Parkwell Investments Ltd v Wilson & Anor
2014
CHANCERY DIVISION
United Kingdom
CORAM
- SIR WILLIAM BLACKBURNE
Areas of Law
- Tax Law
- Insolvency Law
2014
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
The court appointed a provisional liquidator for Parkwell Investments Limited, following HMRC’s claim of significant unpaid VAT. Parkwell sought to terminate this appointment, arguing lack of jurisdiction and insufficient evidence for a winding-up order, while also appealing the VAT assessments before the First-Tier Tax Tribunal (FTT). The court ruled it had jurisdiction despite pending appeals, Parkwell failed to substantiate VAT input claims, thus validating HMRC’s petition, and decided against requiring HMRC to offer an undertaking in damages.
Judgment
Sir William Blackburne:
On 18 March 2014 Hildyard J appointed Mark Wilson of Baker Tilly Restructuring & Recovery LLP (“Mr Wilson”) as provisional liquidator of Parkwell Investments Limited (“Parkwell”). The appointment was made on the without-notice application of The Commissioners for Her Majesty’s Revenue & Customs (“HMRC”) who that day had presented a creditor’s petition to wind up Parkwell. The petition alleged unpaid VAT (inclusive of interest to 31 July 2013) totalling £7,764,476.14 based on assessments raised on or about 30 October 2013 for three quarterly periods between 1 November 2012 and 31 July 2013. The petition also alleged that a further £2,167,261, by way of VAT for periods between 1 August 2013 and 31 December 2013 was contingently or prospectively due. The court appointed Mr Wilson provisional liquidator until the conclusion of the hearing of the petition or further order and conferred upon him the powers and functions usually given when these orders are made. The court also directed that the order and its continuation should be considered on 25 March, which was a week later. Among the undertakings given to the court by HMRC upon the making of the order was that “In the event that the court should later decide that [HMRC] ought, as a condition of the continued appointment of the provisional liquidator to provide an undertaking in damages, to consent to such undertaking having retrospective effect from [18 March (the date of the appointment)] and as if it had been contained in this [the court’s original] order.”
The petition debt is put forward on alternative bases. The first, which relates to the taxable supplies allegedly made to it during the nine months to 31 July 2013, is that Parkwell has failed to produce documentary evidence to support the supplies, that is to say the supplies to it upon which it claims to have paid input tax and in respect of which it has claimed an offset against its liability to pay output tax as set out in its VAT returns for those periods. The alternative basis, which relates to those supplies and the further supplies to it said to have been made for the subsequent five months to 31 December 2013, is that, being a taxable entity, Parkwell knew or should have known that its transactions for those periods were connected with the fraudulent evasion of VAT with the result that HMRC was properly entitled to refuse to deduct input tax in respect of the transactions. In so contending HMRC relied on