Employee Benefit Trust
The Offshore Tax Scheme
What's brought this proud Scottish institution to the edge, and more importantly, who is responsible? At the centre of Rangers'
problems is an offshore tax scheme used to pay players over 10 years. HMRC claim this scheme was tax evasion and that Rangers could
owe up to £75 million. Rangers say they were just exploiting a loophole which until 2010 was perfectly legitimate.
Alastair Johnston "I knew they existed because I've been a shareholder for a long time, it was reported in the annual accounts
that the schemes existed. So nobody should be surprised by them. We had a major accounting firms representing Murray, that were
retained to represent Murray in dealing with the tax authorities. Again, I think we're entitled to assume that these accounting
firms thought there was no validity to what we were representing, they would not have taken their case."
But I wanted to find out who was right, Rangers or the Taxman? The BBC has obtained a wealth of information which could provide the answer.
Tax schemes can be a bit complicated, but this one is very simple. It's called an Employee Benefit Trust or EBT. So how does it work?
Well the company deposits funds in an offshore trust, the trust then divides the money into sub trusts, allocated to individual
employees. They then could apply for a loan which, apparently, they didn't have to pay back. And, bingo, neither the company nor
the employee pays any income tax. Everybody's happy, except, of course, the Taxman.
Working on investigations, one doesn't get the opportunity to interview porn stars every day, but that's exactly what I've got to
do today. Not just any old porn star either. This porn star doubles as a tax adviser and he's a tax adviser that's partly responsible
for bringing the EBT scheme to the Murray Group and to Rangers.
Are you responsible, then, for the mess that Rangers now find themselves in?
Paul "No, because if I build you a bus and it's designed according to specifications, I'm not responsible for who you
carry in the bus. I can't stop you driving into a brick wall and I can't stop you running over an old lady. That's not what
the bus is for, and that's the key, isn't it"
What is a Rangers fan to think, then, when he sees you on this programme, the struck-off lawyer, a pornographer, who has
been the person who has advised the Murray Group on the very scheme that has driven their club to extinction.
Paul "Well, porn doesn't make you blind, running EBTs badly does. The problem, as we all know, is how they implemented
it, the structure, how they drove the bus. But, then again, it's only a problem if HMRC win. If HMRC don't win, then they'll
come back and say Paul all the Rangers fans in this country want to thank you because you have single-handedly saved Rangers
FC £50 million."
So if Paul Baxendale-Walker says his scheme can be perfectly legal, why is the Taxman chasing Rangers? I've developed a
few trusted sources who might be able to answer that question.
One of them, in particular, had a treasure trove of documents that he wanted me to have. To ensure secrecy, we both
travelled to a covert location outside Scotland.
What he's promised to do today, is let me see documentation, tribunal documentation, that hasn't been seen by any journalist
so far. And it will, he says, lay bare the role that Rangers played in the EBT scheme which has contributed to the mess that they are today.
It was worth the trip, I was now inside the tax scheme that threatened to put Rangers out of business. I've been given access to
some of the most sensitive, most highly gathered documents you can imagine in this story. But there are so many court files,
documents, letters, notes to process, we decided to set up a data room which will provide the answers to the questions that
so many Scottish football fans have been asking in this past year.
The first thing the documents reveal is who benefited most. Coming in at number one, was not the highest-paid player Rangers but Sir David
Murray. "Total loans for sub trust number one Sir David Murray, £6.3 million"
Rangers and the Murray Group contributed funds to the trust, with Sir David taking the biggest single payment. Sir David
Murray declined to be interviewed. But told the BBC "I personally have never received any payment from any trust which involve
contributions coming from Rangers football club."
By 2010 Rangers had contributed more than £47 million to the trust.
"Footballers 63, Rangers staff 24, Murray Group employees 24. Total Murray Group remuneration sub trusts 111."
So, if I thought the man behind sub trust number one was a shock, sub trust number two was even more surprising. It involved
a manager who had left the club 10 years previously.
"Graeme Souness sub trust number two £30,000"
It was Graeme Souness who'd lead the Rangers revolution and set them on the road to famous run of nine championships in a row.
He left the club in 1991. 10 years later Mr Souness received £30,000 from the trust. So what was that for? He was managing
Blackburn Rovers at the time and just five weeks after asking for the cash, Mr Souness completed the signing of
Turkish player Tugay Kerimoğlu from Rangers.
The BBC has seen files which show that HMRC suspected that this cash could have been an illegal payment in relation to
the transfer but found no additional documentation to verify it. Sir David Murray says our information is wholly inaccurate.
And Mr Souness did not respond to pur allegations.
It's Saturday, May 5 and the last home game of the season. Sammy's club is in limbo and if they don't find a new owner,
Rangers will go bust.