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T

The Raging Oxter

Well-Known Member
Nov 17, 2010
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Criminal investigations have been launched into tax schemes sold by a key shareholder in Rangers Football Club, The Times has learnt.

Richard Hughes, the co-founder of Zeus Capital, the finance company at the centre of the Rangers takeover, also set up Zeus Partners, which created and marketed a £134 million film investment scheme that HM Revenue & Customs suspects may be part of an illegal effort to generate millions of pounds in tax relief.

The Revenue is understood to be investigating 17 companies set up by Zeus Partners. Criminal investigations by HMRC are reserved for the most serious cases of suspected illegality including those where “only a criminal sanction is appropriate”.

Mr Hughes, who has more than two million shares in Rangers, a stake of 6.8 per cent, played a pivotal role in the purchase of the Glasgow club after it went into administration in February. The collapse came after Rangers’ previous owners became embroiled in disputes with the Revenue. The club has been beset by tax problems that led to the new Rangers, who play at Ibrox Stadium, being forced to start from the fourth tier of Scottish football this season.

The Revenue claims to be owed an estimated £73 million in tax and penalties after the club used a tax avoidance scheme to pay its players for nearly a decade. Rangers went into administration over a separate tax problem, when Craig Whyte, who bought it last year, failed to pay an £18 million PAYE bill.

When Zeus Capital and the businessman Charles Green bought the club for £5.5 million in June, they presented their consortium of investors as a “new beginning”. But a year before the acquisition, Revenue officials raided premises associated with Zeus Partners, two sources told The Times, as well as offices of Seven Arts Entertainment, the US film company that was counterparty to the deal. Neither Zeus Partners nor HMRC commented on the alleged raid.

“They showed up, knocked on the door, and said, ‘We want to come and look at the records’,” one person said of the Seven Arts raid. “They took everything under the sun.”

Mr Hughes, who has one of the biggest shareholdings in Rangers, founded Zeus Partners as an offshoot of Zeus Capital, in 2006. It was set up so wealthy individuals could access “returns that Zeus Capital has been achieving for its corporate clients”. Two other partners run the day-to-day business, although one said that Mr Hughes retained an “active role”.

Mr Hughes stands to make millions of pounds when Rangers floats on the stockmarket before Christmas. Three other Zeus Capital executives, who do not work at Zeus Partners, own stakes in the club, making the finance house collectively its largest owner. There is no evidence that Zeus Capital marketed schemes similar to those offered by Zeus Partners. The Revenue is not investigating Zeus Capital, the company involved in the Rangers takeover.

Zeus Partners’ controversial film deal attracted about 165 high-net worth individuals including Hugh Sloane, the hedge-fund mogul and Tory donor, and Laurie McIlwee, chief finance officer of Tesco. Individual investors are not being investigated by HMRC, however.

Each investor was offered a “high-risk film production” deal to buy a total of eight new films and some library content from Seven Arts.

The deal was structured so that, in the event that the films were “blockbusters”, the investors would double their money. If they did badly, the investment would be largely wiped out and the cost could be written off against the investors’ other income.

Films purchased from Seven Arts included Knife Edge, a 2009 British thriller starring Hugh Bonneville and Tamsin Egerton, The Winter Queen, starring Milla Jovovich, and Autopsy, a horror film directed by Adam Gierasch.

None appears to have achieved anywhere close to the “blockbuster” level that would have generated profit. American Summer made only $2,269, according to Box Office Mojo. Deal, a 2008 film starring Burt Reynolds, is said to have made $61,625.

A year after signing the deal in May 2008, Zeus Partners declared that each of the 17 companies was worthless, their accounts show, enabling investors to claim tax relief.

At the time, however, a number of films had yet to be released. One, The Winter Queen, had not been made. “One of the key questions is how would the investors have known the stock was worthless as early as 2009, when some of the titles had yet to be released,” a person close to Seven Arts said.

Up to 84 per cent of an investor’s contribution was financed by a loan from Seven Arts. The loan was secured against the companies, so investors were not personally liable if films failed.

An investor who put in £160,000 could borrow about £840,000 and claim tax relief on the full £1 million without being liable to pay back the loan. For a high-net-worth investor the tax relief would be between £400,000 and £500,000.

Rebus Investment Solutions, a company representing several disgruntled Zeus investors, said their clients had been advised that the film deal was a “win-win scenario”. “The deal was based on the notion that, if the films were successful, investors would see huge returns and, if they were unsuccessful, they would be able to claim tax relief on the losses,” a spokesman said. “Such a bullish view failed to take into account the significant risks, including potential challenges by HMRC.”

A Rangers spokesman said yesterday that Mr Hughes was “one of a number of minority investors” and had “no involvement in the management of the club”, and that Rangers had “no business relationship with Zeus Capital”.

However, in June, Zeus Capital said that it “worked in conjunction with Charles Green to complete the £5.5 million acquisition of Rangers”. In the same month, Zeus Capital was described by Malcolm Murray, the new chairman, as “the primary advisers” on the Rangers deal.

Mr Hughes is understood to believe that the focus of the criminal investigation is on Seven Arts, not Zeus Partners. He denied that the film investments could be illegal or amounted to tax avoidance. The investments had been approved by qualified accountants before being marketed. He also said that he had not been contacted by HMRC in relation to the film investigation since it began about 18 months ago.

A spokesman for Zeus Partners said: “Zeus Partners provided a number of high-risk investment opportunities, backing highly successful entrepreneurs with a proven track record across a number of sectors. Individual investors had the option of claiming HMRC statutory relief in the event that the investments were unsuccessful. We are aware that there is an HMRC investigation into these and other investments under way at this time and Zeus Partners is providing its full co-operation to HMRC.”

Seven Arts strongly denied claims that it, rather than Zeus, was the focus of the Revenue investigation. Peter Hoffman, chief executive of Seven Arts, said: “There was nothing fraudulent about the transaction, it was perfectly valid. These were real movies we were intending to make money on.”

Mr Sloane said he had not claimed for tax relief on the Seven Arts investment. Mr McIlwee and the Revenue both declined to comment.
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http://www.thetimes.co.uk/tto/money/tax/article3587849.ece

Also:

Rangers Tax-Case ‏@rangerstaxcase
RTC Exclusive: Charles Green is the subject a new tax inquiry- separate from the Zeus investigation.


Oh dear.
 
More obsession from the mhanky bheasts I see.

One word timmy, one single solitary word: Juninho had an EBT an aw <grr>
 
Trevor Santos said:
More fool me? What can I do about it?
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Not what you can do about it, what you thought the SFA were going to do about it.

The fit and proper person test isn't worth a ****. I said it at the time of Craigy Craigy Whyte with Rangers and I'll say it again now with Richard Hughes and Sevco. The test is meaningless and imho they fail as a regulator in not tightening things up.
 
The SFA have stated that they have not the ability to check if people are fit and proper it is up to the clubs.
That is fair enough because Green is doing the same to Rangers as Whyte did. Whyte took approximately
9 months to take Rangers into administration. The only question there is to answer is will Green manage it
in less than the 9 months.

I think the SFA knew damn well when Whyte got the new buyer for Rangers that Green could not be a Fit and Proper
person. Con men like Whyte only do business with people of similar business ethics.
The big losers are the Rangers/Sevco fans even the thousands that get in free to home matches.
 
Admiral Pure said:
More obsession from the mhanky bheasts I see.

One word timmy, one single solitary word: Juninho had an EBT an aw <grr>
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Half wit. The EBT is not the issue. The issue is illegal registration of the contract with the SFA. Having an EBT is not an issue for football authorities, THE ISSUE IS INCORRECT REGISTRATION OF THE PLAYERS AND THE EXISTENCE OF DUAL CONTRACTS. Junhinos EBT was registered with the authorities in full. His final settlement of the remained of his contract was paid through an existing EBT, by his choice. He was PROPERLY REGISTERED, unlike, allegedly rfc players over a decade and more, if Bain is correct.

GET IT SEVCONIAN? Has it gone through that dense mass of vegetation.
 
Trevor Santos said:
More fool me? What can I do about it?
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Read a post on a newspaper site by a very reasonable SEVCONIAN, who felt that his club were dammed if he didn't invest in the share issue, but could also be dammed if he did. He was concerned with the future of his club and not interested in a slanging match about Celtic with false claims about EBTs, and newcos over the perfectly acceptable change of a company name from limited to public. He acknowledged that those in charge of his club had operated it financially incorrectly and had without his knowledge probably cheated. Felt sorry for him. Shame all rfc fans could not have followed his example without all the credibility and sympathy stripping intimidation which involved Special Branch and anti terror forces.
 
Scottish football could do with following the German model. Where the fa determine the finances of the clubs involved. However they would need to get tough and stand up to rangers.
 
eric cartman said:
Scottish football could do with following the German model. Where the fa determine the finances of the clubs involved. However they would need to get tough and stand up to rangers.
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Agree, but what do the FA do about the Chelsea's Man City etc? Real and Barca and probably every major league in Europe.
 
Albatross said:
Half wit. The EBT is not the issue. The issue is illegal registration of the contract with the SFA. Having an EBT is not an issue for football authorities, THE ISSUE IS INCORRECT REGISTRATION OF THE PLAYERS AND THE EXISTENCE OF DUAL CONTRACTS. Junhinos EBT was registered with the authorities in full. His final settlement of the remained of his contract was paid through an existing EBT, by his choice. He was PROPERLY REGISTERED, unlike, allegedly rfc players over a decade and more, if Bain is correct.

GET IT SEVCONIAN? Has it gone through that dense mass of vegetation.
Click to expand...

<laugh><laugh><laugh> I always knew that admiral was a hun in disguise...
 
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