XL Insurance Company SE v IPORS Underwriting Ltd & Ors [2021] EWHC 474 (Comm) (04 March 2021)

XL Insurance Company SE v IPORS Underwriting Ltd & Ors [2021] EWHC 474 (Comm) (04 March 2021)

The court held that XL Insurance's claims against HMRC are arguable because, in the unusual circumstances where a third party's funds were misappropriated and paid as tax on a fictitious liability, the statutory self-assessment regime does not necessarily preclude proprietary or unjust enrichment claims by the true owner. The existence of a genuine liability is open to challenge by a third party, and the defences of bona fide purchaser and discharge of statutory debt are not conclusively established on the assumed facts.

Citation
[2021] EWHC 474 (Comm)
Parties
Claimant/applicant: XL Insurance Company SE; First Defendant: IPORS Underwriting Limited; Second Defendant: Paul Alan Corcoran; Third Defendant: Cheshire Prestigious Cars Limited; Proposed Fourth Defendant/respondent: Her Majesty's Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
04 March 2021
Procedural Posture
Commercial Court Application to Join Party and Amend Claim / Application for Joinder and Permission to Amend Particulars of Claim
Outcome
Application granted
Legal Topics
Joinder of Parties, Constructive Trust, Unjust Enrichment, Tracing Claims, Self Assessment Tax Regime, Fraud, Proprietary Claims
Civil Procedure Equity and Trusts Tax Law Joinder of Parties Constructive Trust Unjust Enrichment Tracing Claims Self Assessment Tax Regime +2 more

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Parties

XL Insurance Company SE

Claimant/applicant

IPORS Underwriting Limited

First Defendant

Paul Alan Corcoran

Second Defendant

Cheshire Prestigious Cars Limited

Third Defendant

Her Majesty's Revenue and Customs

Proposed Fourth Defendant/respondent

Procedural Posture

Commercial Court Application to Join Party and Amend Claim / Application for Joinder and Permission to Amend Particulars of Claim

Legal Issues

  1. 1 Whether XL Insurance has an arguable claim against HMRC for recovery of funds paid as tax by a third party using misappropriated funds
  2. 2 Whether the statutory self-assessment regime precludes third party proprietary or unjust enrichment claims against HMRC
  3. 3 Whether HMRC is a bona fide purchaser for value without notice in respect of tax paid by a third party using misappropriated funds

Ratio Decidendi

The court held that XL Insurance's claims against HMRC are arguable because, in the unusual circumstances where a third party's funds were misappropriated and paid as tax on a fictitious liability, the statutory self-assessment regime does not necessarily preclude proprietary or unjust enrichment claims by the true owner. The existence of a genuine liability is open to challenge by a third party, and the defences of bona fide purchaser and discharge of statutory debt are not conclusively established on the assumed facts.

Court Disposition

Application granted

Orders

  • HMRC to be joined as a party to the proceedings
  • Permission granted to XL Insurance to amend its particulars of claim to include claims against HMRC