gs ...
Res 12 ....unabridged. The First part.( Second page)
21 March 2011 (am) MIH and RFC representatives meet with Cairn Financial (pre-takeover financial advisors to Craig Whyte). Meeting notes taken by Cairn include an entry that reads
“Discounted Option Scheme – £3.2m PAYE liability to be paid to HMRC by 31/3”. That information could only have been provided by the MIH or RFC attendees and is consistent with the rounded amount of the computation provided by HMRC on 23 February 2011. The requirement to pay by 31/3 may suggests the recognition by RFC that they could not carry any “overdue payables” beyond that date if they were to obtain a UEFA Licence for 2011/12.
Source: Meeting notes taken by Cairn Financial, first point of Ref 4c
21 March 2011 (pm) Following the morning meeting with Cairn Financial, HMRC met in the afternoon with MIH and RFC representatives, as requested on 14 March 2011, to seek a solution to HMRC’s assessments. Although liability had been accepted on 18 February 2011, the actual amount due had not been confirmed. Discussions on the quantum of the liability resulted in the amount being agreed as £2,827,801.
That was a compromise figure, that saw HMRC’s claim in respect of Craig Moore being dropped as “out of time”, in the absence of a side letter that might have shown deliberate intent or concealment. RFC also acknowledged that HMRC had missed one payment to Ronald De Boer, which was added to the computation to produce the final agreed figure.
HMRC was told the payment was totally dependent on the Bank agreeing to fund it, but as long the liability was paid, or a contract to pay was signed, HMRC could be flexible on timescale to pay.
Sources: Meeting notes taken by HMRC in Ref4a and the Witness statement by an HM Inspector of Taxes, to an action at the High Court of Justice in London, dated 21 March 2012, at paras 20 & 22 of Ref4b.
NB: Had a contract to pay been signed before the 31 March 2011, it would have allowed RFC to tell the SFA that the tax liability was not an overdue payable under Art 66 Annex VIII (2).
It was noted by HMRC that RFC was now seeking to co-operate with HMRC in an effort to lower their “high risk” rating in advance of the proposed sale of the club.
The liability of £2,827,801 was the same figure as that specified in the Share Purchase Agreement, which saw MIH sell its majority shareholding in RFC to Craig Whyte. The same figure also appeared in subsequent creditors’ claims and court documents a year later. This demonstrates that, by 21 March 2011 at the latest, that a liability existed, was recognised and accepted, was no longer potential or negotiable but a “payable” to HMRC , and in terms UEFA regulations was an “overdue payable” in the absence of a written contract to extend the deadline for payment as well as failing to meet the other three conditions that would excuse the payable being overdue.
30 March 2011 Grant Thornton, Auditors to RFC, provide a letter in support of RFC’s UEFA Licence application, confirming that all payroll taxes have been paid by the due dates, but
“with the exception of the continuing discussion between HM Revenue and Customs in relation to a potential liability of £2.8m“
That statement is at odds with the known positions of acceptance of a liability on 18 February 2011 and agreement as to the amount on 21 March 2011 between HMRC, MIH and RFC and that payment was due. Nor is there any indication of any “continuing discussion” between the parties.
The earlier meeting with Cairn Financial made reference to the liability having to be paid by 31 March 2011. That date is consistent with a need for clubs to have no “overdue payables” as defined by the UEFA Article 50, where proof of such in order to secure a UEFA Licence for the following season is required. The SFA’s position on proof of compliance was documented in the same source email that referenced the Grant Thornton letter.
Source: The existence of the Grant Thornton letter was confirmed in a draft press announcement set out in an email dated 7 December 2011, by SFA CEO S Regan, to be cleared by RFC. It can be found in Ref7a along with reactions by others at Ibrox on seeing it.
31 March 2011 The cut-off date for submission of applications for a UEFA Licence for season 2011/12
1 April 2011 RFC published their unaudited interim accounts for the period to 31 December 2010. Provision was made for a tax liability of £1.7m and an interest provision of £0.9m, both related to the DOS scheme. In the accompanying notes the RFC Chairman also described the liability as
“potential” and that
“Discussions are continuing with HMRC to establish a resolution to the assessments raised”
Sources: The announcement of the RFC interim accounts at Ref8 on 1 April 2011 and the witness statement by an HM Inspector of Taxes, to an action at the High Court of Justice in London, dated 21 March 2012, at para 21 of Ref4b.
2 April 2011 The RFC chairman, interviewed by J Traynor and K Jackson of the Daily Record following the publication of the accounts on 1 April 2011, is quoted regarding the WTC saying it
“has just arisen in the last couple of months.”. In a separate article by J Traynor it is reported that
“The bill dropped through the Ibrox front door only three weeks ago”
Source: The Daily Record
19 April 2011 The SFA granted RFC’s application for a UEFA Licence for season 2011/12.
Source: Andrea Traverso, UEFA Head of Club Licensing, letter in response to the Resolution 12 solicitors, dated 8 June 2016 Ref39
It is important to recognise that the status of the DOS tax liability at the cut-off date was crucial to the award of a UEFA Licence. All the documentary evidence uncovered from HMRC and court sources points to the liability having been accepted and agreed prior to the cut-off date and, as such, should have been designated as an “overdue payable” as defined in the UEFA licensing regulations.
We see from the Grant Thornton letter and the subsequent statements by RFC officials that they continued to describe the liability as
“potential”, despite the weight of the evidence above being to the contrary.
It is inconceivable that RFC was unaware of the 31 March deadline and the implications for the club’s participation in UEFA competitions if they were to acknowledge that they had an overdue payable. Andrew Dickson, RFC’s football administrator, looked after player contracts paperwork since 2004. He also sat on the SFA’s Licensing Committee at the relevant time. Both he and Campbell Ogilvie, the SFA Vice President at the time, who was involved in the establishment of the DOS Scheme back in 1999, had to have had knowledge of the scheme and the relevant UEFA rules. It stretches credulity that both Dickson and Ogilvie were unaware that HMRC was pursuing payment before 31 March 2011.
It is instructive to note that the Crown in the Craig Whyte trial advised the jury that, under Scots Law, a fraud is defined as:
“A false pretence, dishonestly made, to achieve a practical result”
Does,
“incorrectly describing the status of the DOS liability as potential, while knowing that description to be wrong, in order to obtain a UEFA Licence” fit the description of a fraud above?
