(Adds statement from league and police in sixth paragraph, statement from tax agency in 11th, former owner in 13th.)
Feb. 14 (Bloomberg) -- Rangers Football Club Plc, the Scottish soccer champion, went into a form of bankruptcy as U.K. tax authorities chase the Glasgow team over unpaid bills.
Owner Craig Whyte placed the club into administration after HM Revenue & Customs went to court in Edinburgh today to force the move on its terms, which would have allowed the government to appoint the executives overseeing the bankruptcy.
“It is now for the administrators to take forward the process of assessing the business and securing an outcome in the best interests of the club, its staff, supporters and the game of football as a whole in Scotland,” Scottish Sports Minister Shona Robison said in a statement today.
Whyte yesterday filed papers giving him 10 days to decide whether to put the club into administration over a claim by HMRC for as much as 75 million pounds ($118 million) including penalties involving unpaid tax relating to the use of employee benefit trusts. The team today appointed Duff & Phelps as administrators.
Rangers, which has won the Scottish soccer title 54 times, set up the trusts under its previous owner, David Murray, who sold his 85 percent stake in the club to Whyte in May for 1 pound in return for Whyte repaying 18 million pounds of loans to Lloyds Banking Group Plc.
The move means Rangers will lose 10 points in the Scottish Premier League, and faces restrictions on player registrations, the league said today on its website. Strathclyde police said it will continue to provide security for the team’s home matches after reassurances from the club.
The club and Glasgow rival Celtic dominate Scottish soccer, winning every league championship since 1985, when Aberdeen took the title, and have fan bases that rival some of Europe’s biggest teams. Yet the lack of global interest in the Scottish league means they can’t generate the amount of income reaped by teams playing in England’s Premier League.
The teams, known as the “Old Firm” and traditionally divided between Protestant and Catholic areas of Glasgow, also have been blighted by the sectarian divide among fans. The Scottish government last year introduced legislation to outlaw abuse based on religion.
Rangers trail Celtic by 14 points in this year’s championship, and the team will remain in second place even after the point deduction, ahead of Motherwell.
‘Survival at Risk’
Today’s move by the tax authorities was unrelated to a dispute over the employee benefit trusts, HMRC spokesman Ron Barrie said in a telephone interview.
“We can’t discuss specific cases for legal reasons but tax that has been deducted at source from the wages of players and support staff such as groundkeepers and physios, must be paid over to HMRC,” the tax agency said in an e-mailed statement today after the court hearing. “Any business that fails to meet that basic legal requirement puts the survival of the business at risk.”
HMRC is claiming 2.8 million pounds from Rangers over unpaid tax relating to payments made to staff between 1999 and 2003, according to U.K. newspapers including the Daily Mail and the Telegraph. Barrie declined to comment.
“Words cannot express how hugely disappointed I am with news of today’s appointment of administrators,” Murray said in a statement to the Press Association.
The timing of the appointment was “especially surprising” as there was no indication of when a tax tribunal appointed to adjudicate on the dispute will report, while legal opinion on the strength of the club’s case remained favorable, Murray said.
A tax tribunal is due to publish its findings on the main dispute between Rangers and HMRC, which involves 49 million pounds of unpaid tax on money channeled through the trusts since 2001.
“The club did not want nor anticipate having to take this course of action today but had no option,” Whyte said in a statement. “We had hoped that continued dialogue with HMRC would mean that a decision on administration would not have to be taken for 10 days while all other avenues were explored.”
Rangers appointed restructuring specialists Duff & Phelps to advise it on its strategy. The club may delist its shares in May after they were suspended from trading on the PLUS market on Jan. 9 after missing the year-end deadline for publication of its audited accounts for the fiscal year ended June 30, 2010.
It costs 45 million pounds to run the team each year, about 10 million pounds more than the club gets in revenue, Whyte said yesterday in a statement.
--Editors: Christopher Elser, Rodney Jefferson
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