Christopher Purkiss (as Liquidator of Ethos Solutions Limited) v Tim Kennedy & Ors

Christopher Purkiss (as Liquidator of Ethos Solutions Limited) v Tim Kennedy & Ors

Entering into a transaction to prevent a liability from arising does not constitute a prohibited purpose under section 423(3) Insolvency Act 1986. The liquidator's appeal fails because the company did not act with the purpose of prejudicing HMRC's interests in relation to a claim it was making or may make, but rather to prevent any claim from arising.

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
Civil Appeal / Court of Appeal Judgment
Outcome
appeal dismissed
Legal Topics
Transactions at Undervalue, Tax Avoidance, Section 423 Insolvency Act 1986, Employee Benefit Trusts, Liquidator Claims
Insolvency Tax Company Law Transactions at Undervalue Tax Avoidance 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

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether transactions entered into to avoid tax liabilities fall within section 423 Insolvency Act 1986 as transactions defrauding creditors
  2. 2 Whether the purpose of preventing a liability arising constitutes a prohibited purpose under section 423(3)
  3. 3 Whether the company intended to impede HMRC from recovering tax if the scheme failed

Ratio Decidendi

Entering into a transaction to prevent a liability from arising does not constitute a prohibited purpose under section 423(3) Insolvency Act 1986. The liquidator's appeal fails because the company did not act with the purpose of prejudicing HMRC's interests in relation to a claim it was making or may make, but rather to prevent any claim from arising.

Court Disposition

appeal dismissed