The application before Richard Smith J in Re Prezzo Investco Ltd (Re Companies Act 2006) [2023] EWHC 1679 (Ch) was for sanction of a restructuring plan between the company and certain of its creditors under ss 901F and 901G of Part 26A Companies Act 2006.
With HMRC more focused than ever before on recovering taxes due, we look at the most common ways in which HMRC can transfer the liability of taxes due and/or penalties to Company Officers and making them personally liable.
The Government has promised to spend an additional £79 million over the next five years to help HMRC tackle tax fraud and address compliance risks amongst wealthy taxpayers. HMRC's efforts will be a threat to businesses affected in terms of costs and expenditure in time in dealing with HRMC.
Dispute Resolution analysis: A large award of damages and/or equitable compensation has been made against the directors and connected companies of a company which was used to perpetrate a large scale labour supply fraud against HMRC.
Umbrella Care Ltd v Nisa and ors [2022] EWHC 3139 (Ch)
What are the practical implications of this case?
Having experienced first-hand HMRC’s attempts to combat serious tax losses, one of the features of tax litigation over the last 15 years has been the prevalence of so-called ‘Kittel’ cases. These are cases in which HMRC seeks to deny repayments of VAT to companies buying goods in circumstances where HMRC has identified a fraud further up the supply chain, often many companies distant. They can involve significant amounts of VAT and form a substantial pillar of HMRC’s compliance strategy.
As well as the Deka Legal Bake, last week witnessed the publication of the updated ASHE and a further judgment on the subject of jurisdiction, which seems to be a growth area in satellite litigation, perhaps unsurprisingly given the effect of Exit Day.
Eight lessons from previous recessions
It does not take a professional economist to predict that a serious economic downturn is possible in the UK. Given that workforces will be impacted by this, many companies providing workforce support services are likely to be particularly affected.
Background
Houst Ltd (“the Company”) is a property management company which specialises in short-term holiday rentals through an online platform. It is an SME (small or medium-sized enterprise) with total liabilities of approximately £10 million at stake. The Company became both cashflow and balance sheet insolvent having experienced financial difficulty during the Covid pandemic and this resulted in creditors having threatened winding-up petitions.
The corporate insolvency statistics for Q2 2022 paint a worrying picture for UK businesses. With inflation at a 40-year high, fuelled by soaring gas and electricity bills, food prices and wage increases, the cost of living crisis is taking hold across the economy.
On 22 July 2022, the English High Court sanctioned Houst Limited’s (“Houst” or the “Company”) restructuring plan (the “Restructuring Plan”), which significantly, is the first time a Restructuring Plan has been used to cram down HM Revenue & Customs (“HMRC”) as preferential creditor.1
Background
How has HMRC managed its metamorphosis from benevolent supporter of businesses during the pandemic to hard-nosed tax collector?