Owner Craig Whyte claims he took the first step towards administration to ensure Rangers did not die altogether under the potential burden of a "shocking" £75million tax bill.
The club lodged legal papers signalling their intention to enter administration with the Court of Session in Edinburgh at lunchtime on Tuesday.
The Scottish champions are awaiting the verdict of a tax tribunal which it was thought could cost the club around £49million if the judgment went against them, but Whyte revealed that figure was substantially out.
The HMRC case centres around the use of employee benefits trusts (EBTs) which were in place before Whyte took over from Sir David Murray last May.
Whyte told Press Association Sport it was necessary to look at administration.
"If we hadn't done that then liquidation could have been a possibility," he said.
"This secures the long-term future of the club.
"The £49million often quoted is the tax bill and interest but they can charge you a penalty on the tax bill so we could have been up at £75million.
"It is a shocking figure and there is no way we could pay it."
Whyte was heckled by some Rangers fans when he emerged outside Ibrox after 6pm to read a statement outlining his intentions.
The Motherwell-born businessman admitted it had been a "tough day" but insists he has no intentions of leaving the club.
"I can understand how the fans feel," he said.
"But I came in to sort out the financial situation and that's what I will do.
"It has been a tough day. No one likes it but I am doing what has to be done.
"I would say to the fans to stick with (manager) Ally McCoist and the team, they need you more than ever.
"I have not gone through what I have gone through in the last year to walk away. I am here to stay."
Amid a long explanatory statement on the club's website, Whyte outlined why he believes winning the tax case is unlikely.
"There is no realistic or practical alternative to our approach as HMRC has made it plain to the club that should we be successful in the forthcoming tax tribunal decision, they will 'appeal, appeal and appeal again' the decision," he said.
"This would leave the club facing years of uncertainty and also having to pay immediately a range of liabilities to HMRC.
"Even if the club were to succeed in the tax tribunal, it would still face substantial liabilities. Zero liability will not happen."
Rangers are currently four points behind SPL leaders Celtic and 19 above nearest challengers Motherwell, who have a game in hand.
Administration would bring an automatic 10-point deduction and would likely lead to the sale of on-field assets while manager McCoist could expect to see further reductions in the size of his squad.
Rangers also face a race to prove to the Scottish Football Association that their finances are in shape before March 31 or face expulsion from Europe next season.
Although there is no specific ban on clubs in administration playing in Europe, it is understood it would be very difficult for such a club to meet the other financial criteria needed for a licence.
Whyte was reluctant to respond to the suggestion that the club and the supporters may have to write off this season.
"We are not in administration yet," said Whyte, while claiming this move was the first step on the "road to recovery".
"Rangers will always be around, Rangers will always be here at Ibrox," he told Sky Sport News.
"This was the best way to take the club forward and end the uncertainty that is surrounding Rangers at the moment.
"The fact is there no way Rangers can pay that tax bill if that judgment goes against us, it just can't be done.
"I have to make the decision for the long-term future of Rangers.
"This was discussed long before my time when the tax case first became known and it is a really tough decision.
"I bought the club with this tax case hanging over it, it was always an option. We hoped we would find a way to resolve it without going down this route.
"It became apparent at the end of last week that HMRC would not do a deal with us and so we had no choice.
"We will exit administration, we hope, by means of a CVA, which will deal with creditors.
"I don't want to get into that now but that is how we will exit administration, if indeed we go into administration.
"Keep in mind we are not in administration at the moment."
Whyte bought out Murray's shareholding for £1 while pledging to pay off £18million owed to Lloyds Banking Group and invest about £25million in the playing squad over five years.
The club have still not published audited accounts due before the end of last year or held an AGM as required.
That led to trading on their shares being suspended last month by the PLUS Stock Exchange, who are investigating Whyte's admission that he had been disqualified as a director for seven years from 2000. A similar SFA inquiry into Whyte's business background remains ongoing.
Last week former Rangers chairman Alastair Johnston revealed he had asked the Government's Insolvency Service to clarify "certain financial arrangements" relating to the takeover.
Whyte had earlier admitted securing funds from loan company Ticketus in lieu of future season ticket sales, but denied using the cash to fund his takeover.
Rangers financial timeline:
1988: David Murray buys a majority shareholding in the club for £6million from Lawrence Marlborough.
2001: Murray Park is opened at a cost of £14million.
2002: Murray quits as chairman but continues as owner.
2004: Murray returns as chairman after increasing stake in the club. Murray heavily underwrote a £57million share issue after the club's debts peaked at £72million.
2009: August 26 - Murray announces he is to step down as Rangers chairman. Alastair Johnston is named as his successor.
October 24 - Manager Walter Smith claims Lloyds Bank are controlling Rangers' spending following the appointment of one of their representatives, Donald Muir, to the board.
November 12 - Rangers' annual report shows debts have risen by £10million to £31million.
2010: April 27 - Rangers confirm they are under investigation by Her Majesty's Revenue and Customs over offshore payments to players from 2001. A final tax bill could be as much as £49million.
June 9 - London-based property developer Andrew Ellis' consortium, RFC, announce to the Stock Exchange they are in "advanced negotiations" to buy a controlling interest in Rangers.
June 15 - Rangers announce Murray International Holdings (MIH) are no longer "actively marketing its controlling stake in the club for sale" after failing to receive a suitable offer.
September 22 - Rangers announce a reduction in debt from £31million to £27.1million.
November 18 - Scottish tycoon Craig Whyte confirms to the Stock Exchange he is considering making an offer and is in talks with MIH regarding a proposed takeover.
December 3 - Whyte reaches an "agreement in principle" with Murray and meets Johnston for the first time.
2011: March 28 - Whyte officially completes his due diligence.
March 30 - Whyte and Lloyds reach agreement over the debt repayment.
April 1 - Rangers announce an £11.9million profit for the last six months of 2010 but £2.8million is wiped off for a one-off tax payment over an issue relating to 1999-2003. Johnston admits the other ongoing tax probe could leave Rangers with a bill they cannot afford to pay.
May 6 - Whyte announces his acquisition of Murray International Holdings' 85.3% shareholding in Rangers for £1 after the Takeover Panel ratify the deal.
May 24 - Johnston and Paul Murray are removed from their roles as directors. Chief executive Martin Bain and director Donald McIntyre are suspended.
June 20 - Bain instructs his lawyers to open legal proceedings against Rangers. Four days later, Bain resigns.
September 13 - Bain succeeds in having £480,000 of the club's assets frozen while pursuing a legal case.
October 10 - McIntyre resigns as finance director but remains as an employee of the club. Just over a week later, he has £300,000 of Rangers' cash frozen pending a court case.
October 20 - Whyte instructs his lawyers to begin legal proceedings against the BBC over allegations made against him in a documentary, having previously withdrawn all co-operation with the broadcaster. The BBC say they stand by their investigation.
November 30 - Rangers' annual financial figures show net debt has been halved to around £14million. The club also confirm Whyte had previously been disqualified as a company directory for seven years from 2000.
December 9 - Rangers agree an undisclosed out-of-court settlement with McIntyre.
2012: January 9 - Rangers' shares are suspended from trading on the PLUS Stock Exchange for failure to submit audited accounts.
January 18 - A three-day tax tribunal closes in Edinburgh.
January 31 - Rangers sell top goalscorer Nikica Jelavic to Everton but fail to replace him before the transfer window closes. Whyte admits using three years' worth of future season ticket sales to secure funds but denies using the money to fund his takeover.
February 13 - Rangers lodge their intention to go into administration at the Court of Session in Edinburgh.
