FORMER Rangers stars who benefited from an elaborate tax avoidance scheme could be forced to pay back millions of pounds or face bankruptcy when a seven-year legal saga is finally decided in the Supreme Court this week.

The liquidator of Rangers ‘oldco’ is appealing a decision in the Court of Session which ruled that £47.65 million in ‘loans’ to more than 80 players and staff at the club in employee benefit trusts (EBTs) were disguised salary payments – and that in a brazen tax dodge the loans were never intended to be repaid.

What has become known as the ‘big tax case’ has dragged on since 2010 when HM Customs and Revenue first made the claim against the club, which eventually resulted in Rangers FC being forced into liquidation when it was unable to reach a settlement.

In 2015 HMRC won its case in the Court of Session, successfully arguing that the loans should be treated as salary and tax levied. Liquidator BDO’s appeal against the decision will be heard in the highest court in the land in London, on Wednesday and Thursday, with a judgment expected around six weeks later.

Among those who benefited from the scheme were Barry Ferguson – who received £2.5m, and might have to repay £1m – Dutch player Ronald de Boer who 'borrowed' £1.2m (and could have to fork out around £500,000) and former manager Alex McLeish with £1.7m, and a potential liability of £680,000. Sir David Murray, the club’s former owner, who received £6.3m, could end up paying back £2.5m.

The HMRC case is that while EBTs can be used legitimately they were widely misused from the late 1990s until tax legislation was tightened in 2010. Rangers gave millions of pounds of these tax-free loans to star players and senior staff between 2001 and 2010.

The Murray Group, who owned Rangers, argued they were not liable for income tax and national insurance because the players could have paid the loans back.

The use of EBTs was not confined to Rangers and were also widely used in England. Several Premier League and Championship clubs are preparing to negotiate with HMRC over multimillion-pound settlements and the Sunday Herald understands that six have already come to deals with the Revenue.

Andy Wood, a director of Enterprise Tax Consultants, said that he had been involved in helping one club over the affairs of one senior official.

He said: “In addition to the cases that I am aware of in which clubs have made payment, I know of further instances in which clubs have received tax demands after disclosing their own use of EBTs.

“Being asked to stump up large sums may come as a shock for players, especially those in retirement who do not have the earning capacity which they once might have had. Some might even be forced into bankruptcy if they can’t meet those demands.”

He predicted “real bloodshed” over it. “I know it won’t receive much sympathy but you could well have a substantial numbers of these players who have long since retired and have not the capability of repaying.” All of their assets, including houses, could be at risk.

Schemes like EBTs were outlawed with the 2011 Finance Act but billions of pounds in unpaid tax remains outstanding.

In George Osborne’s last budget as Chancellor of the Exchequer in March last year he introduced tax avoidance measures, including against fraudulent EBTs, which means that all such loans have to be repaid by April 5 2019 and taxed or, alternatively, they are admitted to be salaries and tax paid.

The original case triggered calls for Rangers to be stripped of honours acquired during the EBT years, amid accusations of “financial doping”.The club won the Scottish Premier League on five occasions, the Scottish Cup four times as well as five Scottish League Cups.

Lord Drummond Young, one of the three Court of Session judges who considered the case in November 2015, declared that if EBTs had not been in operation at Ibrox certain players “might well have taken their services elsewhere”.

He said it was “common sense” and “self-evident” that the payments were related to work.

Wood pointed out that a ruling in HMRC’s favour was likely to be followed by a succession of “aggressive” tax demands in the form of Accelerated Payment Notices (APNs). “You can bet your bottom dollar on it,” he said “With a Supreme Court judgment in its favour, I feel the Revenue would be emboldened and begin issuing APNs to those clubs which it believes owe tax from their use of EBTs fairly soon afterwards.

“It’s important to remember that there is not necessarily a cap on the sums which can be sought via an APN. The demands would be for outstanding tax and interest and clubs would have 90 days within which to either contest the APNs or pay up.”

He said that “lots of traditional English clubs who were paying their players massive wages were doing so through these EBTs” and several, should the HMRC win the case, could follow Rangers route into bankruptcy.

Rangers’ liquidators BDO have alread secured a £24m out-of-court settlement from Collyer Bristow, the lawyers who acted for Craig Whyte when he bought the club from David Murray in 2011 for £1. The firm is also contributing to the cost of the Rangers EBT defence.

Several other actions are stalled awaiting the outcome of the present case and it is possible that the total BDO can recover for Rangers creditors may be in excess of £50m