The Supreme Court has issued its judgement in RFC 2012 Plc (in liquidation) (formerly The Rangers Football Club Plc) v Advocate General for Scotland [2017] UKSC 45 and has agreed with HMRC that loans made to employees under the club's EBT loan scheme were in fact remuneration and so subject to tax and NIC.

  • Football players and club executives were provided with loans from an employee benefit trust (EBT). These substantially topped up player's pay. The EBT agreement was made via a side-letter that the club tried to hide from the Scottish Premier League (SPL) and the club argued that the loans were not remuneration both in terms of the SPL rules and to HMRC.
  • The loans made were never to be repaid and only the notional interest was taxed on a P11D to the extent that it was unpaid interest.
  • HMRC argued that as the loans were not repayable they were disguised remuneration and raised substantial assessments for unpaid tax and NICs.
  • The club appealed. Mid-way through the case it went into liquidation and the case was continued by the liquidators.

Case through the courts

In 2012 the First-Tier Tribunal (FTT) found in favour of Rangers:

  • The loans were genuine loans
  • They were not employment earnings
  • The scheme was not a sham

HMRC appealed to the Upper Tribunal (UT) on the basis that it was disguised remuneration, not loans

In 2014 the UT reaffirmed  the FTT view that they were genuine loans:

  • HMRC appealed on the basis of a side letter that indicated the loans were remuneration
  • Rangers were in liquidation by this time due to other tax debts and there was a potential risk that the liquidators would demand repayment from the players, depending on the terms of the contract
  • HMRC appealed and were initially refused leave to do so by the UT

HMRC were later granted leave to appeal to the Inner Court of Session (CS)

In 2015 the CS allowed HMRCs appeal:

  • The FTT and UT erred in law
  • The cash contribution to the EBT was in consideration of earned services by the employee
  • It was a ‘mere redirection of earnings which did not remove the liability of employees to income tax’
  • The CS focused on the bonus terms in the side letter which indicated it was part of the remuneration package

Rangers appealed to the Supreme Court

The Supreme Court issued its decision on 6 July 2017, dismissing Rangers’ appeal

  • The CS were entitled to take a purposive approach to the interpretation of the tax allow applicable to this case
  • The loan was a payment made in consideration of employment services provided
  • It was a redirection which did not remove the liability to tax and NIC

It should be noted that this case will have no impact on the current Rangers Football Club, which are a different company. Any reference to Rangers above, is to RFC 2012 Plc.


EBT planning was popular from the 1980s until recently when the disguised remuneration rules were introduced to block loan schemes. A large number of employers were waiting for the outcome of the case and many are now settling with HMRC under the EBT new settlement opportunity. A lay observer may care to note that successive governments and HMRC were either unaware of the extent of this part of the tax avoidance industry, happy to ignore it or were otherwise locked in some kind of unexplained paralysis.

HMRC are likely to continue to issue Accelerated Payment Notices based on the decision.



EBT new settlement opportunity

Accelerated Payment Notices

Disguised remuneration

Anti-avoidance: HMRC’s spotlights

Case link: RFC 2012 Plc (in liquidation) (formerly The Rangers Football Club Plc) v Advocate General for Scotland [2017] UKSC 45