HM Revenue and Customs v Changtel Solutions UK Ltd [2015] EWCA Civ 29 (28 January 2015)

HM Revenue and Customs v Changtel Solutions UK Ltd [2015] EWCA Civ 29 (28 January 2015)

The Companies Court is not required to defer to the Tax Tribunal on whether a VAT assessment debt is disputed in good faith on substantial grounds. In this case, the evidence overwhelmingly demonstrated that the company's purported export transactions were fabricated and not genuinely disputed, and the debts underlying the dispatch assessments were not disputed in good faith on substantial grounds. The judge's approach was flawed by deferring discretion to the Tax Tribunal, and the petition for winding-up should be granted.

Citation
[2015] EWCA Civ 29
Parties
Petitioners/appellants: The Commissioners for Her Majesty's Revenue and Customs; Respondent/respondent: Changtel Solutions UK Limited (formerly Enta Technologies Limited)
Jurisdiction
England and Wales
Judgment Date
28 January 2015
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division)
Outcome
Appeal allowed; winding-up order made against the company.
Legal Topics
Winding Up Petitions, VAT Assessments, Jurisdiction of Companies Court Vs Tax Tribunal, Abuse of Process, Disputed Debts, Fraudulent Trading
Insolvency Law Tax Law Company Law Winding Up Petitions VAT Assessments Jurisdiction of Companies Court Vs Tax Tribunal Abuse of Process Disputed Debts +1 more

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Parties

The Commissioners for Her Majesty's Revenue and Customs

Petitioners/appellants

Changtel Solutions UK Limited (formerly Enta Technologies Limited)

Respondent/respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division)

Legal Issues

  1. 1 Whether the Companies Court must defer to the Tax Tribunal on the question of whether a VAT assessment debt is disputed in good faith on substantial grounds when a winding-up petition is presented
  2. 2 Whether the debts based on the dispatch assessments were disputed in good faith on substantial grounds
  3. 3 Whether the hearing was unfair to HMRC due to judicial interruptions

Ratio Decidendi

The Companies Court is not required to defer to the Tax Tribunal on whether a VAT assessment debt is disputed in good faith on substantial grounds. In this case, the evidence overwhelmingly demonstrated that the company's purported export transactions were fabricated and not genuinely disputed, and the debts underlying the dispatch assessments were not disputed in good faith on substantial grounds. The judge's approach was flawed by deferring discretion to the Tax Tribunal, and the petition for winding-up should be granted.

Court Disposition

Appeal allowed; winding-up order made against the company.

Orders

  • Discharge the order restraining advertisement of the petition.
  • Dismiss the company's application to dismiss the petition and/or restrain advertisement.