Taxman v Footie Fan

Is it a coincidence that HM Revenue & Customs is facing its second major football “cup tie” in a week?

Yesterday Craig Whyte, the chairman of Rangers Football Club, took the unusual step of applying to have the club, one of the two teams that have dominated Scottish football for the last century or so, put into administration because Rangers cannot afford to pay a £75m tax demand. Today HMRC responded by deciding to push Rangers into administration first, so it could control the process.

I will go into the whys and wherefores of the Rangers case in bit. But first, some context.

The war between HMRC and British football has been raging for some time. The tax authorities have been concerned that club, players and officials have not been paying their fair share of tax, using such schemes as registering image rights in offshore tax havens (so that you pay a service company when you publish photos of a player, so avoiding income tax) or employing footballers and managers on a non-domiciled basis.

The taxman has been investigating for years and has had some notably behind-the-scenes successes with major football clubs – football finance spods might like to look at the accounts for some Premier League clubs to see interesting tax adjustments.

But clubs have relied upon the concern HMRC might have for its public persona to play chicken with the taxman, getting HMRC to back down on large tax demands rather than push clubs into administration. In the last couple of years, though, HMRC has got tough, as anyone who has followed the tribulations of Portsmouth FC among others will testify.

Yet it seems that HMRC wanted to make an example of someone for all these alleged tax scams. That’s why it insisted on taking Milan Mandaric, the former Portsmouth and now Sheffield Wednesday boss, and Harry Rednapp, the former Portsmouth and now Spurs manager, to the high court on tax evasion charges. The gamble backfired when both walked free last week.

Back in Glasgow, Craig Whyte no doubt looked on with relish. He wanted to force a settlement with HMRC and his strategy was to force the taxman into a climbdown, believing HMRC wouldn’t want to a second PR #fail in a week. The taxman, though, seems immune to the bad feeling that it would cause by forcing Rangers into administration. On the news last night, even Celtic fans thought this situation was a blot on football.

HMRC, though, can’t win. If it climbed down, it would seem that it is soft on high profile tax cases, following on from its humiliation over the Vodafone and Goldman Sachsdeals. Pushing Rangers over the edge is football’s equivalent of the Highland clearances.

Who knows where this will end?