Arsenal could afford to buy HMRC off. They probably ended up paying less than they owed as they didnt fight it. Ironically Rangers who cant afford to buy it off will probably have to pay more by fighting it- ie the tax, the penalties, interest, legal fees etc etc etc
Nobody knows, that's why it's all speculation. If Arsenal used this same method and broke the law why was it settled out of court? Definition of legal loophole legal flaw allowing people to get around law an area in the law that is insufficiently explicit or comprehensive and allows the law to be circumvented
October 9, 2005 Arsenal get £11m tax-dodge bill ARSENAL football club has been hit with a bill of nearly £12m after an investigation into a tax dodge used on payments made to players and agents. The north London club is set to be the first high-profile victim of a campaign by HM Revenue and Customs (HMRC) against tax avoidance in the game. Arsenal set up a series of front companies and offshore trusts to reward its stars and save millions in tax every year. On average, players were left paying about half the 40% tax rate for high earners. The scheme, revealed in The Sunday Times last year, is now considered illegal by HMRC, which is demanding at least £11m back tax. Payments of more than £4m to agents have also been ruled not to be an “acceptable business expense”. Arsenal must pay an extra £700,000 Vat on these. Premiership sources fear that the actions by HMRC — a merger of the former Inland Revenue and Customs — will make it harder to attract top foreign players to Britain when they can still benefit from tax-free payments abroad. Thierry Henry, Arsenal’s star striker, has disclosed that he will not begin negotiations for a new contract until next summer, prompting fears he will quit England. Peter Hill-Wood, the Arsenal chairman, said: “The Revenue are crawling all over us. We thought we acted perfectly legally . . . but now maybe the rules have changed. We are not the only people who have been doing this. It’s obviously not helpful [in retaining the services of top foreign players].” The club’s tax dodge was revealed in documents detailing the divorce case of Ray Parlour, a former Arsenal midfield player, who was forced to disclose his salary details to the courts. It showed he earned a pre-tax package of £1,557,267 for the 2001-2 season on which he paid £350,000 tax, a rate of just 22%. In its forthcoming annual report, Arsenal will detail the £11m it has put aside to cover the payments. Hill-Wood said he believed HMRC was also investigating individual players. It is not clear if the club may be forced to pay any extra tax they owe to stop an exodus of its stars. It is understood the tax investigation has been discussed by Premiership clubs, which are considering whether to make formal representations to the Treasury. A spokesman for the league said he was aware the Revenue had been probing Vat relief on agents’ fees and tax savings on players’ wages. Top Arsenal players usually sign two contracts. The first pays them an annual basic wage mostly taxed at the higher rate of 40% plus National Insurance. However, they also have a second “shadow” contract for performance-related bonuses that reward success on the field. These can account for up to half the total pay package and are paid via two offshore front companies that accountants say enables foreign players to avoid almost all tax. As a result, Henry is estimated to have saved almost £70,000 a year, Arsene Wenger, the manager, about £118,000 annually, and Dennis Bergkamp more than £45,000. British-born players were able to cut their tax rate from 40% to 25%. Middlesbrough and Leeds United have also previously used employee-benefit trusts to reward players. Where does it say Arsenal settled out of court? The Bill was £11m, they paid it, end of.
A lot of people have an opinion on this yet they have no idea what they're talking about. What Rangers done wasn't illegal, tax evasion is illegal and thats not what Rangers done. HMRC's whole case against Rangers is based on Rangers misuse of the EBT's, at no point have Rangers been accused of tax evasion or anything illegal
They couldn't even afford to pay the £2.8m bill to HMRC which with interest and fines now stand at over £4m.
This is a claim for money - not a criminal prosecution. It can be settled by agreement of the parties ourt of court to avoid legal fees and interest. Rangers bill is so big they cant afford to buy their way out. There is a risk both sides could win/lose this one Arsenal weighed it up and paid £11m to avoid the risk of losing. HMRC took the £11m against what was owed to avoid the risk of losing Rangers could settle out of court too - indeed they tried - but the tax man wouldnt take whites offer of £1
The only figure I have found is £12m, if they did settle out of court (I can find no record of that anywhere incidentally) they managed to get a WHOLE £1m reduction on the bill. I doubt they did settle out of court because the HMRC don't work like that, they hit you with a bill and you pay it first then appeal. Even with a 10% reduction on the total bill it's not exactly looking like a result.
You still get fined whether or not it's "illegal" or not, they may not have broken any laws but they did lie and have been caught out.
Of course it does, if people want to talk about it and get digs in about Rangers then it would work a bit better if they got the facts right. Going around saying Rangers done something illegal is nothing but a lie. The only thing worse than ****s talking pish and telling lies is when people try to talk about something they don't have a clue about
