From: David Grier <DGrier@mcr.uk.

com>
Date: 28 July 2011
To: "ctw@libertycapital.biz" <ctw@libertycapital.biz>
Cc: "gary.withey@collyerbristow.com" <gary.withey@collyerbristow.com>, "phil.betts@virgin.net"
<phil.betts@virgin.net>, Michael Bills <MBills@mcr.uk.com>


Craig,

Just to confirm that I have an update call with HMRC this afternoon and will provide comments to you
later.

Gary,

we have sent the list of employees for transfer to a service company and suggest we arrange a call
with Clare Rinks when convenient.

Any thoughts on the possible appeal process ahead of my call with HMRC would be appreciated.

Regards,

DG
David Grier
Partner
MCR
43 - 45 Portman Square
London W1H 6LY

Office: 020 7487 7240
Fax: 020 7487 7299
www.mcr.uk.com



From: Craig Whyte <ctw@libertycapital.biz>
Date: 28 July 2011
To: David Grier <DGrier@mcr.uk.com>


Thanks David. I'm free anytime this afternoon.

From: <phil.betts@virgin.net>
Date: 28 July 2011
To: David Grier <Dgrier@mcr.uk.com>, Craig Whyte <ctw@libertycapital.biz>
Cc: Gary Withey <gary.withey@collyerbristow.com>, Michael Bills - MCR email
<MBills@mcr.uk.com>


Hi David

How did the call with hmrc go today?

Regards
Phil

From: David Grier <DGrier@mcr.uk.com>
Date: 29 July 2011
To: "phil.betts@virgin.net" <phil.betts@virgin.net>, "ctw@libertycapital.biz" <ctw@libertycapital.biz>
Cc: "gary.withey@collyerbristow.com" <gary.withey@collyerbristow.com>, Michael Bills
<MBills@mcr.uk.com>

Craig,

Summary update below, but best to speak about the call when you are free - happy to set up a
conference call if other want to join.


1. Call started with a review of matters contained in recent HMRC letter and we confirmed that we are
progressing the various information requests and will start to provide information and a 'time to pay'
proposal from next week.

2. HMRC questioned why any player acquisitions are being made when there has been no payment
on account to HMRC.

This was explain by commenting on the importance of building a playing squad to compete at
Champions League level, which in turn is needed to provide positive cash flow.

While HMRC did not fully agree with this they did acknowledge that they are prepared to give limited
time for a proposal to be developed which is linked to the cash availability from either club revenues
or shareholders.

Our view is the HMCR have now moved to 'collection' focus (and this is something we are witnessing
with other situations) and there is a high likelihood of using enforcement to obtain a recovery.

3. We raised a question in respect of any appeal process. HMRC explained that there was an appeal
'window' which closed on 20 June 2011 and that while the Club may still apply for late appeal, HMRC
would consider this action as 'vexatious' and would immediately apply to have action stuck out with
the club being liable for all associated costs.

Two further point here is that HMRC noted the club had previously accepted the assessment of
liability at c1.9m. The total now claimed at c2.8m includes interest and charges.

We can take a legal opinion here, however we believe any late appeal to be high risk and likely to
bring forward any recovery process. We are still of the opinion that a negotiated 'time to pay' is
possible and HMRC have confirmed willingness to consider such a proposal.

4. HMRC confirmed that they have considered the issue of penalty against the tax liability of 1.9m
and have concluded that a 60% penalty is appropriate. This increases that amount now due to
c4.2m.

The club can appeal this level of penalty and have 14 day in which to do so.

Again there are risks associated with any appeal as given the strength of evidence held by HMRC.

5. HMRC asked for confirmation that directors are taking appropriate insolvency advice and we
confirm this point in respect of having highlighted directors duties.

6. HMRC advised that they will be conducting a specific PAYE audit in August to confirm that the
amounts due and paid to Davis and Papac have been properly accounted.

7. HMRC asked for an update call next week, specifically following the outcome from the next
Champions League match.

8. HMRC confirmed that they will be seeking a summary warrant for the amount now due, which when
granted will allow a number of recover options including a freeze on the bank facility. That said HMRC
did re-confirm a willingness to discuss and not enforce at this time.


Regards,

DG
David Grier
Partner
MCR
43 - 45 Portman Square
London W1H 6LY

Office: 020 7487 7240
Fax: 020 7487 7299
www.mcr.uk.com


From: phil.betts@virgin.net [mailto:phil.betts@virgin.net]
Sent: Thursday, July 28, 2011
To: David Grier; Craig Whyte <ctw@libertycapital.biz>
Cc: Gary Withey <gary.withey@collyerbristow.com>; Michael Bills
Subject: Re: Hmrc - update


----------
From: Michael Bills <MBills@mcr.uk.com>
Date: 29 July 2011
To: "phil.betts@virgin.net" <phil.betts@virgin.net>, "ctw@libertycapital.biz" <ctw@libertycapital.biz>,
"gary.withey@collyerbristow.com" <gary.withey@collyerbristow.com>
Cc: David Grier <DGrier@mcr.uk.com>

Dear all

Further to Davids update note below, please find attached for your attention a letter received this
morning from [Redacted] at HMRC in respect of point 4 of Davids e-mail.

In summary, this letter confirms that the Club has 14 days from yesterday to accept HMRCs offer for
the Clubs penalty to be capped at 1.3m, taking the total debt due in respect of the discounted
option scheme to c4.2m. If the Club wishes to accept this, 2 directors must sign off on the attached
letter.

Kind regards

Mike


Michael Bills
MCR
43-45 Portman Square