5 Stone Buildings successful in Supreme Court

Judgment has been handed down by the Supreme Court in RFC 2012 plc (in liquidation) (formerly The Rangers Football Club plc) v. Advocate-General for Scotland, in which Joseph Goldsmith appeared (led by Julian Ghosh QC of Pump Court Tax Chambers) for the Advocate-General on behalf of the successful respondent, HM Revenue and Customs.

The appeal has received wide coverage in the legal and other news media.
The case related to the group of companies, including Rangers Football Club plc, owned by Sir David Murray. It concerned employee-benefit trusts created for executives employed by companies in the Murray group, together with footballers contracted to Rangers FC. HMRC, which was previously successful in the Court of Session in Scotland, contended that payments made to such trusts established for the benefit of the employee’s family constituted a re-direction of earnings and, hence, are taxable in the hands of the employee.

The proceedings also involved interesting issues about the powers of protectors under English law (which was the governing law of the EBTs). In each case, the employee in question was appointed protector of his trust and given wide powers which, in HMRC’s contention, enabled him to call for the funds held upon the terms of the trust to be paid to him absolutely. This issue was discussed by the Court of Session in its decision.

Joseph was instructed by the Advocate-General to advise him on issues of English trust law for the purposes of the hearing before the Court of Session.
Judgment in favour of HMRC was handed down by the Supreme Court on 5 July 2017. A copy of the judgment can be found here.