Purkiss v Kennedy & Ors [2025] EWCA Civ 268 (14 March 2025)

Purkiss v Kennedy & Ors [2025] EWCA Civ 268 (14 March 2025)

Entering into a transaction to prevent a tax liability from arising does not constitute a prohibited purpose under section 423(3) Insolvency Act 1986. The company's purpose was to avoid liability, not to prejudice HMRC's interests in relation to a claim. There was insufficient evidence to infer an intent to impede HMRC's recovery if the scheme failed.

Citation
[2025] EWCA Civ 268
Parties
Applicant/appellant: Christopher Purkiss (as Liquidator of Ethos Solutions Limited); Respondent: Tim Kennedy; Respondent: Kenneth Jarrard; Respondent: Paul Murray; Respondent: Rupert David Potter; Respondent: Balaji Dasarathy; Respondent: Robert Engledow; Respondent: Richard Appleyard; Respondent: Phillip Harris; Respondent: Graeme Hunt; Respondent: Simon Lofting; Respondent: Costas Lemonides; Respondent: Oritstimeyin Omayemi Okoro; Respondent: David John Peck; Respondent: David Adeyinka; Respondent: Gita Pathmanathan; Respondent: Paul Manku; Respondent: Perry Offer; Respondent: Sukuru Yildiz; Respondent: Piers Webster; Respondent: John Reivers; Respondent: Fatima Manku/Choudhary; Respondent: Jamal Almansoor; Respondent: Arvind Sabharwal
Jurisdiction
England and Wales
Judgment Date
14 March 2025
Procedural Posture
Appeal (civil) / Court of Appeal Judgment
Outcome
Appeal dismissed
Legal Topics
Transactions at Undervalue, Tax Avoidance Schemes, Section 423 Insolvency Act 1986, Employee Benefit Trusts, Liquidator Claims
Insolvency Taxation Company Law Transactions at Undervalue Tax Avoidance Schemes Section 423 Insolvency Act 1986 Employee Benefit Trusts Liquidator Claims

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Parties

Christopher Purkiss (as Liquidator of Ethos Solutions Limited)

Applicant/appellant

Tim Kennedy

Respondent

Kenneth Jarrard

Respondent

Paul Murray

Respondent

Rupert David Potter

Respondent

Balaji Dasarathy

Respondent

Robert Engledow

Respondent

Richard Appleyard

Respondent

Phillip Harris

Respondent

Graeme Hunt

Respondent

Simon Lofting

Respondent

Costas Lemonides

Respondent

Oritstimeyin Omayemi Okoro

Respondent

David John Peck

Respondent

David Adeyinka

Respondent

Gita Pathmanathan

Respondent

Paul Manku

Respondent

Perry Offer

Respondent

Sukuru Yildiz

Respondent

Piers Webster

Respondent

John Reivers

Respondent

Fatima Manku/Choudhary

Respondent

Jamal Almansoor

Respondent

Arvind Sabharwal

Respondent

Procedural Posture

Appeal (civil) / Court of Appeal Judgment

Legal Issues

  1. 1 Does entering into a transaction to prevent a tax liability amount to a prohibited purpose under section 423(3) Insolvency Act 1986?
  2. 2 Did the company intend to impede HMRC from recovering tax if the scheme failed?

Ratio Decidendi

Entering into a transaction to prevent a tax liability from arising does not constitute a prohibited purpose under section 423(3) Insolvency Act 1986. The company's purpose was to avoid liability, not to prejudice HMRC's interests in relation to a claim. There was insufficient evidence to infer an intent to impede HMRC's recovery if the scheme failed.

Court Disposition

Appeal dismissed