Scottish Premier League (SPL) club Rangers FC have been forced into liquidation by HMRC.

The club owes HMRC an estimated £21 million in unpaid taxes with a further liability estimated at £75 million in respect of liabilities arising from the operation of its EBT and a discounted employee share option scheme.

Businessman Charles Green had led a consortium aiming to takeover the club, proposing a company voluntary agreement (CVA) with creditors. HMRC had placed the club into administration in February, but has now rejected the CVA proposal calculating that it will do better with a liquidation.

Liquidation will give HMRC the chance for it to persue Rangers present management - owner Craig Whyte and past owner Sir David Murray.

Rangers' EBT was devised by set up by Murray in 2000, the club transferred almost £50 million into the EBT by 2010. The EBT was administered by trustees, who were independent of the club. They lent cash sums to both management and players via over 100 sub-trusts. The plan was that the sums would never be repaid. What has turned heads in this case is that some players were given side letters which confirmed contractual entitlement to payments from the EBT. The moment that payment becomes contractual it is difficult to argue that it is not actually earnings. The result of this could be a huge PAYE and NICs liability. As those in management cannot possibly have been unaware of what was going on, and as they were advised by top advisers who must have also have been able to inform them as to the technical position of making EBT payments contractual it seems that tax penalties will apply in the range of 70% to 100% of tax lost. If it is not possible to recover sums from the company HMRC will, via the liquidators be looking to the management.

Rangers' discounted share options scheme was smaller, it is estimated that the tax bill for this is in the region of £4 million. Funds were transferred into offshore companies, share options were granted to players in those companies. After exercising their options the players ended up as the owners of cash rich offshore companies.

Apart from the tax issues, there are now problems for Rangers under the Scottish Football Association's (SFA) rules. Payments received by players from the trusts should have been declared. Green is expected to purchase the club from the liquidators. There is unlikely to be much of a return for the company's unsecured creditors after professional fees are deducted but fans will be more concerned to see what punishment will be handed down by the SFA and SPL.