a fundamental failure by the SFA to meet its responsibilities towards Scottish football.
We hope this clears up some of the questions that arose from the report we published last week.

For those that are asking, we have yet to receive any response to our report from the Scottish Football Authorities. But to put that in perspective, it took ten years for the original proposals made by the Tax Justice Network after we were established in 2003, to become the global policy agenda at the G8 and G20 meetings in 2013. And we’re still working on making sure they are fully enacted, and that they fully include developing countries – which suffer most from the damage of financial secrecy.

With Newcastle relegated the Scottish press will be in overdrive over Ashley’s involvement with them now.
Whilst corruption continues to poison the game.

Wax on Wax off Daniel son……