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United Kingdom

HMRC must give unlimited cross-undertaking on appointing provisional liquidators: Court of Appeal confirms creditor status on winding-up petitions, rejecting public law enforcement exception (England and Wales)

Published on: 03 September 2024

Published by a LexisNexis Restructuring & Insolvency expert
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Article summary

Insolvency, revenue law, and civil procedure (The Commissioners for HMRC v Payroll & Pension Services (PPS Umbrella Company) Ltd) Revenue and Customs Commissioners v Payroll & Pension Services (PPS Umbrella Company) Ltd [2024] EWCA Civ 995

What are the practical implications of this case?

Before this ruling, first-instance decisions had split along two paths: one held that HMRC was discharging a public interest or law-enforcement role and so need not provide any cross-undertaking in damages; the other treated HMRC, for these purposes, as no different from a creditor enforcing a debt, requiring a cross-undertaking as the price of the order. The Court of Appeal confirmed the latter strand is right. Because appointing provisional liquidators can have a catastrophic impact on a company’s business, if such relief is wrongly obtained the company now has at least some assurance that it may pursue the undertaking. Accordingly, HMRC must proffer a cross-undertaking when seeking the order. This provides a measure of protection where the appointment proves unwarranted.

What was the background?

In November 2023, HMRC presented a petition to wind up the Company on the footing that it owed sums to HMRC...

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