UEFA Licence 2011 - Time to put this to bed
Just as a preamble, I have said in the past on here that I have a number of acquaintances whom I met through Rangers over the years I was fortunate to have hospitality with the club. Over a period of over ten years a small group of nine of us kept close even after most of us had moved on to pastures new including moving abroad and down south.
Between us we have a huge professional and financial background and range from self employed small family businessman through to audit partner and qualified lawyer. We often share emails, thoughts and views on all things Rangers and it’s fair to say that in the most we hold pretty similar opinions on a lot of things. Nine times out of ten, our thoughts and views are not aligned with the majority of our support but we offer them when asked without fear nor favour. Never was that more prevalent than back in 2011/12 when we could see exactly what was happening and I was sending out all the warning signals much to a lot of unhappy replies.
I thought it important to give this background as what I'm about to write has been shared by email between us all, checked and verified as standing up by people who have an advantage over the general Scottish football fan and I don’t mean that to sound demeaning in any respect, just to point out that checking information, looking at regulations and legal documents etc. is what they have done most of their working life.
The recent report which claims that the SFA wrongly approved a licence for Rangers to play in Europe which was compiled by an Independent group (The Offshore Game) based on information supplied to them by Celtic supporters. The first thing to note is that, for once, I genuinely believe the author is independent and not a Celtic fan/Rangers hater. I believe however the evidence presented was tainted and hand-picked before sending it however I am about to prove why the report is wrong and why all the moon howling by Celtic fans on Resolution 12 is dead in the water.
In relation to the report there are 4 main accusations, which mirror the ones made constantly by Celtic fans, and Auldheid in particular, not forgetting John James though he falls into the first category:
1) As at 31st March 2011, Rangers had an overdue tax bill which meant the SFA should not issue a licence to play in Europe
2) As at 31st March 2011, Rangers claimed this bill was “a potential bill” instead of stating it was actually a bill which meant the SFA should not issue a licence to play in Europe
3) Even if the bill at 31st March was only “a potential bill” as at 30th June 2011, it had became a proper bill which meant the SFA should not issue a licence to play in Europe.
4) As at 30th June, Rangers declared that they had a bill but were waiting on a schedule of payments from HMRC, which meant the SFA should not issue a licence to play in Europe.
In order to understand each of the 4 accusations we first need to understand the actual rules they refer to which can be found here:
In relation to the first 2 issues, Article 50 of the rules states:
Article 50 – No overdue payables towards employees and social/tax authorities
1 The licence applicant must prove that as at 31 March preceding the licence season it has no “OVERDUE PAYABLES” (as defined in Annex VIII) towards its employees as well as social/tax authorities as a result of contractual and legal obligations towards its employees that arose prior to the previous 31 December.
To understand what constitutes an “OVERDUE PAYABLE” we need to turn to Annex VIII as directed.
Annex VIII states:
ANNEX VIII: Notion of ‘overdue payables’
1. Payables are considered as overdue if they are not paid according to the agreed terms.
So to be crystal clear, a Social Tax is ONLY considered as “OVERDUE PAYABLE” if there is a debt owed to HMRC (or other tax authority) and that the terms of the amount due have been agreed then not met. Article 50 and 66(later) solely deal with overdue pyables.
To help understand if our club had a debt which met the above, we can use the evidence in The Offshore Game report. Here is the timeline of the evidence:
3rd March - Andrew Thornhill recommends to the Rangers Board that they "seek a settlement" with HMRC in relation to the Small Tax Case
21st March - A hand written note states that HMRC have agreed "IN PRINCIPLE" that the settlement seems the right thing to do. A decision which then needs to become a formal offer by HMRC and an agreement by the Club.
31st March - 1st disclosure due to SFA for licence by the Club. At this point, the Social Tax is NOT overdue as no formal agreement has been reached and no payment date set by HMRC. This means according to Clause Viii of UEFA guidelines they are not "overdue if not paid according to the agreed terms" I have no idea if Rangers disclosed them on the submission, however if they did, they would have done so without any formal disclosure requirement.
1st April - Rangers released their interim accounts confirming: "Discussions are continuing with HMRC to establish a resolution to the assessments raised." This is in line with the evidence presented in the report.
Again to be clear. As at 31st March 2011, HMRC had not made an official agreement with Rangers nor set out the terms of which they wanted any money to be paid. According to UEFA own rules, the £2.83m was NOT an “OVERDUE PAYABLE” and therefore required no disclosure whatsoever as part of the licence process.
Therefore the evidence actually shows that Issue 1 and Issue 2 outlined above are false and that the licence requirements were fully met.
Moving onto the more contentious Issues 3 and 4. To understand if we broke any guidelines here, we need to refer to Article 66 which states:
Article 66 – No overdue payables towards employees and/or social/tax authorities – Enhanced
1 The licensee must prove that as at 30 June of the year in which the UEFA club competitions commence it has no overdue payables (as specified in Annex VIII) towards its employees and/or social/tax authorities (as defined in paragraphs 2 and 3 of Article 50) that arose prior to 30 June.
2 By the deadline and in the form communicated by the UEFA administration, the licensee must prepare and submit a declaration confirming the absence or existence of overdue payables towards employees and social/tax authorities.
4 The following information must be given, as a minimum, in respect of each overdue payable towards social/tax authorities, together with explanatory comment:
a) Name of the creditor;
b) Balance overdue as at 30 June, including the due date for each overdue element.
5 The declaration must be approved by management and this must be evidenced by way of a brief statement and signature on behalf of the executive body of the licensee.
In summary the above requires the same disclosures as 31st March but clarifies what you need to do in the circumstance that you do have an overdue payable and this is where the confusion really kicks on for the authors and Celtic fans complaining about it.
For understanding of our situation, here is the timeline between 1st April and 30th June as presented by the author of the report:
5th May - HMRC make a formal offer of settlement for the club to decide to pay or not and give the club 11 days to sign the offer(16th May) and a further 30 days after the signature to pay it(15th June). At this stage, this is still not an "overdue payable" according to UEFA rules. This letter also confirms that no bill was formally agreed prior to 31st March.
6th May - Craig Whyte takes over Rangers.
20th May - As Rangers, now under different ownership, failed to agree to the offer received on the 5th May sent to and agreed by the previous owners, HMRC issue Formal determinations to the value of the agreed amounts made by the previous Board. The amount is now an “overdue payable” according to UEFA rules and subject to disclosure for the first time.
6th June - MCR write to HMRC on behalf of the club asking HMRC to consider a payment schedule and to allow more time for the new owners to work out cashflow and working capital.
There is then no evidence of any replies from HMRC which is quite surprising given that other documents from HMRC which paint a "bad picture" seem readily available yet the 1 document which can prove beyond any doubt the situation at 30th June is missing.
30th June – Ken Olverman emails Craig Whyte to confirm that he is disclosing the “overdue payable” and commenting that they are waiting a schedule of payments from HMRC as per the letter dated 6th June.
CRUCIAL CLARIFICATION POINT
UEFA regulations do not forbid a club from having an overdue payable. UEFA regulations do not state that if you have an overdue payable, that you cannot get a licence. UEFA regulations simply state that if you have an overdue payable then under Article 66 section 4 that you must disclose the debt and state why its overdue. Ken Olvermans email is 100% consistent with this. Rangers disclosed their overdue payable. Rangers followed the regulations. The licence was issued.
The report gets another aspect hugely wrong by referring to The Malaga Ruling. It states:
"The (Malaga) judgement confirmed that in order to meet the rules, a club must have written agreement in place to pay any outstanding tax liability" which is completely wrong.
The Malaga judgement confirmed that the "EUR 8,450,000 had to be considered as OVERDUE, because of the lack of any written agreement between Malaga and the tax authorities." This ultimately means that as an OVERDUE amount, Malaga had a duty of disclosure under Pargaraph 4 of Article 66. It does NOT mean that they had to have a written agreement in place to meet the rules. It also does NOT mean they wouldnt have got a licence if properly disclosed. Malaga failed to disclose this amount completely and this is why they breached the rules. The overdue payable in itself was NOT a breach of the rules.
It is important to note at this stage that if any club has a written agreement with the tax authority then no disclosure is required at all. This does not change anything in relation to our situation, as we did not take that route. We disclosed it.
It is also even more important to note that in the case of Malaga, on the 30th June, they disclosed an overdue payable of 9.42m EURO(this was in addition to the undiscosed amount above) yet they were granted a licence by the RFEF (Spanish SFA) and the licence was rubber stamped by UEFA. Rangers fully disclosed an overdue payable of 3.4m EURO(35% of Malagas) yet some would have you believe the SFA should not have granted the initial licence. They use Malaga ruling (wrongly) when they want to and ignore it when it doesnt suit the agenda.
SO THERE WE HAVE IT
31st March – HMRC had not officially agreed the final bill and given a due date means no disclosure was required. Rangers may have actually have disclosed it incidentally, but it was not a requirement.
30th June – Rangers had to disclose the overdue payable and comment on the current position. They did this.
There is a further checkpoint at 30th September, however by this time, Rangers were out of Europe and have not had a licence since. Any noise around the 30th September is just nonsense.
THE OFFSHORE GAME
All of the above has been sent to the author, over various emails and he agreed it was “very thoughtful” and “considered”. A review was promised with the co-author however on Twitter yesterday, the account continued to reply to tweets on the subject with no sign of taking a step back and considering this game changer. A few of my acquaintances have taken to other forms of Social Media to ask questions of others with a lot of sweeping, blocking and deleting going on. Its funny that all of these people cry for these things to be out in the open yet when presented with credible evidence, they shrink into the tortoise shell.
We await a reply and correction from the author of the report unless evidence is hiding in the wings to disprove the position above.