Judge spells out ‘real and substantial risk’ of insolvency for Rangers

Rangers: Court has heard Rangers could be forced to pay £49m if they lose tax case.© STV

A senior judge ring-fenced almost £500,000 of Rangers' money because there is a "substantial risk" of insolvency if the Scottish champions lose their case against the inland revenue.

In a written ruling issued on Friday, Lord Hodge set out the reasons for freezing £480,000 of the Ibrox side's assets after the club was sued by its former chief executive Martin Bain.

Mr Bain is pursuing a damages claim against the Ibrox club of £1.3m, alleging breach of contract following the takeover at Rangers FC by venture capitalist Craig Whyte, 40, from former owner Sir David Murray.

The court heard the football club also faces two tax claims, the larger of which could leave them with a bill of £49m - £35m in tax plus £14m in interest and penalties.

Lord Hodge's statement expands on a ruling issued earlier this month but does not change the substance of the decision.

Lord Hodge wrote: "When I asked Mr Napier (Brian Napier, Rangers’ lawyer) if he could clarify Rangers' position in relation to the HMRC claim for £49m, which Mr Bain averred comprised a claim for £35m of tax and £14m in interest and penalties, he was not able to assist as he had no intructions in relation to that matter.

"I must therefore treat Mr Bain's assertions as to the extent of HMRC's claim as uncontradicted, although I acknowledge that the claim itself is the subject of an appeal by Rangers.

"I accept that the appeal against the HMRC determination is at an early stage and that there is scope for appeals by either party from the First tier Tribunal to the Upper Tribunal and thereafter the courts. I also recognise that a proof in this action is unlikely to occur before the summer of 2012."

Lord Hodge continued: "I am not persuaded that the outcome of the HMRC claim is too remote in time for the court to form a view as to the existence of a risk.

"I am satisfied that there is a real and substantial risk of insolvency if the tax appeal were to be decided against Rangers in the sums which have been discussed. In reaching this view I emphasise that I am concerned with the statutory test which addresses the degree of possibility. I am not speaking of the actuality or even probability of insolvency."

A spokesman for Rangers said the club was "vigorously appealing" against the decision.

"It should be noted the case taken against Rangers has not yet been proven or even heard yet. All that has happened is that a sum of money has been set aside if the club were to lose the case," the spokesman said.

Mr Whyte dismissed the idea that the club's existence was under threat in an interview with RangersTV.

He said: "In terms of the first case, we are looking through the paperwork of that at the moment.

"I believe the tribunal meets in November to discuss the other case. We are told by our counsel that he is confident we can win the case.

"Rangers will be here and playing at Ibrox long after we are all dead and buried regardless of what happens in the HMRC case - there is no doubt about that."

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